Steve Daines rallies Congress to make Donald Trump’s tax cuts permanent

For more than a year, Sen. Steve Daines has been arduously cultivating support in Congress to permanently extend President Trump’s first-term tax cuts.

Now, as the December expiration of the 2017 tax cuts for individuals and small businesses inches closer, Mr. Daines made the permanent extension his top priority for the filibuster-proof budget reconciliation package Republicans are using to pass the president’s agenda.

“If there’s one thing I’ve heard from our small businesses — and from the American people, for that matter — is they’d rather have certainty, they’d rather have 80% of something that’s certain than 100% of something that has an expiration on it. So permanency is something I think is really important,” he told The Washington Times in an interview in his Capitol Hill office.

Republicans in 2017 made corporate tax cuts permanent but, to reduce the impact on budget projections, they placed a 2025 expiration on tax cuts for families and small businesses.

Mr. Daines, Montana Republican, wants to avoid a repeat. He’s been thinking about permanent tax cuts since last summer when he and other members of the Senate Finance Committee met to discuss the expiring tax cuts.

What started as a movement of one slowly drew broad support among Senate Republicans, including Majority Leader John Thune of South Dakota, Majority Whip John Barrasso of Wyoming and Finance Committee Chair Mike Crapo of Idaho.

Mr. Daines also has made direct appeals on the issue to Mr. Trump, Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, getting all those key players on board with the permanency push.

“There’s a lot of voices in the choir right now, but I’ve been trying to sing as loud as I can,” Mr. Daines said.

For the senator, his trip to China last week underscored the need to revive an expired 2017 tax break that allowed businesses to immediately write off their research and development expenses. He also wants to re-up a “bonus depreciation” provision for writing off business equipment that has been gradually winding down.

“We’re in a race right now out of competition with China on innovation, and we better be continuing to have tax policy that incentivizes innovation,” Mr. Daines said. 

Republicans are in the midst of negotiating a budget resolution, the first step in the reconciliation process. The House and Senate passed their own versions last month, and Republicans want to settle on a final bicameral product they can vote on in the next few weeks before the congressional recess for Easter and Passover.

Included in the House budget blueprint was a $4.5 trillion cost ceiling for tax cuts, which could rise or fall depending on whether lawmakers hit a goal of $2 trillion in spending cuts.

Senate Republicans, however, say that the $4.5 trillion ceiling isn’t high enough to pay for permanent tax cuts and the president’s other policy wishes, such as eliminating taxes on tips, overtime and Social Security benefits.

“I think those items, I’m hoping we can make those permanent,” Mr. Daines said.

Exempting income tax on Social Security benefits is something that lawmakers still need to figure out how to accomplish because under Senate rules they can’t touch Social Security in budget reconciliation.

Mr. Daines said they have begun to explore potential workarounds.

Senate Republicans’ plan for making room for Mr. Trump’s new tax proposals is to use an alternative “current policy” baseline that would zero out the cost of extending the 2017 tax cuts because they’re already in law. The Congressional Budget Office’s traditional baseline estimates the cost at $4.6 trillion over a decade.

Some House Republicans are reticent to go down that route, but Mr. Daines believes he’s winning over minds in the lower chamber with the help of a key ally, House Ways and Means Chairman Jason Smith, whom he recognized as a “very important voice” in the tax debate.

Both came to Washington as House first-term lawmakers in 2013 and have remained good friends. Understanding the lower chamber’s dynamics better than most, Mr. Daines said the Senate must avoid the “red lines” for House Republicans.

“But I think there needs to be some movement on both sides to find something that can work with 51 [votes] in the Senate and 218 in the House,” he said.

House Speaker Mike Johnson, Louisiana Republican, is on board with the current policy baseline. However, he still must win over those who fear it would drive up deficits, at least in the short term, until anticipated broader economic growth from the tax cuts kicks in.

Rep. Darin LaHood of Illinois, a GOP tax writer, told The Times that his support of permanently extending Mr. Trump’s tax cuts depended on direction from the president. He also acknowledged that the desire to lower deficits was a prohibitive factor for other House Republicans.

“I think we all realize the economic benefits by making these permanent, but the reality is, we’re $36 trillion in debt,” he said. “Members are acutely aware of that. We need to be focused on that.”

One move that could be a sweetener for fiscal conservatives would be increasing the spending cut floor to $2 trillion, which Mr. Daines said Senate Republicans were starting to coalesce around.

If things go awry, Mr. Daines can call up his good friend, Mr. Trump. The pair have worked together since lawmakers crafted the 2017 tax package and “built up trust over the years.”

That relationship strengthened when Mr. Daines flipped the Senate last year as chair of the National Republican Senatorial Committee, sealing the GOP’s trifecta in Washington and putting them in the position to hammer through the president’s agenda without Democratic lawmakers standing in the way.