Donald Trump's Ambitious Tax Cuts and Spending Reductions

Introduction

President Donald Trump's presidential actions have spanned from significant to seemingly trivial. While he has proposed slashing government spending on various programs, he has also pushed for cost-saving measures, such as discontinuing penny production. These seemingly disparate initiatives have a unifying goal: financing extensive tax cuts.

Financing Tax Cuts

Extending the current tax cuts set to expire in 2025 and enacting new ones is a top priority for Trump. However, this requires substantial budgetary savings.

The national debt has reached $36 trillion, with a large portion held by the public. This has raised concerns in financial markets about the sustainability of the debt.

To address these concerns, Trump has proposed major spending cuts.

Cost-Cutting Measures

Elon Musk's cost-cutting spree at Twitter serves as a model for Trump's proposed approach.

The plan involves significantly downsizing the government, a libertarian approach favored by Trump supporters such as tech billionaires Peter Thiel and Marc Andreessen.

Killing the penny would save only a small amount of money, but it symbolizes Trump's attention to every penny of taxpayer funds.

Other Targets for Spending Cuts

Larger targets for spending cuts include:

* Shutting down the US Agency for International Development
* Capping health research grants

Tesla CEO Elon Musk and his team are evaluating federal agency budgets to identify potential savings.

Tariff Revenue

Trump is also looking to increase tax revenue through tariffs. In 2024, the US collected $83 billion from customs duties. Trump aims to significantly expand this revenue, claiming it is a tax paid by foreign entities.

Legal Challenges

Many of Trump's spending cut plans require congressional authorization, which may face legal challenges.

However, Trump can independently abolish the penny and impose tariffs.

Libertarian Experiment

Trump's cost-cutting efforts align with the libertarian philosophy that advocates for smaller government and lower taxes.

While some Republicans support this approach, others may be hesitant to cut services or benefits for their constituents.

The success of Trump's libertarian experiment remains to be seen.