Republican House Speaker Mike Johnson said on Wednesday that former President Trump could stimulate economic growth by loosening corporate regulations and expanding tax cuts to pay for the economic proposals of his presidential campaign.
“You have to have a growth-friendly economy, and to do that you need to use the tax code aggressively and reduce government regulations,” the Louisiana congressman said on CNBC's “Squawk Box.”
“If Republicans take leadership in the White House, the Senate and the House and unify the government, we're going to accelerate this. You're going to see massive regulatory reform,” he said.
Trump has proposed making the 2017 tax cuts permanent, further lowering the corporate tax rate, and completely eliminating federal income taxes on workers’ tips, overtime pay and Social Security benefits.
An August study by the nonpartisan Penn State Wharton School of Business Budget Modeling found that Trump's policy proposals could increase the federal deficit by about $5.8 trillion over the next 10 years.
That number does not include Trump's Sept. 12 proposal to exempt overtime pay from federal income taxes.
If applied only to wages currently designated as overtime, the proposal is expected to increase the total cost of Trump's proposals over the next decade by $866 billion, according to an analysis by the Yale Budget Lab. Tax exemptions for all hours worked over 40 hours per week are expected to cost $1.3 trillion over 10 years.
On Tuesday, Republican presidential candidates also proposed reconstruction State and local taxes (SALT) deduction, which he limited during his first term.
Louisiana House Speaker Mike Johnson speaks with reporters at the U.S. Capitol after the final vote of the week, Thursday, Sept. 12, 2024.
Tom Williams | Chongqing Roll Call Company | Getty Images
Johnson said on Wednesday he agreed with all of Trump's proposals. Paying for them will come down to a combination of corporate tax cuts, deregulation and energy policies to allow “the economy to thrive,” he said.
However, Trump has repeatedly said he wants to pay for his plan with proceeds from tough tariffs on all imports, with particularly high tariffs on Chinese imports.
During a debate with Vice President Kamala Harris last Tuesday, Trump touted the “billions” of dollars in revenue from his first-term tariffs, which nearly sparked a trade war with China.
On Wednesday, Johnson did not mention tariffs as a potential source of revenue. The Trump campaign did not immediately respond to CNBC's request for comment on Johnson's suggestions on how to pay for Trump's proposed tax cuts.
As of March 2024, Trump First phase tariffPresident Joe Biden retained and continued on many of these programs, resulting in higher taxes for the U.S. government totaling more than $233 billion, which are paid by U.S. consumers as suppliers pass them on, according to the Tax Foundation. cost.
Of this amount, $89 billion was generated during the Trump administration, and the remaining $144 billion was generated during the Biden administration.
The gap between the billions of dollars in tariffs imposed and the trillions that Trump's tax cuts are expected to cost is not lost on economists, who warn that if the plans are implemented as proposed, annual deficits and The national debt will explode.
Experts have also directly criticized Trump's sweeping tariff proposal, arguing that it could lead to higher consumer prices at a time when consumer prices have begun to cool from a 40-year inflation high in 2022.
Johnson's comments on Wednesday came hours before his six-month interim government funding bill faced a House vote, with the bill expected to fail due to lingering opposition within the Republican caucus. If Congress fails to pass an appropriations resolution by September 30, the government will enter a partial shutdown at 12:01 pm ET on October 1.
