House Republicans are pushing for tax cuts but face a tough dilemma—deciding what to trim. They are setting a $4.5 trillion cap on the tax cut package, but even that may not be enough to fulfill all of former President Donald Trump’s promises.
The primary goal is to extend key provisions from the 2017 tax cuts, such as the larger standard deduction and child tax credit, which expire this year. Maintaining these would cost about $4 trillion over the next decade. Additional business tax breaks, including deductions for research and development and business interest expenses, would consume most of the remaining budget, leaving little room for new initiatives.
Trump has proposed several costly measures, including eliminating taxes on tips ($100 billion), overtime pay (at least $250 billion), and Social Security income ($550 billion). He also wants tax breaks for domestic manufacturers. Meanwhile, Republicans from high-tax states are pushing to lift the $10,000 cap on state and local tax deductions, which could add up to $1 trillion to the bill.
To stay within budget, Republicans might repeal clean energy subsidies or opt for short-term extensions of tax cuts, hoping a future Congress will make them permanent. However, short-term fixes can create economic uncertainty and limit growth.
A group of Senate Republicans is urging permanent extensions of the 2017 tax cuts, but reconciliation rules restrict deficit increases beyond 10 years. Some propose changing budget rules to make tax cuts appear cost-neutral, but fiscal conservatives remain skeptical. House Republicans must now balance ambitious tax cuts with fiscal realities, a challenge that could define their legislative success.
rewrite this news: Democrats Fear They Are Missing the Moment to Remake the Party
As President Trump steamrolls over their priorities, Democrats say they could miss the opportunity to learn lessons from their defeat and undertake needed reform.
Several dozen Democratic political operatives had just gathered to discuss the party’s future at an upscale resort nestled along the Potomac River when the very first speaker unleashed a blistering address about the “hard truths” they needed to confront.
“Now is not the time for taking refuge in comforting platitudes,” said Jonathan Cowan, the president of the centrist group Third Way, which had organized the private event last week. “Now is not the time to bet on the other guys” messing up “so badly that we win simply by not being them.”
The remark, with a much coarser term than “messing,” reflected a deepening distress, shared by a wide range of Democratic strategists, lawmakers and donors, that the party is at risk of missing a critical window for introspection and reform in the aftermath of the devastating 2024 election.
The fear is that Democrats are squandering one of the few silver linings of losing: the chance to learn lessons from defeat.
“You have a come-to-Jesus moment as a team — and that’s very useful,” said Maurice Mitchell, the national director of Working Families Party.
Unless, of course, that moment doesn’t come about.
The fretting spans the party’s ideological spectrum, from the Third Way moderates who met at the Lansdowne Resort in Leesburg, Va., to former supporters of Senator Bernie Sanders’s left-wing presidential bids. All are eager to rearrange the party more to their ideological liking, though their views of how to fix what went wrong are often diametrically opposed.
There is almost universal agreement on a diagnosis of the party’s problem with the working class. The question is if there will be any consensus on a treatment plan.
Some favor shedding unpopular policies or reprioritizing new ones. Others focus on improving the messages deployed to sell those policies to voters — or on how to deliver the party’s message, whatever it turns out to be, in a fractured media environment. Already, a blizzard of organizations are holding focus groups, conducting polls and studying voting patterns to assess the severity of the situation, especially the party’s worrisome decline with groups where it once held sizable advantages, like younger voters and Latinos.
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The pressure for Democrats to push back on President Trump’s expansive agenda further complicates any prospect of a unified, rigorous “autopsy” like the one Republicans conducted in 2012. Opposing Mr. Trump has been the Democratic Party’s greatest unifying force for nearly a decade. But the 2024 election showed that its coalition of resistance is no longer a majority.
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Two men in suits standing beside a row of American flags.
Preparations at the Capitol last week before President Trump’s national prayer breakfast. Mr. Trump has unified Democrats for a decade.Credit…Jason Andrew for The New York Times
Representative Ro Khanna of California, who was a co-chair of the 2020 Sanders campaign, framed the party’s choice in terms of its ambitions: settle for simply being the opposition, and hope that is enough to win the House narrowly in 2026, or boldly reinvent the party altogether.
“If you’re just a tactician, then you say, ‘OK, let them overreach,’” Mr. Khanna said in an interview. “If the Democrats aspire to more than just getting back control, if we actually aspire to building a governing majority and trying to solve the fundamental divides in this country, and the fundamental anger, then we need to recognize we have a lot of work to do.”
Whatever tensions there are between aggressively battling back against Mr. Trump now and a broader rebranding, the reality is that how the current fight unfolds is most likely the first chapter in the new party’s story.
For disillusioned Democrats, too much of the post-election focus has been on tactics, and too much time has been spent second-guessing past decisions — Should former President Joseph R. Biden Jr. have dropped out sooner? Should former Vice President Kamala Harris have gone on Joe Rogan’s podcast? — when what is needed is a deeper discussion of whether the party’s policies and priorities are repelling voters.
A recent Quinnipiac University poll showed favorable views of the Democratic Party at their lowest level ever, and favorable views of the Republican Party at their highest.
“Everyone has their pet theory for why the Democratic Party is in crisis,” said Waleed Shahid, a progressive strategist, who urged leaders to sit with rank-and-file workers to better understand their anger and aspirations. “But at some point, Democratic leaders need to break the decorum and be honest with themselves: Something is deeply wrong, and pretending otherwise won’t stop voters from noticing.”
The new chairman of the Democratic National Committee, Ken Martin, has emerged as a surprising flashpoint, after he said, days before his Feb. 1 election, that “anyone saying we need to start over with a new message is wrong.”
The line has ricocheted through the party, leaving many Democrats shaking their heads in dismay and concluding that Mr. Martin will defend the status quo.
At the Third Way event, Mr. Cowan said he had torn up the opening of his speech specifically to address that line from Mr. Martin.
He made an impassioned plea for a clean break from the current state of affairs: “The D next to a candidate’s name too often stands for disqualified, demoralized, distrusted and disconnected.”
In an interview, Mr. Martin said his view was being badly misinterpreted. “Clearly we have a brand and a perception problem,” he said, adding that he had ordered up his own post-election review.
Mr. Martin contended the problem was not the Democratic agenda but how Democrats sell their popular positions.
“While we don’t need a wholesale abandonment of the issues, we do need to focus on the things that people desperately care about and we haven’t, because we’ve allowed ourselves to message to smaller and smaller parts of our coalition,” he said.
“Anyone who would suggest I am not a change agent hasn’t been listening,” he added.
Still, some prominent Democrats have lost faith in the party’s resolve to pinpoint its problems, let alone solve them.
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Ken Martin, wearing a dark suit and blue tie, speaks at a lectern that says Democratic National Committee. Behind him are three people clapping and cheering, with American flags behind them.
“While we don’t need a wholesale abandonment of the issues, we do need to focus on the things that people desperately care about and we haven’t,” said Ken Martin, the Democrats’ new chair.Credit…Allison Robbert for The New York Times
“That whole group of people that they elected to the D.N.C., to me, means they have learned absolutely nothing in the shellacking of Kamala Harris,” said John Morgan, a major Democratic contributor from Florida who has often backed more moderate candidates.
Mr. Morgan, who said his personal-injury law firm spent around $375 million last year advertising its brand, acknowledged that Democrats, who would need to flip three seats to win a majority in 2026, might be able to do so without a major overhaul of the party’s image, assuming the usual midterm backlash against the party in power.
But he urged the party to seek new ways to appeal to a broader swath of Americans — and warned that without a rebranding they would continue to turn off the swing voters needed to win.
“When I think ‘progressive,’ I think of the ‘Squad,’” Mr. Morgan said, referring to the group of left-wing House members. “And when I think of ‘the Squad,’ I think of socialism, and when I think of socialism, I think of communism, and when I think of communism, I think of the downfall of countries.”
The concern is at the grass-roots level, too, said Yasmin Radjy, executive director of Swing Left, which helps organize Democratic volunteers and donors. She said “the endless freaking fund-raising emails and texts” from candidates, committees and allied groups come off as “remarkably tone-deaf and anger-inducing in this moment.”
For now, even rank-and-file Democratic voters appear torn on what direction the party should take.
A poll last month by the Democratic-aligned group Data for Progress found that likely Democratic voters were evenly divided between preferring a party that “focuses on pragmatic solutions to appeal to a broader electorate” or one that “champions bold progressive populist policies to address major challenges.”
And a Gallup poll released Thursday found a jump in the share of Democrats who favor a more moderate party compared to four years ago, to 45 percent — but they were still outnumbered by the share of Democrats who wanted the party to become more liberal or to stay the same (a combined 51 percent).
But many argue that fresh thinking is sorely needed.
Jesse Ferguson, a veteran Democratic strategist, lamented that many in the party, when discussing how to solve its problems, continued to think in terms of holding onto the same political coalition that elected Barack Obama in 2008.
“Our strategy can no longer be about winning back something that existed at the time the very first iPhone came on the market,” he said. “When you stop growing, you start dying.”
He also warned that Democratic victories in special elections this year, or even in the 2026 midterm elections, could paper over problems with vast numbers of less-engaged voters, who tend to vote only in presidential elections.
“Victory in the midterms is vital,” Mr. Ferguson said. “But it’s not validation that we can win in 2028.”