Good economics leads to good politics.
Plenty of congratulations all the way around, as House Republicans defied conventional wisdom last night and passed a “one big beautiful bill” budget resolution — including, importantly, the Trump tax cuts.
Speaker Johnson and the majority leader, Congressman Steve Scalise, defied Beltway wisdom, and also Senate Republican wisdom, by getting a bill through quickly.
The Budget chairman, Congressman Jodey Arrington, deserves a lot of credit for having written the bill. President Trump gets some credit for making a couple of key phone calls. And Secretary Bessent gets credit for shepherding the bill through the House.
Interestingly, not a single House Democrat voted for the bill, which means the entire House Democratic conference favors a $4 trillion plus tax hike.
Nice going. Almost ensures their minority status — for quite some time.
So now the House and Senate have to get together, and hammer out a compromise — and a group called the ‘Big 6’ started a meeting on reconciliation today.
That group includes the tax-writing chairmen, Senator Crapo and Congressman Jason Smith; the two leaders, Senator Thune and Mr. Johnson; and Mr. Trump’s representatives, Mr. Bessent and the National Economic Council’s director, Kevin Hassett.
One key point is whether all the Trump tax cuts, both version 1.0 from 2017 and version 2.0 from the campaign last year, will be made permanent.
Earlier today, I spoke to a Senate Republican leader who would like all the tax cuts made permanent, and he believes most of his conferees agree.
Whether they will conform to Mr. Crapo’s current policy baseline and net out to a neutral deficit impact remains to be seen. But I think the best possible outcome is Crapo’s current policy baseline approach, and making all the tax cuts permanent.
Also noteworthy is whether DOGE budget cuts, DOGE dividend checks, and DOGE debt reduction will be part of the overall package. And then surely there will be various budget-cutting programs that will get modified around the edges, including the President’s crackdown on fraud.
But here’s the key point: Mr. Johnson’s House victory ties together all of President Trump’s policy requests.
Lower taxes. Lower spending. Fewer regulations. More energy production. Tough border control. And a strong national defense.
And the House will now continue to drive the process.
One big beautiful bill is what Mr. Trump always wanted.
Another point to consider is that this is fundamentally a pro-growth policy mix that will fatten the wallets of the working-class coalition put together by Mr. Trump during his incredibly successful 2024 campaign.
And with Mr. Johnson’s great victory last night, this whole budget package could conceivably be concluded by Memorial Day, which would be a world record.
Not only will Mr. Trump be able to tout ‘promises made, promises kept’ — but his early-term high-velocity Presidential management could guarantee Republican majorities in the off-year 2026 election, as well.
I believe, as my first boss Ronald Reagan used to argue, that good economics leads to good politics.
The Gipper sure had a successful time of it.
Looks like Mr. Trump is following in the same path of economic and political abundance.
From Mr. Kudlow’s broadcast on Fox Business Network.
