Economist Stephen Moore joined Chicago’s Morning Answer to unpack a pair of bold Trump administration claims—one about tariffs replacing income taxes, the other about solving America’s affordability crisis. While Moore defended the strategic direction of the Trump economy, he warned that Republicans still haven’t identified a disciplined approach to spending or a persuasive message for frustrated voters.
Trump Promises Income-Tax Elimination—Moore Offers a Reality Check
Host Dan Proft opened with President Trump’s latest sweeping declaration: tariff revenues will be so large they can fund dividend checks, reduce the national debt, and eliminate the federal income tax entirely.
Moore, who has advised Trump for years, didn’t reject the idea outright—but he pushed it into more practical territory.
“Whether you like tariffs or not, they do generate revenue,” Moore said. “Hundreds of billions of dollars. But use that revenue to cut the payroll tax—the tax every worker pays from their first dollar.”
In a forthcoming Wall Street Journal op-ed co-authored with Art Laffer, Moore argues that redirecting tariff revenue toward payroll-tax relief would be far more impactful than one-time rebate checks.
“Eliminating the income tax entirely? Historically, tariffs funded most of government before 1915,” Moore said. “But government is much bigger now. Trump’s goal is good, but spending restraint is the missing piece.”
Proft immediately pounced on the point: Republicans, he argued, have shown no appetite to shrink federal spending in a meaningful way. Without that, cutting revenue—even via tariffs—won’t get far.
“You’re forced into the adult conversation,” Proft said. “What should government do and not do? And they never want to take that step.”
Moore agreed: any real tax revolution must come with real spending cuts. But in Washington, he noted, even tiny cuts prompt apocalyptic rhetoric.
“If you reduce the rate of spending by one percentage point, you’re cruel and unusual,” Moore said. “People are going to die. That’s what you hear every time.”
The GOP’s Affordability Problem: Voters Are Angry, and Republicans Don’t Know Why
Attention turned to the Tennessee special election, where Republicans held a deep-red seat—but by a sharply reduced margin.
Moore admitted he’s perplexed.
“People’s incomes are up more this year than inflation,” he said. “They have more after-tax and after-inflation income than a year ago. But polls all show people saying they can’t afford anything.”
Republican underperformance, he said, reflects voter anxiety about prices—particularly housing and healthcare. And while inflation has cooled, prices themselves remain high.
“Eighty-eight percent of the price increases happened under Biden,” Moore said. “But voters are still angry, and they’re blaming Republicans.”
Proft asked whether the GOP has developed a coherent counter-message. Moore cited data that JD Vance and Kevin Hassett have used: Biden wiped out $3,000 of purchasing power, Americans have regained about $1,200 under Trump, and more improvement is expected next year.
“But voters still don’t feel it,” Moore said. “That’s the challenge.”
Will Republicans Extend Obamacare Subsidies? Moore Says Yes—Unfortunately
One flashpoint: whether congressional Republicans will extend the expanded Obamacare subsidies that now reach families making up to half a million dollars a year.
“This is the stupidest thing,” Moore said. “Millionaires getting free healthcare. But Republicans will probably fold. They’ll extend it.”
That, he warned, accelerates the drift toward full government control of healthcare, which he believes will bankrupt the country and degrade care for everyone.
A Strong Economy Ahead—If Messaging Doesn’t Sink It First
Despite political missteps, Moore said he expects robust economic growth in early 2026. Many Americans will finally feel the Trump tax cuts through lower withholding next year—“like a pay raise,” he said. In addition, capital inflows from abroad are strengthening investment.
“We’ve become a magnet for capital,” he said. “I’m very bullish on the economy next year.”
But he added a cautionary note: none of that matters unless Republicans explain the benefits clearly and consistently.
“Young people say, ‘I can’t make any money,’” Moore said. “Get a job. There are 7 million openings. Prosperity starts with work.”
Stephen Moore agrees with Trump’s economic instincts—cut taxes, reduce payroll burdens, supercharge growth. But he insists that without spending discipline and coherent messaging, even the strongest economic tailwinds won’t protect the GOP from political backlash.
“Cheer up,” Moore concluded. “It’s a great economy. But Republicans need to make the case for it.”