Reconciliation: How the Democrats Can Run the Table

Congressional Democrats will take office in January with the broadest mandate since the post-Watergate midterms in 1974—twice the popular-vote margin the Contract-with-America Republicans won in 1994. The work begins with dismantling most of what Donald Trump and his corrupt, incompetent administration have done over the past two years.

Much of what Trump wrought came through his One Big Beautiful (sic) Bill enacted through “reconciliation” in 2025. Reconciliation allows Congress to cut or increase spending and taxes with bare, partisan majorities in the House and Senate, provided the net result doesn’t worsen the deficit. Crucially, Senate opponents cannot filibuster reconciliation.

The president doesn’t need to initiate reconciliation: The law says Congress alone can start the process, giving Democrats a lever to unwind Trump’s entire budget and tax program.

The boldest and most important move would be to repeal his 2025 tax provisions, save those benefiting ordinary Americans. That would include restoring the 39.7 percent top income tax rate, reinstating the former limits on exemptions from the alternative minimum tax and the estate tax, bringing back pre-Trump limits on itemized deductions by high-income people, repealing giveaways for wealthy owners of LLCs and LLPs, and stripping out “bonus depreciation” and enhanced interest deductions for profitable corporations.

Making billionaires and millionaires pay their way would raise a heap of money: These rollbacks alone would generate $2.4 trillion in additional revenues over the next 10 years without touching anything that helps ordinary Americans, including the One Big Beautiful Bill’s lower tax brackets (except at the top), the larger standard deduction, the expanded child tax credit,  deductions for tips, overtime, and seniors, or the higher cap on deducting state and local taxes.

Trump could certainly wield his veto, and we’ll see if Congressional Republicans stand alongside their disgraced leader to protect the rich, starting with the 18 Republican senators up for reelection in 2028, including those from North Carolina, South Carolina, Kansas, Iowa, and Alaska, states that are no longer reliably red and that elected or, in the case of the 49th state, seem about to elect a Democrat. Or Trump and congressional Republicans can cut deals that give up some of their handouts for the wealthy—anything’s possible these days—and Democrats can leave the rest for the next administration.

Rolling back Trump’s tax freebies for rich Americans and the companies they own will provide the resources Democrats need, and reconciliation demands, to unravel Trump’s let-them-take-aspirin healthcare cuts and let-them-pick-another-protein nutrition cuts. Over 10 years, restoring the Medicaid cuts, including support for rural hospitals, will cost $910 billion; reinstating the subsidies and enhanced credits for the Affordable Care Act will cost another $450 billion, and restoring SNAP funding will cost $190 billion. The total bill adds up to $1.55 trillion over 10 years.

Trump’s 2025 reconciliation act also included an eye-popping $170 billion over 10 years for immigration enforcement, and the Democrats’ 2027 reconciliation could save another $140 to $150 billion by limiting ICE detention and deportation operations to undocumented felons. Altogether, then, unwinding Trump’s domestic legislative program would cost $1.4 trillion over 10 years, leaving $1 trillion in revenue restored by unwinding Trump’s tax regime for the rich.

Rolling back Trump’s stupid tariffs is the most direct and effective next step toward addressing people’s affordability concerns. The Democrats’ reconciliation package could require Congress to approve any tariff to remain in effect beyond 60 days. 

When the Supreme Court struck down Trump’s “Liberation Day” tariffs, it left in place an array of other tariffs that continue to push up prices. Trump has imposed new tariffs on imports of automobiles, trucks, and buses; steel, aluminum, and copper; lumber and furniture; semiconductors and pharmaceuticals; and nearly everything imported from Canada and China. He also recently slapped 10 percent and 13.5 percent tariffs on a range of imports from Mexico, India, Vietnam, the United Kingdom, the European Union, Japan, Korea, and Australia based on unsubstantiated claims that the goods use parts or materials produced with “forced labor.”

The direct costs that consumers bear from Trump’s tariffs and the revenues the government collects from imposing them are two sides of the same coin: The Federal Reserve Bank of New York found that 90 percent of the cost of Trump’s 2025 tariffs were passed along in higher prices. Rolling back those tariffs will cost the Treasury up to $1 trillion over 10 years while cutting consumer prices by nearly as much.

So far, the budget accounts would be balanced under the Democrats’ reconciliation: Revenues from unraveling Trump’s tax program and thuggish ICE operations will cover the costs of restoring his healthcare and nutrition cuts and rolling back his tariffs.

That need not be the end of it. Trump’s 2025 reconciliation package included bloated defense spending. Ending his no-questions-asked Pentagon spending spree should be part of the Democrats’ reconciliation package, too. Limiting increases in defense spending from 2027 forward to inflation would save $1.1 trillion over five years and $2.1 trillion over 10 years, compared with Trump’s plan, as priced out by his Office of Management and Budget.

But the arithmetic for reconciliation starts with a “budget baseline” calculated by the Congressional Budget Office (CBO). Until Congress votes otherwise, CBO’s baseline for defense spending already assumes only current outlays plus inflation. An inflation-only freeze on Pentagon spending would mean smaller deficits than Trump would like, but it wouldn’t produce additional resources under reconciliation.

To do that, Democrats can repeal the provision in Trump’s 2017 reconciliation package that cut corporate income tax rates from a graduated schedule topping out at 35 percent—the rate through the business investment boom of the 1990s—to a flat 21 percent. The Democrats’ 2027 reconciliation package could roll back Trump’s drastic cut to 28 percent and raise $1 trillion over 10 years or 30 percent and raise $1.3 trillion.

With those additional resources, Democrats could flesh out a broader affordability program. For $140 billion over 10 years, they could let first-time homebuyers deduct their down payments from federal taxes, directly cutting the cost for Generation Z to buy their first homes. Trump has called on Congress to eliminate federal support for home energy costs for low-income Americans—no surprise there—and instead, Democrats could expand eligibility to households earning less than $50,000.

This program would still leave $750 billion to $1 trillion over 10 years for down payments on deficit reduction. That should also be a priority for Democrats, not only to ease pressure on interest rates but to give the next administration room to maneuver when Social Security solvency issues turn critical in 2031 and 2032.

The good news is that every element of this approach has been well-tested. More than three decades ago, Bill Clinton followed 12 years of Republican tax and spending policies with a new fiscal strategy that I helped him devise and implement. It rebalanced the tax system to favor the middle class instead of the rich and dramatically slowed Pentagon spending. (Granted, the end of the Cold War helped make that possible, but so did refraining from entering idiotic wars.) It increased federal investments in education, health, infrastructure, and research and development because those additional resources drive productivity and growth across the economy. And it used the defense savings and additional revenues to reduce federal deficits, which were claiming the lion’s share of private savings. More capital was available to spur business investment and provide cheaper credit for consumers.

It wasn’t radical, just mainstream economics, and it worked superbly: Americans saw the longest expansion, the fastest-growing incomes, the strongest growth, and the greatest investment boom of the past half-century.

The next administration can do it again, with a head start from the Democrats’ 2027 reconciliation that, to use Clinton’s phrase, puts people first.

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