That’s the question I was asked today. 12 Ideas.
A Spending Conversation on X
What Do I Propose?
The short answer is fiscal discipline by Republicans and better tax code and trade policy.
Currently, the inevitable Congressional result is more of this for more of that. Democrats and Republicans are both in on it.
Mish Top 12 Ideas
Proposal #1: Stick to Medicaid guns. Repeal the Obama handouts to states 100 percent. Cut Medicaid funding by 25 percent. Give states a block grant. Watch the states clean up Medicaid fraud fast.
Proposal #2: Cut military spending by 25 percent. Give the money to the Pentagon as a block grant with the note “Spend it wisely”. Stupid programs would be cancelled. Unneeded bases would be canceled. Pet projects like the Golden Dome would never get started. And might I suggest we do not need more tanks because neither Canada or Mexico will attack us, and I don’t want the US to attack them either. We can close bases in Europe too, or make Europe pay us to defend them.
Proposal #3: Dramatically reduce the tax code by slashing all deductions. SALT gone. Charitable deductions gone. Mortgage interest (phase out over 10 years). Note that Trump is adding deductions and making the code more complex while moaning about the number of pages in the tax code and wanting to get rid of the IRS. The way to reduce the need for the IRS is to simplify the tax code, not make it more complex.
Proposal #4: End child tax credits and earned income credits, Make able bodied people work. To encourage people to work instead of receiving tax credits, make the first $35,000 in income tax-free for everyone.
Proposal #5: End all tariffs and subsidies except where genuinely needed for national security. Steel, autos, movies do not qualify. Microchips and rare earth elements would.
Proposal #6: Re-enact the USMCA, apologize to Canada and Mexico, join the TPP now called the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Following Trump’s withdrawal of TPP, the remaining members struck a new deal. These countries now have easier access to each other’s markets than what the US enjoys. I will do a separate post on this.
Proposal #7: SNAP (food stamp) modifications – No snacks, candy, chips, soda, on food stamps. Instead, to promote cleanliness, allow soap and cleaning supplies.
Proposal #8: Lower the corporate tax rate to 10 percent but make it 20 percent on income earned overseas. Some manufacturing will return to the US and all of the games played by drug manufacturers including the entire trade deficit with Ireland related to drug production (a massive $86 billion) would immediately return to the US. I will also discuss this in a separate post.
Proposal #9: Allow immediate corporate writeoffs of expenses, but only for expansion in the United States.
Proposal #10: Lower the individual tax rate and set the automatic deduction at $35,000. To make up for revenue lost, have a modest VAT but no tax on food, medicine, or shelter, the latter up to a base rate indexed for inflation. I have previously proposed a national sale tax, exempting food and medicine, but John Mauldin and Erica York at the Tax Foundation convinced me a VAT was a better idea.
Proposal #11: Heavily tax all executive stock options and pay over $1,000,000 with more of a focus on options and free shares that constitute shareholder dilution.
Proposal #12: Balance all of the above proposals to the required levels to stabilize debt levels while ensuring the middle class gets the biggest benefit from tax policy changes. I am willing to phase all of this in over time, if necessary, to reduce the likelihood of economic shocks, as long as it gets done.
Five-Point Synopsis
- I dramatically simplify the tax code, eliminating much of the need for the IRS.
- I encourage people to work by changing how Medicaid works, by tax code, and elimination of credits.
- I encourage business expansion in the United States via expense writeoffs and a lower corporate tax rate in the US than overseas.
- I reduce trade barriers by rejoining USMCA and joining the TPP replacement.
- I raise revenue at the extreme high end while lowering taxes for the middle class.
I am open for discussion and welcome other ideas. Trump is seriously on the wrong path on most of this.
Related Posts
May 22, 2025: Scott Bessent Has a 3 Percent Deficit Target, How’s He Doing?
Let’s check in on the Treasury Secretary’s 3-3-3 plan.
May 22, 2025: The One Big, Irresponsible, Deficit-Increasing Bill Passes the House
Did anyone really think Republicans would be fiscally responsible?
May 23, 2025: Trump Commands Apple to Make iPhones in the US or Pay 25 Percent Tariff
An increasingly erratic Trump is clueless about what it would take to move iPhones production to the US.
May 25, 2025: Trump Complains About the EU’s VAT, What’s the Real Story?
Do value added taxes (VATs) constitute trade barriers?
Addendum
I failed to mention how to get this done.
It would have to start with Trump. He would have to hold a fireside chat with the nation, explaining why he is doing what he is doing. He needs to convince the middle class they would be better off and why.
By cutting defense spending and Medicaid, he would show Democrats it’s not all one sided. So does exempting the first $35,000 in income.
Instead we have the same old same old which is more spending on this in return for more spending on that plus constant bickering.
Trump has show zero leadership on reducing the deficit.
Addendum II
John Mauldin replied
I like all but the taxing exec pay. Just philosophical on that issue. I would have a MUCH higher VAT and get rid of SS taxes. That would really help the lower income working class.
And thanks for the shoutout.
John Mauldin
Addendum III
I was questioned about steel not being a national security issue. What I meant was a security issue requiring tariffs or subsidies, which I have written about before.
We make steel and can get it from Canada, Japan, and the EU, all allies. I supported the purchase of US Steel by Nippon. Oddly, letting Cleveland Cliffs buy US Steel would have created a US monopoly, making steel a security issue where none would exist if Nippon bought US steel.
For discission please see Biden and Trump are Both Wrong on US Steel Nippon Merger
This post originated on MishTalk.Com
Thanks for Tuning In!
Mish
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