Republicans Wrestle With Trump’s Demands for Tax Cuts

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“Congressional Republicans are struggling to incorporate former President Trump’s tax proposals into legislation, including not taxing tips, overtime pay, and Social Security benefits. While Republicans acknowledge the need to pass some of Trump’s proposals, they are concerned about the cost and are trying to limit the scope of the tax breaks. The leading proposal for not taxing tips would limit the break to certain industries and exclude gig workers, while Republicans are considering a more general tax break for older Americans to address Trump’s wish to not tax Social Security benefits.

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House Republicans are planning to include several of President Trump’s campaign promises in the first draft of the bill, which they hope to release soon.

May 2, 2025Updated 2:24 p.m. ET

Congressional Republicans are straining to incorporate several of President Trump’s novel tax plans into legislation.Pete Marovich for The New York Times

It was easy to miss, but last weekend President Trump floated a fundamental rewrite of the American tax code. In a social media post, and again in remarks to reporters, Mr. Trump suggested the United States could stop taxing income under $200,000 and instead rely on revenue from his extensive tariffs.

“It’ll take a little while before we do that, but we’re going to be cutting taxes, and it’s possible we’ll do a complete tax cut,” Mr. Trump told reporters on Sunday. “Because I think the tariffs will be enough to cut all of the income tax.”

The idea was news to Republicans on Capitol Hill already in the throes of translating Mr. Trump’s impulses for cutting taxes into law.

Senator Mike Crapo, a Republican from Idaho who leads the Finance Committee, said he had not heard from Mr. Trump or his staff about the proposal. “So I just don’t know what that’s referencing,” he said.

Likewise in the House, where Republicans are preparing to release their first stab at the tax bill in the coming days. “We aren’t having that discussion at all — it’s never come up,” Representative Lloyd Smucker, a Republican from Pennsylvania and a member of the Ways and Means committee, said of not collecting income taxes on earnings under $200,000.

Even if they take a pass on Mr. Trump’s most recent notion, congressional Republicans are straining to incorporate several of his previous tax proposals into the legislation. Those include not taxing tips, overtime pay or Social Security benefits, three of Mr. Trump’s campaign pledges that the White House has continued to push in his second term.

House Republicans are planning to include those ideas in their version of the bill, though their proposals are expected to be narrower than the blanket tax exemptions Mr. Trump has advertised, according to lawmakers, staff and lobbyists after the talks. Mr. Trump’s other ideas from the campaign trail, like allowing Americans to deduct the cost of buying a generator, seem very likely to fall by the way side.

While Republicans acknowledge they’ll now probably have to pass at least a couple of Mr. Trump’s tax proposals, some still grouse about them.

“My beef with what’s being proposed right now, there’s no guiding principle other than, ‘well, this is what President Trump promised on the campaign,’” said Senator Ron Johnson, a Republican from Wisconsin. “I understand the political message there, but let’s keep our tax code simple. I’d much rather lower the rates and keep it simple, rather than do another little special carve-out deal.”

As with all of the tax cuts Republicans are considering, a chief concern about Mr. Trump’s ideas is their cost. Without steps to curb their reach, the cost of the campaign promises could balloon into the trillions, according to estimates from the Committee for a Responsible Federal Budget.

Republicans are trying to limit how much they add to the deficit with the legislation, forcing a parallel and politically treacherous negotiation over cuts to spending on Medicaid and other programs that help low-income Americans. How far Republicans can cut taxes, and what Mr. Trump’s ideas look like in practice, will depend on how much in spending Republicans can ultimately agree to cut.

“I want to make sure that we get tax relief for hardworking Americans, which seems to be the focus of those, but there is a finite amount of money as well,” Senator Roger Marshall, a Republican from Kansas, said of Mr. Trump’s campaign promises. “So I think the big debate is: How much money does the House want to save?”

The leading proposal for not taxing tips — a bill crafted by Senator Ted Cruz, Republican of Texas, and Representative Vern Buchanan, Republican of Florida — would take a number of steps to limit the scope of the tax break.

Under their bill, Americans making more than a threshold that rises annually, set at $160,000 this year, would still have to pay taxes on their tipped income. People making under that limit would avoid income taxes only on the first $25,000 in tips they receive, though they would still owe payroll taxes. To prevent all types of workers from trying to claim the tax break, the bill tasks the Treasury Department with limiting it to people in industries that traditionally receive tips.

It also excludes gig workers from the tax break. Some companies, including the food-delivery service DoorDash, are lobbying for lawmakers to expand the tax break to independent contractors. The company has invited its drivers, who work as independent contractors rather than traditional employees, to write to members of Congress about the issue, with nearly 40,000 of them doing so already.

“This is a matter of basic fairness — tips are tips,” Max Rettig, global head of public policy at DoorDash, said in a statement.

While the details for not taxing tips are up in the air, Republicans expect their bill to ultimately include limitations similar to what Mr. Cruz and Mr. Buchanan had in their bill. Lawmakers said they were also trying to make sure the tax exemption for overtime pay was targeted toward middle-and-low income Americans — and would not create a gold rush in tax dodging for rich Americans. To hold down costs, Republicans may approve the tax breaks only for the duration of Mr. Trump’s term.

Mr. Trump’s wish to not tax Social Security benefits is more complicated. Republicans are using a special procedure called reconciliation to pass the tax legislation without Democratic support. Reconciliation requires lawmakers to follow a series of rules, one of which is that bills considered under the process cannot affect Social Security’s finances.

To work around that prohibition, House Republicans, rather than directly changing how Social Security benefits are taxed, are preparing to offer a more general tax break to older Americans. Americans over 65 are already eligible for a slightly larger standard deduction, and Republicans have considered a further expansion.

“If we can do a deduction that erases the tax burden that our seniors pay on their Social Security income, for people within a certain income threshold, it equates to the same thing,” said Representative Nicole Malliotakis, a New York Republican and member of the Ways and Means Committee. “It’s eliminating their tax burden.”

Andrew Duehren covers tax policy for The Times from Washington.“

Trump Strikes Peace Deal Between DRC and Rwanda—Right After Accepting Mi...

Exclusive-US Pushes Congo, Rwanda for Peace Accord and Billion-Dollar Mineral Deals

"DOHA (Reuters) -The U.S. is pushing Congo and Rwanda to sign a peace accord at the White House in about two months, accompanied by bilateral mineral deals that would bring billions of dollars of Western investment to the region, President Donald Trump's senior advisor for Africa told Reuters on Thursday.

"When we sign the peace agreement ... the minerals deal with the DRC (Democratic Republic of Congo) will be signed on that day, and then a similar package, but of a different size, will be signed on that day with Rwanda," Massad Boulos said in an interview in the Qatari capital, Doha.

A U.S.-backed peace accord would come amid an unprecedented advance by Rwandan-backed M23 rebels in Congo, the latest cycle of violence in a decades-long conflict, in a region rich in minerals including tantalum and gold. Rwanda denies backing the group.

Rwanda and Congo are expected to submit separate drafts of a peace agreement on Friday, according to a peace process agreed in Washington last week as part of diplomatic efforts to end violence in eastern Congo.

The Congolese government did not immediately respond to Reuters' request for comment.

In mid-May U.S. Secretary of State Marco Rubio will meet in Washington with the Rwandan and Congolese foreign ministers in an effort to agree on a final draft peace accord, Boulos said.

But before that accord can be signed, Boulos said, Rwanda and Congo must finalise bilateral economic agreements with Washington that will see U.S. and Western companies invest billions of dollars in Congolese mines and infrastructure projects to support mining in both countries including the processing of minerals in Rwanda.

"The (agreement) with the D.R.C. is at a much bigger scale, because it's a much bigger country and it has much more resources, but Rwanda also has a lot of resources and capacities and potential in the area of mining as well ... not just the upstream, but also midstream and downstream to processing and refining and trading," Boulos said.

Boulos said U.S. and Western companies have told Washington they would make multi-billon dollar investments in the region once the bilateral minerals deals are signed.

Boulos also said before the White House signing ceremony can go ahead, Washington expects both countries to address a number of security concerns. For example, Rwanda must pull its troops out of Congo and end its support for M23 rebels. Congo must address Rwanda's security concerns with militias such as the Democratic Forces for the Liberation of Rwanda (FDLR).

Boulos said that on Wednesday a follow-up committee was appointed to monitor both countries' progress towards the peace deal, which includes the U.S., Qatar, France and Togo, which is representing the African Union.

(Reporting by Andrew MillsEditing by Robbie Corey-Boulet and Peter Graff and Sandra Maler)

Copyright 2025 Thomson Reuters."

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A Flashing Economic Warning and a Sharp Political Jolt

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“The first-quarter GDP contraction, coupled with a decline in stock prices, poses a significant political challenge for President Trump. His aggressive trade war, characterized by steep tariffs, has created uncertainty among businesses and consumers, potentially leading to higher prices and supply chain disruptions. While Trump remains optimistic about negotiating trade deals and bringing manufacturing back to the U.S., the timing of his strategy’s impact and the potential for economic pain raise concerns about his handling of the economy.

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The report that the economy contracted in the first quarter underscored how much President Trump has at risk as he pursues an aggressive trade war.

Published April 30, 2025Updated May 1, 2025, 4:53 a.m. ET

The nation’s gross domestic product contracted in the first three months of the year, a reflection of the costs of Mr. Trump’s chaotic off-and-on approach to steep tariffs.Ashley Gilbertson for The New York Times

By David E. Sanger

David E. Sanger has covered six American presidencies and served as both a business and national security correspondent in Asia during a previous era of trade wars with the United States. He reported from Washington.

President Trump took office 101 days ago after a campaign in which voters bought his argument that he could skillfully manage the economy and that his policy prescriptions could both bolster growth and eradicate inflation.

So the news on Wednesday that the nation’s gross domestic product had contracted in the first three months of the year was a sharp political jolt as well as a blinking economic warning.

It came at the end of a quarter in which stock prices were down sharply, Wall Street’s worst performance at the start of a new presidential term since Gerald R. Ford tried to steer the country out of scandal and inflation 51 years ago. And it only added to the widespread uncertainty among businesses and consumers about what the rest of the year might hold as Mr. Trump pursues a trade war that is already choking off supply chains and threatening to push prices up and lead to shortages of critical components and products on shelves.

It is too soon to predict where the American economy is headed for the rest of the year, and Mr. Trump remains insistent that he will produce a flurry of trade deals that will bring manufacturing back to the United States and usher in a new age of prosperity.

But the first-quarter figures brought the political risks for him into focus. For Mr. Trump, what is at stake is a question of fundamental competence on an issue that he has always used to define himself.

If the report proves to be a harbinger of an extended slowdown or recession, the situation could become the economic analog of President Joseph R. Biden Jr.’s fumbled withdrawal from Afghanistan four years ago this summer. Mr. Biden’s job approval ratings never recovered from that early debacle. Nothing he did later — not the millions of jobs created, not the big legislative victories, not the rapid response to Russia’s invasion of Ukraine — could restore the sense among voters that he could be trusted to carry out the job with the skill they assumed he brought to it.

Mr. Trump stood in the Rose Garden on April 2, what he called “liberation day,” and rolled out a broad and punitive set of tariffs on trading partners. He has promised that other countries will come begging for a deal to roll back those levies and other tariffs he has imposed.

A substantial number of Americans appear skeptical. In a New York Times/Siena College poll last week, 55 percent disapproved of Mr. Trump’s handling of the economy, with 43 percent approving. About half of voters disapproved of Mr. Trump’s handling of trade.

Some of Mr. Trump’s economic advisers now recognize that the timing and execution of his tariff announcements could prove to be colossal mistakes, even if they applaud the underlying strategy. That is why, every few days, they are announcing new exceptions, most recently to relieve the pain for American carmakers. 

“On April 2, standing in arguably the most powerful place in the world, President Trump thought he was projecting American strength,” said Matthew P. Goodman, who runs the geoeconomics center at the Council on Foreign Relations and served under Presidents George W. Bush and Barack Obama. “But he discovered that trade is complicated, that you need to be more surgical, and he has had to tack back from that ever since.”

Mr. Trump, the billionaire real estate investor, has acknowledged that his strategy will bring some temporary pain to Americans, but seemed to argue on Wednesday that it would hardly be noticed by ordinary Americans, at least at toy stores.

“Well, maybe the children will have two dolls instead of 30 dolls, you know?” he said. “And maybe the two dolls will cost a couple of bucks more than they would normally.”

Whatever the cost of a Barbie, Mr. Trump is facing a fundamental timing problem. It will take years for the huge investments he predicts will flow into the United States to unfold and bring about the industrial renaissance he has promised. Building the most cutting-edge semiconductor fabrication plant, for example, can easily take five years.

“Those chips, those beautiful chips, make those suckers in the U.S.A.,” Mr. Trump said in the White House on Wednesday as he addressed executives and called out how much each had committed to spending on new facilities in the country.

It is too early to know how quickly those investments will take off, including Apple’s commitment, hailed again by Mr. Trump on Wednesday, to invest $500 billion, including a chunk of its manufacturing capability, in the United States over the next four years.

But the economic pain of the tariffs could start within months, with upward pressure on prices and shortages of both industrial and consumer products made abroad.

Much of Mr. Trump’s political problem lies in that disconnect. For many of the products Americans will be paying more for — especially Chinese-made products — there is no American alternative. And for many more, producing them in the United States may make no sense.

For all his downplaying of economic concerns, Mr. Trump is clearly sensitive to the prospect of being blamed for rising prices. When reports began to circulate this week that an Amazon subsidiary was thinking about posting the tariffs customers would be paying on every product, Mr. Trump called Jeff Bezos, Amazon’s founder, to complain.

Giving consumers a breakdown of how much tariffs are costing them, the White House said, would be a “hostile and political act.” Amazon quickly said it had never fully approved the plan, and that it would not go into effect.

But many business leaders are rattled by the environment, saying they have no way of projecting their earnings for the second quarter because the economic environment has never been more opaque.

“I keep telling them not to underestimate Donald Trump,” said David McIntosh, the president of the Club for Growth, the anti-tax advocacy group whose members almost unanimously cheered Mr. Trump’s return to office.

Mr. McIntosh said he is optimistic that Mr. Trump will be successful at negotiating down tariffs with Western-style democracies that rank among America’s biggest trading partners. “I run into a lot of executives who ask, ‘OK, how does Donald Trump do this?’ And my answer is to wrap their minds around ‘The Art of the Deal,’ that he is negotiator in chief.”

The way to calm the markets now, he said, is to “get Congress to get the tax cut bill done,” and to extend the tax cuts Mr. Trump got enacted in his first term.

Mr. McIntosh is pressing to expand that tax cut, specifically by permitting businesses to write off the cost of building new production facilities immediately, rather than depreciate those costs over decades.

Mr. Trump may score some early wins. Treasury Secretary Scott Bessent said on Tuesday that “we are very close on India.” He added that South Korea was “sending its A-team” to negotiate and that a deal was also possible soon with Japan. Mr. Trump said on Wednesday that Canada’s new prime minister, Mark Carney, had called him the day before and said “‘Let’s make a deal.’”

Perhaps so, but Mr. Carney also had this to say on Tuesday after winning the Canadian election: “Our old relationship with the United States, a relationship based on steadily increasing integration, is over. The system of open global trade anchored by the United States, a system that Canada has relied on since the Second World War, a system that, while not perfect, has helped deliver prosperity for a country for decades, is over.”

Mr. Carney has vowed to reduce Canada’s dependence on its huge neighbor, no easy assignment since bilateral trade amounts to about a fifth of the country’s economy. China, the most powerful player in Mr. Trump’s trade wars, has been pursuing a similar strategy. And its leader, Xi Jinping, has every incentive to make the next few months as politically painful for Mr. Trump as possible.

Mr. Xi has largely maintained radio silence since Mr. Trump announced an escalating set of tariffs on Chinese goods, settling at 145 percent after several angry moves and countermoves with Beijing. That rate is so high that it essentially freezes trade; already there are reports of freighters loaded with goods that are being turned around, so that importers do not have to pay those tariffs.

Mr. Trump’s bet is that Mr. Xi will blink first because the pain for the Chinese economy will be so great that he will have to strike an accommodation that will, over time, allow the United States to get back to something approaching normal. Mr. Xi is betting the opposite: that Mr. Trump has overreached, and can’t withstand bad G.D.P. numbers, rising inflation or plummeting polls.

Only one of them is right.

David E. Sanger covers the Trump administration and a range of national security issues. He has been a Times journalist for more than four decades and has written four books on foreign policy and national security challenges.“

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"It was photoshopped!" Trump falls for BLATANT conspiracy ON AIR

We are witnessing slow constitutional collapse in the US | Moira Donegan

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“The Trump administration’s disregard for checks and balances, coupled with a weakened Democratic Party and a judiciary increasingly ignored, suggests a constitutional collapse in the US. The erosion of Congress’s power, coupled with the judiciary’s overreach, has led to a dangerous concentration of power in the executive branch. The future of American democracy remains uncertain.

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It’s possible that later, when we know more about how the Trump regime reshapes the US and about how it ultimately comes to an end, we will look back at this moment in 2025 and conclude that we were already living under an autocracy. Checks on executive power seem to have all but vanished; the Trump administration is not acting like either the courts, the judiciary or the people have any prerogatives that they must respect.

Science is suffering: massive cuts to federal funding of research into medicine, climate change or anything that might include a word on a long list of banned ones – like “transition” – has decimated research, made the US a global laughingstock, and set the cause of human thriving back by years. The economy is in chaos, and the bribery is all but out in the open; it no longer seems to occur to many Americans that their politicians should not be on the take.

Immigrants appear to have lost the entitlement to due process, and the administration appears to be trying to deport as many of them as possible, paying smaller countries in the American sphere of influence to imprison them at forced labor camps from which they have no means of petitioning for their own release. Dissidents are being captured on the streets, kidnapped from their homes and arrested in the courtrooms they preside over as punishment for their speech. In light of all this, even without the benefit of hindsight, it is already becoming more difficult to speak of American “democracy” with a straight face.

Which is not to say that the developments of the past few months are unprecedented. In many ways, the first 100 days of Trump’s restoration are much like the first 100 of his initial term, in 2017: they are marked by a dizzying whirlwind of scandals, so numerous and preposterous as to be difficult to keep up with; by a cartoonish incompetence; and by public displays of aggression, cruelty, malice and dominance – be it over the federal workforce, his political rivals, foreign leaders, major institutions or the American people themselves.

But the second Trump term has also been more reckless, more focused and more frictionless in its work to consolidate power and cut off its political opposition. Long gone are the first-term administration staff members who sought to have some sort of moderating influence on Trump – the bureaucrats and institutionalists who thought they could slow him down with procedure, the more cynical Republican opportunists who thought they could bend his charisma to their own ends. What is left in Trumpworld are only the true believers, or those with the zeal of converts. They are no longer being slowed down from the inside.

Nor are they being opposed much from without. In 2017, when liberal Americans could still comfort themselves with the notion that Trump’s election was an anomaly, and in the early months of Trump’s first term, an uncharacteristic level of civic engagement and pride sprang up. The Women’s Marches attracted millions, and crowds swarmed the airports to lend support to travelers from the countries that Trump had targeted with his Muslim ban. But while the early resistance movement had tremendous amounts of feeling, it ultimately lacked direction: all that outrage did not find a useful place to go, and eventually it ebbed. It is hard to find hopefulness, now, among American liberals, and the Democratic party is showing few signs of life. On the Sunday talkshows last week, the Senate minority leader Chuck Schumer was asked about the administration’s attacks on institutions of higher education, which have lost federal funding as the regime attempts to restructure their curricula and faculties. Schumer replied that he had sent a strongly worded letter.

The United States has long been in a state of constitutional erosion. The role of Congress, the most representative of the federal branches, has been dwindling for decades, as gerrymandering and malapportionment have made its two chambers less competitive and more partisan, leading to permanent gridlock and dysfunction. Congress was once endowed with both the power of the purse and the sole power to declare war; it has largely handed the latter off to the executive, endowing the president with broad powers to use the US military abroad even without congressional approval and has not seemed interested in taking that power back.

Now, the Trump administration seems to have also usurped Congress’s power of the purse for the executive, declaring that the president may refuse to appropriate congressionally allocated funds by personal fiat. This is a profound constitutional change, one that shifts a massive power into the hands of one man; and again, Congress does not seem to be interested in this assault on its own prerogatives, with even many Democratic leaders seemingly preferring to have less power – and, hence, less responsibility.

For a long time, the decline of Congress meant the ascent of the federal judiciary, which appropriated large swaths of de facto policymaking authority to itself in light of congressional paralysis. This was already a degradation of democracy: the unelected judges came to have far too much influence over federal policy. And the judges were not the neutral, non-ideological referees that they claimed to be: many interpreted the law to be maximally deferential to the whims of the powerful and only minimally respectful to the rights of the less powerful.

The US supreme court, in particular, seemed to change its doctrine almost as whim based on whatever outcome would best serve conservative priorities. Indeed, the judiciary itself seemed more than willing to share in democratically unaccountable power with the president, so long as that president was a Republican: it declared last year that the executive was immune from almost all criminal prosecution, thereby carving out a category of person – Donald Trump – to whom federal criminal law mostly does not apply. But even this wildly partisan federal judiciary does not seem to be good enough for the restored Trump regime, which wants to eliminate all possibility that its agenda might be checked by the courts: JD Vance, the vice-president, has taken to complaining in public when judges rule against the administration, claiming, falsely, that they do not have the authority to check the executive. But such petulant little demonstrations may not long be necessary: increasingly, the Trump regime is simply ignoring judicial orders that it does not like.

Critics of the Trump administration have called this state of affairs a constitutional crisis. I have come to think of it more like a constitutional collapse: long vacant, the vestiges of the US’s democracy are crumbling to the ground, falling like an empty tent. We don’t yet know what, exactly, will be erected in its place.

• Moira Donegan is a Guardian US columnist“

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