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House Speaker Mike Johnson is pouring cold water on the prospect of Republicans hiking taxes on the rich to help pay for President Trump’s “big, beautiful” agenda package.
Despite Trump previously telling Republicans that he is open to a tax increase for the wealthy, Johnson (R-La.) argued that he’d prefer to find payfors elsewhere and underscored that the GOP needs to hustle on finishing the Trump agenda bill due to bond market jitters.
“I’m not a big fan of doing that,” Johnson told Fox News’ “Sunday Morning Futures” when asked about ratcheting up taxes on the rich. “We’re the Republican Party and we’re for tax reduction for everyone. So, I mean, that’s a general principle that we always try to abide by.”
Republicans are staring down a difficult arithmetic problem to fund Trump’s marquee agenda package, which includes tax cuts, stepped-up energy supply, border security and bolstered defense spending.
Fiscal hawks are adamant that the agenda package doesn’t add to the deficit, but moderates are skittish about deep cuts to programs like Medicaid, creating a predicament for Johnson, given the slim GOP control of the House and Senate.
“We’re going to protect Medicare, Social Security and Medicaid,” Johnson stressed. “At the same time, we have to root out fraud, waste, and abuse.”
About 61% of the roughly $6.75 trillion federal budget is mandatory spending such as Medicare, Social Security and Medicaid. Another 13% is interest on the debt.
Given that Republicans want to increase defense spending in the agenda package, that leaves less than $1 trillion of annual discretionary spending to cut based on fiscal year 2024 spending levels.
House Republicans were hoping to cut a minimum of $1.5 trillion over 10 years. And between the two chambers, Republicans had been eyeing somewhere between $5.8 trillion and $4.5 trillion worth of tax cuts and spending increases (for border security and defense) over the same period.
Tax hikes on the rich have been floated as a means of making that math work. Hardliners such as Freedom Caucus Chairman Andy Harris (R-Md.) have expressed openness to it.
Privately, Trump had told Senate Republicans that he is open to jacking up taxes on high-income earners, Semafor reported.
Trump ally Steve Bannon insisted that Republicans will jack up taxes on the rich, telling “Real Time with Bill Maher” on Friday that “Trump and the MAGA movement will raise taxes on the wealthy.”
“People have different thoughts and theories on how we can find this perfect — solve this perfect equation to get all of this done,” Johnson added. “I would say, just stay tuned.”
House Majority Leader Steve Scalise (R-La.) had similarly cast doubt on soaking the rich, telling reporters, “We’re not looking for tax increases; We’re looking for locking in current rates so there is not a tax increase,” per CNBC.
During the development of the 2017 Tax Cuts and Jobs Act, Republicans helped pay for the tax reductions in part by capping the state and local tax deduction (SALT), which imposed a stiffer burden on high-income earners.
Last week, Johnson managed to take a big first step towards advancing Trump’s agenda package. The House adopted a budget resolution — a blueprint that unlocks the reconciliation process, which allows Republicans to bypass the 60-vote threshold needed to break a filibuster in the Senate.
But that budget resolution gave House and Senate Republicans completely different frameworks about what the Trump agenda package should look like.
The speaker is hoping to get the final bill across Trump’s desk by Memorial Day, despite many unanswered questions about spending cuts and the contours of the tax cuts.
“The timing’s critical,” Johnson said, “because for all the reasons you know and you have discussed on your show all the time and that we know, we have to show that stability to the markets.”
We have to send a message to the bond market, the stock market investors, to our allies around the world and our enemies as well that America is on sound fiscal ground. And so we can bend the debt trajectory curve, get us back on a path to fiscal sanity.”
Johnson predicted that passing the Trump agenda package will help “calm” the economy “and start us back on that path to real recovery.”
If Republicans fail to act, key provisions in the 2017 Tax Cuts and Jobs Act will expire by the end of the year, resulting in a significant tax increase. Additionally, the Trump agenda package is the GOP’s plan to raise the debt limit.
Uncle Sam is expected to face a credit limit on borrowing at some point over the summer.
