During my tenure in Congress, I observed a fundamental truth about American democracy—when Americans vote for change, they vote because of their wallets. It’s that simple.
The pattern of anti-incumbency across three consecutive presidential cycles underscores this reality. Americans have repeatedly rejected sitting administrations not so much because of ideology or partisan loyalty, but because of their lived economic experience. Forget the Dow; when voters feel the pinch at the grocery store or the gas pump, they demand change.
The public has now given a second chance to a Trump-led Republican administration, whose campaign messaging of building a stronger and more thriving economy resonated with voters.
Trump will need to substantively boost the economy if he and Republicans want to maintain power. The upcoming showdown over renewing the 2017 Trump tax cuts provides an opportunity for stimulus provisions to supercharge two key pillars of the economy: small businesses and housing.
Retroactive R&D expenses fix—a stimulus boost for jobs and GDP
Over the past three years, the Tax Cuts and Jobs Act, or TCJA, has increased taxes on many small businesses by substantial margins, specifically the businesses that are making improvements to their products or experimenting with ways to be more efficient.
That’s because under Section 174 of the act, businesses are forced to amortize certain technical expenses over multiple years instead of deducting them all at once. For example, if you designed an update to a product, you normally could take a 100% deduction of all the costs associated with that update. Under the TCJA, you would pay tax on 90% of those costs in the first year instead.
While it may seem like an esoteric tax issue, the reality is that there are tens of thousands of businesses across the country seeing anywhere from 300% increases in tax to outright bankruptcy. Smaller businesses are feeling the pain the most, as they do not have the capital reserves to survive massive tax hikes.
A small steel fabrication company I know went from paying $35,000 in tax to owing $1.3 million, only because they employed engineers. This was not the intended policy. To add insult to injury, China offers a deduction 20 times that of the U.S. for the same expenses.
Retroactively fixing Section 174 would be a massive stimulus package for small businesses. The fix has widespread bipartisan support (the previous solution, H.R. 7024, passed the House 357 votes to 70), but the current legislation only fixes it on a go-forward basis, meaning only starting January 2025. If businesses can recoup their older tax overpayments, even just for 2024, it would immediately infuse the economy with tens of billions of dollars.
More importantly for Trump, it’s money that would be available to U.S. businesses in 2025 well before the midterms and would further endear him to a crucial segment of voters who are praying this gets fixed.
Fighting inflation with low-income housing
I learned in Congress that a high-flying economy is no match for a sagging housing market. Since the pandemic, we’ve seen the largest increases in rents since we’ve been keeping records. Mortgage rates have leveled off but are still locking millions out of the American dream of homeownership. Skyrocketing inflation across insurance, labor, and supply costs are putting intense pressure on homeowners, landlords, and working American families in nearly every state.
When we say we have an inflation problem, what we really mean is that we have a housing cost problem. The relative importance of housing costs within the Consumer Price Index (CPI), which measures the change in prices for consumer goods and services, represents a 35% share of all items. The cost of shelter, including rent and mortgage payments, has increased for 57 consecutive months. To put it another way, if shelter were excluded from the CPI, overall inflation would have been at or below the Fed’s 2% target level in 16 of the last 20 months.
Here, again, changes to tax policy can power a transformation in housing costs, lowering bills for millions of families. Since 1986, the Low-Income Housing Tax Credit (LIHTC) has been a trusted mechanism for stimulating economic growth while building and preserving attainable, affordable homes. The LIHTC works by subsidizing development costs of low-income housing by allowing those that invest in qualified projects to take up to a 9% tax credit against the cost of construction. It gives decision-making to the states, incentivizes private capital and management, and does not rely on big bureaucracy. The enormity of this incentive has resulted in 4 million affordable homes for 9,280,000 families over the last 30 years.
Republicans and Democrats have put forward legislation to expand and strengthen the tax credit, which would boost housing supply at a critical moment. Again, this is overwhelmingly supported by both parties. A 12.5% increase to the allocation to each state’s Housing Credit ceiling, alongside a bevy of other enhancements, was also included in the aforementioned H.R. 7024. If Trump champions this change, it would result in approximately 200,000 additional affordable homes over the next decade than what would have otherwise been possible.
Realizing Trump’s economic promise
Looking ahead, the administration’s success will be measured by its ability to translate policy into pocketbook results for everyday Americans. The window of opportunity is clear but finite; while the proposed employment initiatives and tax reforms provide a framework, their success depends entirely on execution that impacts kitchen-table economics.
With a clear mandate for change and a comprehensive economic playbook, the Trump administration now faces its defining challenge: creating an economy that delivers tangible benefits across all segments of American society. Championing these two provisions would tell the American people that Congress and President Trump care about the real economy and the Americans who make it hum.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
