A significant number of Americans support the tax cuts implemented by President Trump. Now, Congress faces the challenge of determining what sacrifices taxpayers are willing to make to maintain these cuts.

In 2017, President Donald Trump introduced substantial tax relief through the Tax Cuts and Jobs Act, particularly benefiting corporations and wealthier individuals.

Many of these tax reductions are on track to end at the close of this year. However, with Trump and the Republican Party regaining influence, extending these cuts seems highly likely.

Yet, what will be the trade-off? A report from the Congressional Budget Office, a nonpartisan entity, revealed that keeping the tax reductions in place for the next decade could increase the federal deficit by $4.6 trillion.

Currently, the deficit sits at $1.8 trillion as of 2024, indicating that the government’s expenses exceeded its income by $1.8 trillion over the last fiscal year.

The effects of overspending, starting with Social Security

Overspending brings about serious repercussions, one being the forecast that Social Security will run out of funds, potentially leading to a 17% reduction in benefits by 2035.

In light of these numbers, Congressional Republicans have shared a 50-page document outlining suggestions to offset the costs of extending the tax cuts. According to an analysis by the New York Times, the intent is to create legislation that funds tax reductions and enforces stricter immigration policies without worsening the deficit.

Some of the proposed cost-saving measures include:

• Implementing a 10% tariff on all imports, which could yield $1.9 trillion over the next decade, though many economists argue American shoppers would ultimately bear this cost.
• Removing the tax deduction for mortgage interest, which would increase taxes for homeowners but could recover $1 trillion over ten years.
• Abolishing Health Savings Accounts and corresponding tax benefits in favor of a Roth-style account, which would save $110 billion.
• Mandating that many Medicaid beneficiaries work. Estimated savings: $100 billion.
• Dropping the head of household tax-filing status, which would save $192 billion but negatively impact many taxpayers with dependents.
• Reducing Pell Grants, an initiative that was recently expanded by the Biden administration to assist low-income college attendees. Savings figures are unspecified.

The purpose of this cost-cutting evaluation is to determine which reductions may be acceptable to congressional Republicans and their voters: essentially, which benefits they might sacrifice in return for lower taxes.

Congress faces limited options for cuts

However, if Congress aims to trim trillions from government expenditure, their choices are constrained.

“About two-thirds of government spending is mandatory,” encompassing Social Security, Medicare, and interest payments on the deficit, among other expenses, explains Don Leonard, an assistant professor in city and regional planning at The Ohio State University.

“This means only a third of the federal budget is adjustable. And out of that, half is allocated to defense.”

There is considerable public support for the Trump tax cuts. When taking office, Joe Biden pledged to maintain the majority of them, committing to raise taxes solely for the wealthiest individuals.

Tax cuts are generally favored by elected representatives. A 2024 survey conducted by the conservative organization Americans for Prosperity found that 90% of voters endorse retaining current tax rates.

However, citizens are also increasingly concerned about Social Security and the deficit. In a recent poll from YSL News and Suffolk University, most voters expressed that Congress should prioritize deficit reduction, even if it compromises the extension of tax cuts.

“You would hope that people realize that any changes to the tax rate have to be compensated for somehow,” remarks Chester Spatt, a finance professor at Carnegie Mellon University’s Tepper School of Business.

The deficit has steadily increased during both the Trump and Biden administrations, not accounting for surges caused by COVID-19.

Trump believed his tax cuts would become self-funding

Trump asserted that his tax cuts would generate enough growth to cover their costs, a claim not realized, though the economic effects have been muddied by the COVID-19 pandemic.

Biden aimed to increase revenue and decrease the deficit by taxing the wealthy more and targeting affluent tax evaders. While this approach provided additional funds, it fell short of what was needed.

Republicans have historically championed the need to curb the deficit. Conservative members of Congress resisted the removal of the federal debt ceiling, arguing that the government needs to rein in its spending, a view that conflicted with Trump’s support for abolishing the ceiling.

“Conservative Republicans are indeed concerned about the deficit,” Spatt points out. “And one critique of President Trump is that he doesn’t prioritize the deficit.”

Regardless of their concerns about the deficit, many Republicans in Congress might find it challenging to align on sufficient spending cuts to significantly impact the national debt.

The list of proposed cuts asks legislators to evaluate them based on their “viability.” The list features “quite contentious items,” according to William Hoagland, a senior vice president at the Bipartisan Policy Center, in a discussion with YSL News earlier this month.

“If the government had the resolve, there’s no shortage of suggestions available for deficit reduction,” observes Steven Hamilton, an economist at The George Washington University. “The issue is, we lack consensus on them.”

Moreover, Republicans do not have the luxury of defections since they require a majority to facilitate any legislation.

‘They’ll keep postponing decisions’

As a result, some analysts predict that Congress might simply renew the Trump tax cuts without pinpointing any substantial spending reductions to fund them.

“They will just extend it,” Hamilton said. “They’ll postpone tough decisions.”

A divided Congress could present challenges for Elon Musk along with his Department of Government Efficiency. Musk had promised to reduce federal spending by $2 trillion, but his department lacks formal authority to do so.

“The only way Musk can achieve significant cuts is by passing legislation through Congress,” Leonard explains.

Yet Congress might resist Musk’s proposed cuts.

“Any politician facing reelection, when given the choice of cutting benefits or increasing the national debt, will almost always opt to increase the debt,” Leonard concludes.