The Post-Reconciliation Fiscal Landscape
Two new essays on the future of spending and taxes in the US
I have two new pieces out on the post-reconciliation fiscal trajectory. The first provides an overview of the major components of the Republicans’ tax and spending package, which ends with scenarios for what could come next. The second takes a bigger-picture look at the fiscal landscape, arguing that deficits are the wrong metric to dwell on if the goal is a smaller, less intrusive government. Spending cuts must take center stage.
Writing for GIS, I argue that the 2025 reconciliation law includes meaningful pro-growth elements but leaves the most intractable fiscal challenges unaddressed. The result is a package that reduces some of the worst distortions of the US tax code and slows the growth of some spending, but does little to resolve mounting federal debt and widening annual deficits. I conclude with some possible future scenarios.
The OBBBA strengthens US investment incentives by cementing full expensing and lowering marginal tax rates. However, a nation’s competitiveness is shaped by more than just statutory tax rates. The persistence of tariffs, creeping industrial policy and unsustainable debt remain threats. If deficits rise unchecked, higher interest costs could crowd out private investment and lead to a fiscal crisis, eroding the very competitiveness gains the bill seeks to achieve. Similarly, if policymakers continue to pursue interventionist industrial policy, the benefits of market-driven reform will be undermined.
Read the full piece: The One Big Beautiful Bill Act: Implications For US Fiscal Policy
Writing for the Civitas Outlook, I argue that focusing narrowly on the federal deficit misdirects the policy conversation. Saying “the deficit is bad” doesn’t tell us how to fix it, and too often leads to calls for higher taxes and a permanently larger government.
The real battle is over the size and scope of government. Without credible plans to restrain spending, America’s fiscal future points toward a European-style taxation model: less growth, fewer jobs, and higher burdens on the middle class.
The task for budget hawks is to redefine fiscal sustainability as ensuring the government does less and leaves more space for families, communities, and markets to work. Spending restraint must be sold with the same clarity and conviction as tax relief: as a promise of more opportunity, lower costs, and greater freedoms. Only by centering spending cuts will taxes remain low. This is why spending cuts matter. They are not just about balancing the books, but about preventing the continued proliferation of broad-based tax hikes.
Read the full piece: The Deficit Trap: Why Spending Cuts Must Take Center Stage
Taken together, these two essays highlight both the promise and the peril of the post-reconciliation fiscal landscape. The package moves the tax code in a more pro-growth direction, but without tackling the biggest drivers of spending growth, those gains are precarious. I’m hopeful—though not optimistic—that stronger growth from tax cuts and deregulation will boost investment, improve investor confidence, and embolden Republicans to pursue further spending reforms, creating a virtuous cycle of growth and incremental fiscal consolidation. But the opposite path is just as likely: abandoning spending restraint would trade short-term political gains for long-term stagnation and higher taxes.