“The key to fiscal sanity is not just making tax cuts permanent but doing so in a fiscally responsible way”
U.S. Senator Steve Daines today spoke with President Trump’s nominee for Deputy Secretary of the Treasury Michael Faulkender in the Senate Finance Committee about the importance of establishing permanent tax cuts for hard-working Americans and unleashing the economy.
Watch their full exchange HERE.
Daines asked Faulkender how permanency in the tax code will benefit American taxpayers:
Daines: Mr. Faulkner, good to have you here this morning. Congratulations on your nomination and your willingness to serve our great country. I really appreciate our conversation we had in my office yesterday, discussing the upcoming tax cliff and the responsibility we have to avoid a $4.6 trillion tax increase. In fact, you said it well on the issue of permanence. You said, we don’t want to defer a $4.6 trillion tax increase by our actions. We want to permanently make sure it doesn’t happen. It’s imperative we succeed in passing this bill. And as you said in our conversation, permanently passing this bill and preventing this tax hike on our small businesses and families is absolutely one of the most important missions we have going forward. President Trump did great things during his last term. This Congress, we will again deliver on his promises to the American people and cement his legacy by making this historic tax cut permanent. I’ve been vocal about the need for clarity in the tax code and proudly led a letter alongside the chairman of this committee, as well as our majority leader John Thune and six other members of this committee saying just that. After the crushing inflation of the last administration, Montanans need assurance that we’ll fight to keep their hard-earned dollars in their pockets and not the government’s. Mr. Falkender, how does permanence in the tax code and removing that uncertainty going forward, grow our economy, and actually benefit taxpayers?
Faulkender: …Just as we made the corporate income tax rate permanent in the 2017 legislation, it’s important to come back and make permanent these rates and the pass-through deduction that are set to expire at the end of this year.
Daines and Faulkender discussed how cutting spending will unleash the economy:
Daines: Mr. Faulkender, during our discussion, one thing that stuck out to me is you quoted one of my heroes as well who’s Milton Friedman. And The Milton Friedman quote is this. ‘Keep your eye on one thing and one thing only: how much the government is spending, because that’s the true tax.’ It’s well said. The key to fiscal sanity is not just making tax cuts permanent but doing so in a fiscally responsible way. We have a once in a decade opportunity, perhaps once in a generation opportunity to bring back economic greatness, which is why I believe we need to be as passionate about cutting spending as we are at preventing massive tax increase. I’m working with my colleagues here in the Senate and the House to deliver just that. After the passage of the Tax Cuts and Jobs Act of ’17, we saw one of the greatest economies in the history of our country. And then of course we had the black swan event of COVID. We cut taxes, wages increased, household income rose by $5,000. It was across every demographic. Minorities benefited greatly from this. And revenues hit an all-time high, tax revenues. Unfortunately, the Democrats’ reckless tax and spend agenda wiped out many of those gains. How would cutting spending unleash the American economy?
Faulkender: As your comments suggest, if you look at the fiscal challenge that we have, over the 50 years prior to the pandemic, federal spending averaged just over 20 percent of gross domestic product. Since then, it’s been approximately 23 percent and remains in that range. That spending has the potential to crowd out private investment, those larger deficits, remove capital that could instead be available for private enterprise and small businesses. And that’s why as Secretary Bessent has discussed, if you look at the government and the government adjacent sectors, they have done well over the last couple of years. But the purely private sector, they have been basically stagnant over the last couple of years. Part of that possibly is arising from the fact that all of this spending is crowding out capital that could be going into the private sector.