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The Conservative Caucus Podcast #09 – David McIntosh

Published: August 20, 2025
Network: The Conservative Caucus
Analysis: Conservative Caucus President Jim Pfaff

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The Trump tax cuts face a critical moment as Congress debates the “Big Beautiful Bill” reconciliation package that will determine whether these pro-growth policies become permanent or expire into a $4.5 trillion tax increase. In a wide-ranging conversation on The Conservative Caucus podcast, Club for Growth President David McIntosh breaks down the reconciliation bill’s strengths and weaknesses, from immediate expensing provisions that could revolutionize business investment to problematic state and local tax deduction expansions that reward blue state spending.

Topics Covered

• Making the Trump Tax Cuts Permanent
• The Hidden Economic Engine: Immediate Expensing
• The SALT Deduction Battle
• Medicaid Expansion and Work Requirements
• Federal School Choice Revolution
• The Rescission Process: Testing Congressional Courage
• Regulatory Reform as Economic Foundation
• Training the Next Generation of Conservative Leaders
• Key Takeaways

Making the Trump Tax Cuts Permanent

The stakes couldn’t be higher for the reconciliation bill currently moving through Congress. As McIntosh emphasized, failure to pass this legislation would result in the expiration of the 2017 Trump tax cuts, triggering a massive $4.5 trillion tax increase over the next decade that could tank the economy.

“The most important thing in this bill is to make the Trump tax cuts from 2017 permanent. If they don’t pass the bill, then it’s a $4.5 trillion tax increase over the next 10 years. That’s a huge hit to the economy.”
— David McIntosh, President, Club for Growth

The markets have already priced in the expectation that Congress will extend these tax policies, making passage essential to avoid economic disruption. McIntosh expressed confidence that despite disagreements over specific provisions, Republicans will ultimately unite around a bill that preserves these critical tax cuts while adding new pro-growth measures.

Beyond simply extending existing policy, the reconciliation package includes several new tax reforms that have garnered significant attention, including elimination of taxes on tips and overtime pay. While these provisions help working Americans, McIntosh pointed to a less-discussed provision that could have far more significant economic impact.

The Hidden Economic Engine: Immediate Expensing

One of the most economically consequential provisions in the reconciliation bill receives little media attention but could transform business investment decisions across America. The immediate expensing provision allows businesses to take full tax deductions immediately when investing in new factories, equipment, and machinery—rather than spreading those deductions over 30 years as the old tax code required.

The House version of the bill included immediate expensing but made it temporary, set to expire after just four years. McIntosh praised the Senate for correcting this flaw by making the provision permanent, noting that businesses need certainty about tax policy to make long-term investment decisions. According to the Treasury Department’s own analysis, this single provision will create more jobs than many of the higher-profile tax cuts receiving media attention.

The permanence question extends beyond immediate expensing to the entire Trump tax cuts framework. As Jim Pfaff noted during the discussion, Congress traditionally allows tax provisions to expire because lawmakers enjoy the political theater of fighting over extensions. By making these policies permanent, any future tax increases would require Congress to explicitly vote for raising taxes—a much more politically difficult proposition.

The SALT Deduction Battle

One of the most contentious elements of the reconciliation bill involves the state and local tax (SALT) deduction, which has become a flashpoint between fiscal conservatives and Republicans from high-tax blue states. The 2017 tax reform capped the SALT deduction at $10,000, preventing wealthy taxpayers in high-tax states from deducting unlimited amounts of state and local taxes from their federal returns.

McIntosh strongly defended this cap, arguing that it ended an unfair subsidy where low-tax states like Indiana, Texas, and Florida effectively subsidized the spending habits of high-tax states like New York and California through the federal tax system. The cap ensures that residents of fiscally responsible states aren’t paying the bill for profligate spending elsewhere.

“My view is if that’s the case, go lobby California to lower its taxes. Go lobby New York to lower its taxes. Don’t make me pay the bill from a low tax state because your state spends more and taxes more.”
— David McIntosh

However, to secure enough votes for passage, the House increased the cap from $10,000 to $40,000—a concession worth approximately $300 billion over ten years that primarily benefits wealthy constituents in blue states. The Senate scaled this back, creating a point of contention that will need resolution before final passage. Club for Growth ran advertisements in districts of Republicans pushing for higher SALT deductions, highlighting to their constituents that these members were demanding tax giveaways to blue states.

The SALT debate illustrates a broader tension within the Republican coalition between fiscal conservatives committed to limiting government and members from blue states facing pressure from wealthy constituents accustomed to deducting high state taxes. McIntosh acknowledged that Speaker Mike Johnson faces the difficult task of assembling a majority while managing these competing demands.

Medicaid Expansion and Work Requirements

While tax policy dominates headlines, the reconciliation bill also addresses runaway spending in federal entitlement programs, particularly Medicaid. The Obamacare Medicaid expansion created a perverse incentive structure where states receive $9 in federal reimbursement for every dollar they spend on the program—essentially encouraging states to maximize spending regardless of efficiency or necessity.

McIntosh criticized the bill for failing to address this fundamental flaw in the reimbursement formula, though he praised the inclusion of work requirements for able-bodied Medicaid recipients. The work requirement provision represents a return to the principle that government assistance programs should help those truly unable to work, while encouraging able-bodied individuals to seek employment where their healthcare can be covered through employer-provided insurance.

The discussion of Medicaid reform touched on a broader philosophical point about government monopolization of charity. Pfaff argued that federal dominance of charitable functions—with trillions in government spending dwarfing private charitable giving—has created inefficiencies that private charity would never tolerate. No private charitable organization would provide free healthcare to able-bodied individuals capable of working, yet government programs do exactly that, creating dependency rather than encouraging self-sufficiency.

Federal School Choice Revolution

Buried in the reconciliation bill is a provision that could fundamentally transform American education over the next two decades. The legislation creates a federal tax credit for contributions to school choice scholarship funds, enabling parents across the country—including in states that haven’t passed school choice legislation—to access alternatives to failing public schools.

These scholarship funds have operated successfully in several states for years, allowing students from dangerous or underperforming urban schools to attend private schools, including Catholic schools that often provide superior education at lower cost. The federal tax credit, worth approximately $20 billion over ten years, will extend this opportunity to students in states like New York, California, and Massachusetts where teachers unions have blocked state-level school choice reforms.

“I think once it takes off, you’re going to see a lot of changes in our educational program where the public schools have to do better in order to keep the kids going there. Parents love their children, they’re going to make the right decision for their children on what kind of education they need.”
— David McIntosh

McIntosh predicted that historians will look back on this provision as a watershed moment in American education, even though it’s receiving minimal attention compared to other elements of the bill. The Senate is considering doubling the program’s funding, recognizing its potential to break the government monopoly on education that has trapped millions of children in failing schools.

The school choice discussion highlighted how COVID-era school closures awakened parents to the failures of public education. When remote learning gave parents direct visibility into what their children were—or weren’t—learning, demand for alternatives exploded. Homeschooling has surged, and Club for Growth has helped twelve states pass school choice legislation this year alone. The federal tax credit will accelerate this trend, forcing public schools to improve or lose students to superior alternatives.

The Rescission Process: Testing Congressional Courage

Once the reconciliation bill passes, attention will shift to the rescission process—a mechanism allowing the President to propose canceling previously appropriated spending with only a majority vote required in both houses. This process, reformed in 2011 as an amendment to the 1974 Budget Act, gives Congress 45 days to act on each rescission package without the threat of Senate filibuster.

The Trump administration has already submitted its first rescission package worth $9 billion, targeting wasteful spending at organizations like PBS, NPR, and various USAID programs that have been captured by progressive activists. McIntosh expressed optimism that this initial package will pass, establishing momentum for larger rescission efforts.

The real test will come with subsequent packages. Representative David Schweikert of Arizona has introduced legislation to rescind all “laying around money”—funds that were appropriated but haven’t been spent and are sitting unused in government accounts. This single action could save up to half a trillion dollars. Combined with findings from the Department of Government Efficiency (DOGE), McIntosh believes Congress could ultimately rescind between $500 billion and $1 trillion in wasteful spending.

However, McIntosh acknowledged that Congress faces an addiction to spending that won’t be easily overcome. The appropriations committees in both the House and Senate, populated largely by members who enjoy distributing taxpayer dollars to favored constituencies, have resisted spending cuts. The key question is whether enough Republicans will demonstrate the courage to support significant rescissions, or whether they’ll cave to pressure from lobbyists and special interests.

Regulatory Reform as Economic Foundation

While tax cuts and spending reductions receive the most attention, both McIntosh and Pfaff argued that regulatory reform may be the most important factor in economic growth. McIntosh, who led regulatory reform efforts in the Reagan administration and chaired the House subcommittee on regulatory reform during his time in Congress, has decades of experience demonstrating how excessive regulation stifles economic activity.

Pfaff made the case that regulatory reform was actually more important than tax cuts in driving the Reagan-era economic boom. While the Reagan tax cuts and Paul Volcker’s Federal Reserve policies certainly contributed to growth, the dramatic reduction in federal regulations—cutting the federal code nearly in half—unleashed private sector innovation and investment. Similarly, Trump’s first-term regulatory reforms may have been more consequential for economic growth than his tax cuts, even though the tax policies received more publicity.

“The average cost is now something close to $40,000 per worker in this country to comply with all these regulations. You cut that in half and that’s $20,000 more that they can pay people with a pay raise.”
— David McIntosh

The Trump administration is pursuing even more aggressive regulatory reform in its second term. EPA Administrator Lee Zeldin has already announced major reforms, including ending California’s authority to set air pollution standards for the entire nation—a change that will significantly reduce vehicle costs for consumers nationwide. Across federal agencies, administrators are working to eliminate regulations that impose costs without corresponding benefits to safety, health, or environmental protection.

McIntosh emphasized that regulatory reform allows the private market to function efficiently. When businesses must seek government permission for every decision, costs increase, innovation slows, and many entrepreneurs simply give up rather than navigate the regulatory maze. The $40,000 per worker compliance cost represents hundreds of billions of dollars that could instead go to higher wages, lower prices, or business expansion.

Training the Next Generation of Conservative Leaders

Beyond its well-known role in political campaigns and policy advocacy, Club for Growth has developed a comprehensive leadership training program designed to build a pipeline of conservative leaders from the grassroots to Congress and potentially the presidency. The fellowship program trains 50 leaders annually in free market principles, individual liberty, and constitutional government, providing both policy education and media training.

The program has already produced tangible results, with six fellows elected to Congress. These members arrive in Washington already grounded in free market economics and committed to limited government principles, making them less susceptible to the lobbying pressure and Washington groupthink that often corrupts new members. The fellows also form a national network, allowing conservative activists and officials in different states to share strategies and coordinate efforts.

McIntosh highlighted Senator Bernie Moreno of Ohio as an example of the program’s success. Moreno faced a difficult primary against three well-funded opponents before defeating incumbent Democrat Sherrod Brown in the general election. Now in the Senate, Moreno—who fled Colombia when communists took over—uses his skills as a businessman to sell conservative principles to colleagues, demonstrating how the right candidates can win tough races and govern effectively.

The fellowship program represents Club for Growth’s long-term vision: creating a continuous pipeline of leaders trained in free market principles who can serve at every level of government. Some fellows run for state legislature, others for Congress, and some become attorneys general or governors. The ultimate goal is to eventually see a Club for Growth fellow elected president, ensuring that commitment to economic freedom and limited government extends to the highest office in the land.

Key Takeaways

1. Trump Tax Cuts Must Pass – Failure to pass the reconciliation bill would trigger a $4.5 trillion tax increase over ten years, potentially tanking an economy that has already priced in the expectation of extension.
2. Immediate Expensing Is the Hidden Winner – Allowing businesses to immediately deduct investments in factories and equipment, rather than spreading deductions over 30 years, will create more jobs than higher-profile provisions like eliminating taxes on tips and overtime.
3. SALT Deduction Remains Contentious – The battle over state and local tax deductions pits fiscal conservatives against blue-state Republicans, with the House proposing a $40,000 cap that would cost $300 billion over ten years and primarily benefit wealthy constituents in high-tax states.
4. Federal School Choice Is a Game-Changer – A little-noticed provision creating tax credits for school choice scholarship contributions will give parents in states like New York and California access to educational alternatives for the first time, potentially transforming American education over the next two decades.
5. Rescission Process Tests Congressional Courage – With the reconciliation bill likely to pass, the real test of Republican commitment to fiscal responsibility will come through the rescission process, where Congress can cut previously appropriated spending with only majority votes required.
6. Regulatory Reform Drives Economic Growth – While less visible than tax cuts, regulatory reform may be more important for economic growth, with compliance costs averaging $40,000 per worker that could instead go to wages and business expansion.
7. Democrats Face an Identity Crisis – The Democrat Party’s embrace of radical progressive policies on issues from Palestine to gender ideology has alienated traditional supporters, creating opportunities for Republicans in the 2026 midterms if they can unite around a positive agenda.
8. Leadership Pipeline Is Essential – Building a sustainable conservative movement requires training the next generation of leaders through programs like Club for Growth’s fellowship, which has already produced six members of Congress committed to free market principles.

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About The Conservative Caucus:
The Conservative Caucus is a grassroots public policy action organization, formed in 1974. Headed by President Jim Pfaff, the Caucus is committed to advancing free enterprise, limited government, and traditional values.

Originally broadcast August 20, 2025 on The Conservative Caucus.