With Trump’s ‘big, beautiful bill,’ Idaho’s Mike Crapo aims to make tax cuts permanent
WASHINGTON – Since taking office in January, President Donald Trump has wasted no time in remaking the federal government while largely sidelining the legislative branch, but there are some things only Congress can do.
After a relatively quiet few months on Capitol Hill, Republican lawmakers are gearing up to pass what the president has dubbed “one big, beautiful bill” to enact their agenda and extend the tax cuts they passed in 2017, the signature legislative accomplishment of Trump’s first term. And when it comes to tax policy, there may be no one in Congress more influential than Sen. Mike Crapo of Idaho.
The soft-spoken Republican has been in Congress since 1993 and in the Senate since 1999, joining the powerful Senate Finance Committee in 2005. He became the panel’s chairman in January, just in time to play a lead role in shaping the nation’s tax code for years to come.
In an interview in his office at the Capitol this week, Crapo said he believes the bill will “supercharge” businesses large and small, generate more jobs and higher wages and “make the United States economy the dominant economy, without question, in the globe for the foreseeable future.”
“I think it will have a very powerful legacy,” he said. “If we can get this done, it will probably be the most significant thing that we do in our service in Congress. That’s how strongly I feel about it.”
While the actual cost of the final legislation is still unclear, it is by any standard a massive package that aims to enact much of Trump’s domestic agenda in a single bill. The version currently working its way through the House would spend billions to crack down on illegal immigration and build the U.S.-Mexico border wall, repeal tax credits enacted under former President Joe Biden for electric vehicles and low-carbon energy, cut spending on Medicaid and food assistance, and enact a slew of new tax cuts.
Republicans control the “trifecta” of the House, Senate and White House, but the Senate filibuster rule – which requires a 60-vote supermajority to pass most legislation – and virtually unanimous Democratic opposition to Trump’s agenda leave the GOP with just one option. They must pass their bill through “budget reconciliation,” the same process Democrats used to enact their own tax-and-spending packages in 2021 and 2022.
The strictures of that arcane process and the GOP’s slim majorities in both chambers mean the party must balance new tax cuts – which reduce federal revenue – with reductions in spending on Medicaid and other politically touchy programs. Meanwhile, Crapo and his fellow Republican committee leaders have decided to use what critics call a budgetary gimmick to treat the permanent extension of the 2017 tax cuts, which expire at the end of this year, as if it costs nothing.
Before it gets to Crapo and his fellow senators, the bill needs to pass the House, where Speaker Mike Johnson, R-La., is trying to hold together the moderate and conservative wings of his conference. On Thursday, some key House Republicans said they won’t vote for the legislation unless it cuts more spending, putting the current iteration of the bill in peril.
Not getting some version of the “big, beautiful bill” to Trump’s desk, however, isn’t really an option for Republicans. Letting the 2017 tax cuts expire would mean a major tax hike on virtually all Americans. The average taxpayer in Idaho would see taxes rise in 2026 by more than $2,600, and more than $4,500 in Washington state, according to an analysis by the nonpartisan Tax Foundation.
But the 2017 tax cuts reduced revenue, expanding the federal budget deficit and adding about $1.9 trillion to the national debt over 10 years, according to an analysis by the Committee for a Responsible Federal Budget, a nonpartisan group that advocates for deficit reduction. Democrats argue that taxes on large corporations and the richest Americans should return to higher rates, but they have little leverage to shape the new tax measures.
Kyle Pomerleau, a tax policy expert at the American Enterprise Institute, a conservative think tank, said Congress could let the tax cuts expire and renew them retroactively next year, since taxpayers wouldn’t have to file those taxes until April 2027. But he noted that uncertainty over future taxes could slow the economy, and Republicans are eager to enact Trump’s domestic agenda and keep the promises they made to voters.
Crapo noted that a more pressing deadline is coming sometime this summer when Congress needs to raise the debt ceiling to allow the government to borrow more money. In a letter on May 9, Treasury Secretary Scott Bessent told lawmakers they need to increase that borrowing limit by mid-July to avoid a default on the nation’s debts, which could have catastrophic consequences on the U.S. and global economies.
“I’m not one of those who sets deadlines or even targets,” Crapo said. “My objective is to work as quickly as we can.”
A simple philosophy
Crapo said his leadership of the Finance Committee, like nearly everything he does in Congress, is guided by a simple philosophy.
“I believe in limited government, maximizing personal freedom and a free-market system,” he said. “Tax policy can really grow government and expand the impact of government in people’s lives, as well as reduce freedoms, if it’s not done properly. So I think that we should focus on those very simple and direct policies.”
The Finance Committee’s vast jurisdiction covers the federal tax code, international trade, tariffs, Social Security, Medicare and Medicaid.
“It’s virtually 95% of all revenue to the country, and about 60 or 65% of all spending,” Crapo said. “So it’s the committee with the most critical issues facing Americans on all sorts of different fronts.”
Crapo has a long relationship with the committee’s top Democrat, Sen. Ron Wyden of Oregon, and the two men have worked together on bipartisan legislation over the years. But when it comes to the Republicans’ reconciliation bill, Wyden has been a staunch critic.
“Republicans have defied the will of the American public by proposing the largest Medicaid cut in history,” Wyden said in a statement on Monday after the initial bill was released. “These cuts are going to do nothing to tackle waste, fraud and abuse – they are simply going to harm American kids, seniors, those with disabilities, and working families.”
Crapo said he and his staff have been working closely with their House counterparts for “eight or 10 months” on the reconciliation bill, so they can move quickly to reconcile their different versions and send a bill to Trump’s desk.
“That being said, we will have different bills,” he said. “There are different groups in the House and the Senate, and they will dictate different policies and approaches to different things, but we are doing our very best to stay on the same page.”
While he declined to detail what he expects to happen in the House, Crapo said Republicans in both chambers have been working on the same framework.
Their top priority is to extend the Tax Cuts and Jobs Act of 2017, which is largely set to expire on December 31. But unlike the 2017 tax cuts, which Republicans made temporary to limit their total cost, Crapo wants to make the cuts permanent.
The rest of their framework, the senator said, involves stitching together “literally dozens and dozens and dozens” of separate priorities for members of the House and the Senate and for Trump himself, who campaigned on promises to eliminate federal taxes on tips, overtime pay and Social Security benefits.
Some of those measures have bipartisan support, Crapo said, such as allowing taxpayers to claim charitable deductions in addition to the standard deduction, expanding low-income housing tax credits and creating more “opportunity zones” designed to incentivize investment and business growth in low-income communities.
Asked about his opinion on Trump’s pledge to eliminate tax on tips, Crapo didn’t answer directly. He also declined to weigh in on a provision in the House bill that would dramatically raise taxes on university endowments – by as much as 1,400% for Harvard University, where Crapo earned a law degree.
He said that while he personally focuses on “pro-growth policy and permanence,” the president is the one who signs the bill into law.
The senator said Trump’s actions aimed at reducing government spending – including the flurry of layoffs and cuts that took place under Trump adviser Elon Musk’s leadership of the Department of Government Efficiency – could transform the nation’s budget outlook.
“Regulatory reform is probably as powerful as tax policy in reducing spending,” Crapo said. “The president is a full part of this negotiation, and because of that, I believe that tax on tips and probably several more of his proposals need to be included. It all depends on the available dollars that we have.”
How many dollars are available for those new tax cuts depends on how much spending Republicans can cut, since party leaders have promised to offset lost revenue that isn’t related to extending the 2017 tax cuts.
The most controversial of those spending cuts would come from Medicaid, the government health insurance program for low-income Americans, children, pregnant women, new mothers and people with disabilities. According to a preliminary estimate from the nonpartisan Congressional Budget Office, the proposed cuts would result in 8.6 million people losing Medicaid coverage.
“President Trump has long said his policy is he won’t sign the bill if this reduces benefits,” Crapo said. “It’s got to be focused on waste, fraud and abuse, and that’s what we’re trying to do.”
The senator conceded that some people won’t get to stay on Medicaid, but he said the GOP policies are aimed at removing unauthorized immigrants, able-bodied people who choose not to work and others who shouldn’t be on the rolls. Democrats and other critics say the measures will create a tangle of red tape that results in people who qualify for Medicaid losing their health care coverage.
In apparent recognition of the political third rail that cutting Medicaid represents, House Republicans designed their new work requirements to take effect only in 2029. That would delay the potential political fallout – along with any cost savings – until after Trump’s presidency.
‘I’m extremely concerned about the national debt’
Amid a reckoning over the federal deficit in 2010, Crapo served on the bipartisan National Commission on Fiscal Responsibility and Reform, better known as Simpson-Bowles after the two men who chaired it. The Idaho senator was then part of the so-called Gang of Six, another bipartisan group of senators who proposed a compromise plan to reduce the deficit that won the support of then-President Barack Obama.
Crapo, whose website prominently displays the ever-growing national debt, said he still worries about the total sum that the U.S. government has borrowed, which now exceeds $36 trillion. But he insisted that the GOP bill won’t add to that debt, despite an analysis released Wednesday by the Committee for a Responsible Federal Budget that estimates the legislation would add $3.3 trillion to the debt over 10 years.
“I’m extremely concerned about the national debt, and I completely reject the argument that our bill is going to increase the deficit,” Crapo said. “Current policy is not changing. It’s not increasing the deficit. It is not reducing our tax revenue.”
When Republicans began the budget reconciliation process, they decided to treat the 2017 tax cuts – which they designed to expire after eight years – as though extending them permanently has no additional cost. The Wall Street Journal’s editorial board and the U.S. Chamber of Commerce have cheered that approach, but tax policy experts across the political spectrum say Crapo and his fellow Republicans are using a disingenuous accounting trick to justify tax cuts without offsetting them.
“The Senate budget reconciliation instructions allow for up to $5.8 trillion in additional borrowing,” Pomerleau said. “It’s not obvious that it’s that much, because the Senate is using what I’d say is a budget gimmick that kind of masks the overall cost by pretending extending the tax the individual income tax cuts is costless.”
Jessica Riedl, a senior fellow at the Manhattan Institute and a former Republican staffer on the Senate Finance Committee, said taxpayers “should be very concerned that Republicans are about to pass one of the most expensive bills in American history,” pointing out that the House bill would cost more than the 2017 tax cuts, two massive pandemic relief bills and the 2021 bipartisan infrastructure law combined.
“Interest on the debt has tripled over the past three years to become the second biggest item in the budget,” Riedl added. “By passing more tax cuts without pay-fors, the American people are going to find an increasing share of their taxes just paying interest on the debt, rather than buying any benefits. That should concern everybody.”
Crapo said he believes tax policy should be treated as if it will continue indefinitely because businesspeople around the country tell him they need to know how to plan for future taxes.
“I personally think that tax policy should all be on current policy baseline,” Crapo said. “And I believe that spending policy should almost entirely be on current law baseline, but that’s just because I believe that if you put spending on autopilot, then it’s never reviewed. And I guess one could say the same thing about tax policy, but I believe we need certainty in the tax code.”
Bobby Kogan, a budget policy expert at the left-wing Center for American Progress and a former budget adviser in the Biden administration, said that what Crapo seems to want isn’t to treat all taxes as current policy but rather to switch between scoring methods to hide the true cost of a bill.
“It’s pretty shocking to hear a member of Congress explicitly say that he wants special treatment for things he likes but not for things he doesn’t like,” Kogan said. “Budget process should be policy- and outcome-neutral. Setting up a system whose purpose is to facilitate specific outcomes is anti-democratic.”
Another variable, Crapo argues, is that the Republicans’ bill will spur enough economic growth to offset its impact to the deficit by generating additional revenue.
“When I say we’re not going to have a deficit, I am counting the fact that by passing this legislation, we will generate significant growth in the economy and increased revenue to the Treasury that will cover it,” he said. “And that revenue makes it so that it’s deficit neutral.”
Ben Ritz, a tax policy expert at the center-left Progressive Policy Institute, said that several independent analyses – by the Congressional Budget Office, the Yale Budget Lab and the Penn-Wharton Budget Model – project far less economic growth than would be needed to have such an effect. Even the House Republicans’ budget resolution, he pointed out, claims just $2.5 trillion in additional revenue from economic growth.
“Even this figure, which has no basis in reality, isn’t enough to cover the cost of making expiring tax cuts permanent,” Ritz said.
Crapo painted a picture of a future in which America’s economy gets back on the track it was on before the COVID-19 pandemic and the trillions in debt-financed spending under both Trump and Biden. Whether that comes to pass, and exactly what the Republicans’ tax bill looks like, remain to be seen.
“That economy would come back and would be stabilized,” he said. “We’re putting the gas back in the engine of this bill, putting the powerhouses back in place and letting us get back onto that track that we did prove out in 2017.”