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Unleash Prosperity Hotline
Issue #1269
05/21/2025
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1) Trump Tax Bill Is Pro-Growth and Pro-Jobs

The President's Council of Economic Advisers (CEA) released figures Tuesday estimating the economic impact of the Trump tax bill. Here are the key takeaways:
* Real economic growth rises by up to 5.2% over the next four years.
* Up to 7.4 million full-time American jobs saved or created in the next four years.
* Increase in investment up to 14.5% in the next four years.
* Up to $11,600 in higher wages per worker.
* Up to $13,300 more in take-home pay for a family with two children.

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The Trump CEA is admittedly NOT an unbiased source, but even if its projections are TWICE as high as reality, the so-called price tag of the One Big Beautiful Bill drops by at least $2 trillion dollars.

Alas, JCT, CBO, and the rest of the bean counters score the economic effects at zero.

Go figure.
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2) Salt Shakedown

Our spies on Capitol Hill tell us that the House budget deal might quadruple the state and local tax deduction to $40,000. At least there will be a cap on the deduction at an income of around $500,000 - with the exact details to be worked out.

This is an absurd subsidy to the high tax blue states of California, Illinois, Maryland, New Jersey and New York.

Only 9% of tax filers itemize their deductions, so the vast majority of the taxpayers in SALT ringleader Rep. Mike Lawler's district don't even benefit from the deduction.

This loophole will add at least $300 billion to the debt over the next decade. That's money that could be used to lower the business tax rate and create jobs.

Not a single Republican senator represents a high-tax blue state, so we hope the Senate bill fixes this monstrosity.
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3) Senate Will Vote on California 100% EV Mandate

California wants to ban internal combustion vehicles in a few years. The House has voted to overturn that ban with the help of 35 Democrats.

Schumer desperately argued that a GAO memo should tie the Senate's hands even though the GAO admits it has no role in the Congressional Review Act (CRA) process, once the EPA duly submitted the rule for review.

John Barrasso crushed the Schumer argument: "As I presented it to the conference: Either we uphold the Senate's rights under the CRA, or do we provide the GAO with a veto over the Senate's use of the CRA."

Senate Democratic leaders are worried about a jailbreak and Democrats voting with Republicans in large numbers.

Kudos to GOP Senate Leader Thune. His great floor speech from yesterday on this is worth a watch:
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4) Headline of the Week
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We're not sure we can add to this, but we would simply repeat our contention that the two most popular politicians in the world today are Javier Milei and Donald Trump - both of whom promise to drain the political swamp in their respective countries. They also are supported by the working class and the investor class.
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5) Durbin-Marshall Credit Card Price Controls Are Back

This bad idea never seems to die, probably because the Big Box retailers are enamored with the idea of the government juicing their margins by forcing down swipe fees. We expect a vote on the misnamed "Credit Card Competition Act" soon as an amendment to pending stablecoin legislation.

Proponents of the amendment point to rising transaction fees IN DOLLAR TERMS, even though that increase has been entirely a product of rising transaction volume.
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As we explained in our 2023 paper on this issue ([link removed]) , Federal Reserve research shows credit card issuers actually have NEGATIVE margins on their transaction, paying out MORE in rewards than they collect in fees:

Credit card companies use rewards and cash back programs to build customer loyalty and expand their share of cardholders. They are willing to take a loss on their transaction services if they can expand their credit services that account for the bulk of their profitability. But they would have no need to offer such rich rewards to consumers if they weren't trying to bid them away from their competitors. The negative profitability margin that credit card companies incur from keeping interchange fees stable and increasing rewards to their customers is robust evidence of fierce competition in the credit card market.

We would have hoped by now that politicians would have learned one of the iron laws of economics: government wage and price controls are always and everywhere a bad idea.

Ironically, the same retailers who want Uncle Sam to set prices on credit card fees lead the charge against minimum wage and mandated worker benefit laws.
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6) A Supply Side Lesson

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