Feel free to get in touch with Rick Newman, connect with him on Bluesky, or subscribe to his newsletter. President Trump is eyeing significant savings in his latest fiscal targets. He is proposing to close down the US Agency for International Development, with a budget of $40 billion annually. Additionally, a cap on health research grants is expected to result in savings of several billion dollars.
Elon Musk and his team are meticulously examining the budgets of various federal agencies, with plans to identify substantial cost reductions. Musk’s ambitious goal is to pinpoint at least $500 billion in annual spending cuts. Furthermore, Trump is factoring in new tax revenue as part of his strategy. This explains his push for a wide array of tariffs.
In 2024, the US collected $83 billion in revenue from customs duties, which accounted for less than 2% of total revenue. Trump is aiming to significantly increase tariff revenue, a move he mistakenly refers to as taxes paid by foreigners. Moreover, he is open to scrapping a tax break for specific professional investors, potentially generating an additional $15 billion in annual revenue.
However, the feasibility of many of these proposals hinges on congressional approval, making them uncertain endeavors. While Trump has the authority to eliminate the penny and impose tariffs, cutting agency budgets requires congressional consent. It could be deemed unlawful for Trump to withhold funding that Congress has authorized through legislation. Numerous legal challenges have already been mounted against Trump’s executive orders, with more expected.
Musk’s pursuit of efficiency is setting a precedent for congressional Republicans to emulate. While some Republicans align with the stance of low taxes and limited government, there may be dissenters reluctant to reduce services or benefits for their constituents. The principles of libertarianism are being put to the test, with the final judgment pending.
Rick Newman, a prominent columnist for Yahoo Finance, continues to provide insightful analysis on these developments. Stay updated by following him on Bluesky and X: @rickjnewman. For the latest in political news impacting business and financial policies that influence stock markets, explore the comprehensive coverage on Yahoo Finance.
