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Unleash Prosperity Hotline
Issue #1257
05/05/2025
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1) Unsalt the Tax Code

There is a debate inside the Republican House about how high the IRS tax deduction should be for state and local taxes paid (SALT).

Regular readers of the HOTLINE know there is no economic rationale for allowing taxpayers who freely choose to live in high-tax blue states and cities to deduct these taxes. The correct tax deduction number is zero - which should be accompanied by lowering federal tax rates.

The current law allows a deduction of up to $10,000, and the leadership has agreed to raise that amount to $20k. We can live with that compromise. Since 91% of tax filers don't itemize their deductions, the only people who benefit from raising the SALT cap are the very rich.

But some of the blue state Republicans now are holding out for a $50,000 or $100,000 deduction amount. They are threatening to vote "no" on the tax bill even though allowing the repeal of the 2017 tax cut would RAISE taxes on about 80% of their own residents. This strategy makes no sense to us.

The leadership in the House and Senate should stay firm on policy. The table below shows that this plan would provide a giant tax giveaway for millionaires and billionaires who almost exclusively live in blue states and cities. Of the top 25 districts affected by SALT, all but two are blue.

This is bad economics and even stupider politics.
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2) Half A Million MORE Americans Working Since January 1

Trump is off to a good start on the jobs front. We will see if these strong numbers hold up in the months ahead as the Trump tariffs kick in. And unlike job growth under Biden, almost all of these jobs are in the private sector, not government.
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3) Has Big Government Finally Tapped Out?

Maybe. Hopefully.

This chart from economist Mark Skousen, author of The Making of Modern Economics ([link removed]) , shows the worldwide surge in the size of government over the past 150 years. In 1900, governments accounted for a little more than 10% of total output, and that number peaked during Covid to about 50%.

It is interesting that the periods of pauses in government growth in the U.S. have tended to be the most prosperous times. This includes the roaring 20s, the Reagan '80s, and the 1990's with the Clinton declaration that the "era of big government is over."

There is one hopeful sign that the post-COVID era is seeing a slight retreat in the size of government. Trump could and should lead this new era.
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4) Bad Headline of the Day
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This is less than the $4 billion Biden wanted to hand out, but why throw good money after bad by providing ANY money for the globalists at the World Bank and International Monetary Fund?

Treasury Secretary Scott Bessent put it well in his speech to the IMF recently when he told the gathering of international bureaucrats that they are "obsessed with climate change, gender, and social issues." The IMF and World Bank, he complained, want a "blank check" for decades of failed economic development missions.

So why give it to them?

The IMF and World Bank are sitting on more than $1 trillion of resources - a big percentage of which has come from American taxpayers. Yet there is no evidence of development - just dependency. As we've noted before in the Hotline, the globalists' obsession with shutting down fossil fuel projects has denied many hundreds of millions of those in poor nations the reliable energy production that is imperative for growth.
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5) Media Ignores Record Stock Rebound

Last week we noted that the media hyperventilated over the stock market losses through the first three weeks of April, even blurting that this was the worst month since the Great Depression. But the naysayers have ignored the big market comeback of the last few weeks.

As if to validate our point, the Sunday New York Times published a chart on the front page saying that "the S&P 500 is on track for the worst start to a presidential term since Gerald R. Ford took over from Richard M. Nixon in August 1974."
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That's true except the reporters failed to show in the chart or even MENTION that since then the big stock market selloff in March and April has reversed most of those losses. As CNBC reported late Friday:

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Stocks have erased nearly all early April's losses, in part, due to the strong jobs report. Through Friday's close, the S&P 500 has notched its longest winning streak since 2004.

We still think there are many rough economic and financial waters ahead with the trade and tariff turmoil, and that there may be some irrational exuberance going on here, but is it asking too much for the Hate Trump media to be a little honest.
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6) Not Too Big To Rig

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