Trump’s Policies Aim to Make America Affordable Again
The article discusses how President Donald Trump’s One Big Beautiful Bill (OBBB) is designed to boost wages and reduce inflation through capital incentives and tax cuts on tips and overtime pay. Treasury counselor Joseph Lavorgna explains these measures aim to lower costs for American families and enhance productivity. The OBBB includes provisions for full expensing of business investments, tax deductions for manufacturing plants, and elimination of taxes on tips, all contributing to economic growth and improved living standards. The bill is presented as a response to the inflationary pressures under the Biden administration.
The article highlights President Donald Trump’s proposal, the One Big Beautiful Bill (OBBB), which seeks to make America more affordable for its citizens by boosting wages and reducing inflation. Treasury counselor Joseph Lavorgna explains how the bill’s provisions, including capital incentives and tax cuts, are intended to support economic growth and improve living standards. By eliminating taxes on tips and overtime pay, the OBBB aims to increase take-home pay for working families. Additionally, the bill includes provisions for full expensing of business investments and tax deductions for manufacturing plants, which are expected to drive economic activity and job creation. These measures are presented as a response to the inflationary pressures experienced during the Biden administration.
The memory of low inflation and strong economic growth during Trump’s first term inspired Americans to re-elect him for a second term. Voters put their trust in Trump’s stewardship after a disastrous four years of economic hardship under Biden. Immediately after taking office, Trump began laying the groundwork for a Golden Age economy. While there is still much work ahead to help Americans out of the hole created by the Biden administration, we are making progress.
The first step was passing the One Big Beautiful Bill (OBBB), which will help Make America Affordable Again. There are three key provisions in the OBBB that will boost take-home worker pay. First is permanent full expensing of business investment, or what is commonly referred to as capital expenditures (or ‘capex’). Thanks to this bold tax incentive, companies can now write off the full cost of purchasing computers, industrial machinery, software and any other equipment. When firms raise their capex, productivity increases since workers have additional capital to produce the goods and services businesses and consumers want. Greater productivity, in turn, raises household living standards by providing companies the ability to pay their workers more. Economic history is replete with examples when surging productivity produced large increases in worker wages.
The second provision in the OBBB dovetails with the capex incentive but may be even more powerful. Companies can now deduct the entire cost of building a manufacturing plant or agricultural structure in the first year of construction. In the past, companies had to wait nearly 40 years to depreciate the full cost of factories and farm structure. But not anymore. This novel tax incentive will lead to a massive increase in industrial building and support reshoring of our supply chains. With that will come high-paying construction jobs. And when the project is done, there will be high-paying jobs inside those structures, where workers will be using the newest technologies thanks to the capex incentives. The effect will be an industrial boom.
In tandem, a capex and industrial construction boom will increase the economy’s underlying productive capacity, which in the past has always been disinflationary. This means that inflation is poised to fall much further, thereby giving workers an added lift. This is a one-two punch in restoring worker purchasing power because nominal wages will be rising at the same time inflation will be falling. The upshot is a powerful historical gain in real wages, similar but even bigger than Trump’s first term.
The third provision that will improve affordability is no tax on tips or overtime pay. By eliminating these taxes, working Americans will get to keep more of their hard-earned income. This is critical to restoring household finances to lower- and middle-class families, which suffered disproportionately under the prior administration. Real after-tax wages for blue collar workers are poised to soar thanks to Trump’s policies and economic vision.
From higher take-home pay for hardworking families to tax incentives that will drive a disinflationary boom, the One Big Beautiful Bill was engineered to Make America Affordable Again. This historic tax reform will ensure that Main Street prospers alongside Wall Street in President Trump’s Golden Age economy.