Unleash Prosperity Hotline – Memorial Day Weekend Edition
Issue #1271
05/23/2025 – 05/26/2025
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1) Congress's Cracked Crystal Ball

The Congressional Budget Office estimates that the House-passed tax bill will lower federal revenues by nearly $4 trillion over the next decade. That forecast borders on economic malpractice.

We know CBO and the Joint Committee on Taxation are wrong, because this same model overestimated the revenue loss of the 2017 Trump tax cut by $1.5 trillion in the first five years of the bill. That's a gross error.

After decades of complaining about the JCT and CBO's erroneous models, which ALWAYS overestimate the "cost" of tax cuts, they still refuse to fully take account of the economic benefits of lowering tax rates.  It's like a doctor tapping a patient's knee and not expecting the leg to kick up.

If Trump's America-first agenda of deregulation, lower tax rates, domestic energy production, government efficiency reforms, etc. raises the economic growth rate to just the historical average of 3% for the country, the burden of the deficit will fall, not rise.

Yet Congress is a slave to a model that is repeatedly wrong. Unlike a broken clock, they aren't even right twice a day, as this piece by Steve Moore in today's WSJ points out:

2) The OPPOSITE of Tax Reform

Speaking of the tax bill… As all our readers know, the state and local tax deduction (SALT) deal in the House bill is outrageous, crazy, and infuriating. It quadruples from $10,000 to $40,000 the deduction level, which is a giant tax giveaway to mostly millionaires and billionaires who freely choose to live in high-tax blue states. Below we show the details.

This also reverses one of the great features of the 2017 tax bill, which was to dramatically lower the percentage of tax filers who itemize deductions to just 9%. The WSJ is reporting that the effect on this SALT tax deform will be to dramatically raise the number of filers who itemize deductions. (It's a tax preparer's dream come true.).

The goal of good tax policy is to eliminate ALL tax deductions and then slash the tax rates to one beautiful low rate.

There are no Republicans in the Senate from high-tax blue states, so we are praying that the Senate has the wisdom to eliminate the SALT deduction altogether and lower tax rates even more.

Notice that the bill even raises the SALT deduction retroactively to the start of this year. These millionaire blue state liberals will no doubt use their tax windfall to write bigger campaign contributions to left-wing candidates.

3) Meet "Trump Accounts"

One of the little known features of One Big Beautiful Bill Act is essentially a 401K retirement fund for every newborn in America.

Senator Ted Cruz of Texas pushed for the idea, calling it "very much designed to get the next generation to invest in the market."

"You see a lot of young people who in public opinion surveys, say they have a negative view of capitalism and they embrace socialism," Cruz told Semafor. "What is powerful about this is, when every child has invested, it's no longer an abstract idea."

A tax-advantaged investment account of $1,000 would be created for every newborn baby with a Social Security number. That money would be invested in the S&P 500 and would accumulate value over time. Families and employers could supplement the account with up to $5,000 annually and leaders of companies such as Uber, Dell, Nvidia and Oracle have already pledged to contribute to the accounts of the kids of their employees.

Kevin Hassett, the director of the National Economic Council, said that with the accounts kids will gain a renewed appreciation and knowledge of how the economy works: "They get to look at that account on their iPhone for the rest of their lives and see what America is doing for them."

Now we need to transition to personal Social Security accounts and we will truly have a nation of owner capitalists.