Kudlow warns GOP against narrow reconciliation budget bill, calls for pro-growth tax cuts amid fraud concerns

FOX Business host Larry Kudlow warned Republicans against pursuing a narrow reconciliation budget bill, arguing that the party should prioritize pro-growth tax cuts while also addressing alleged waste, fraud, and abuse in government spending.

Kudlow said Republicans “win elections” when they focus on tax cuts and economic growth, but “lose elections” when they emphasize spending more taxpayer money without delivering a growth message. He argued the economy is “holding up very well during wartime,” but said affordability remains a concern, citing “$4 gas” and rising prices.

He also referenced polling, saying a “dependable TIPP poll” found four out of 10 voters believe their taxes are higher this year, while only one out of 10 think they are lower. Kudlow said this is occurring despite tax cuts included in “the One, Big, Beautiful Bill,” which he said was “never properly sold” to voters.

Dispute over the Senate reconciliation “skinny bill”

Kudlow said he raised concerns with Senate leadership Republican Shelley Moore Capito, arguing that the proposed approach would not deliver the broader set of policies he believes should be included. He said he told Capito that Republicans were not “re-fund[ing] the Department of Homeland Security” and were not including “no tax cuts, no inflation indexing for capital gains, no Pentagon military supplement, no voting rights bill, no waste, fraud, and abuse.”

He said Capito defended the narrow bill. Kudlow argued that, based on current conditions, there may be room for only one major budget bill that could pass with 50 votes plus the vice president under the reconciliation process.

According to Kudlow, the Senate is currently pushing a “so-called skinny bill” that would finance ICE and CBP for 3.5 years, for about $70 billion.

What Kudlow says is missing from the bill

Kudlow said he supports border security and the agencies he referenced, but argued that the rest of the Department of Homeland Security is not included. He specifically cited that the Coast Guard, the Federal Emergency Management Agency, and the Transportation Security Administration are not included in the bill.

He also criticized what he described as a lack of attention to voting rights reform, saying it would require photo identification and citizenship proof, while arguing the GOP is “ignoring that.”

Cost-of-living concerns and tax-cut priorities

Kudlow tied affordability concerns to energy prices, stating that “$4 gas” is a “necessary casualty” of destroying Iran, which he said he supports. He argued that working people would benefit from additional money in their pockets through more tax cuts.

He cited historical examples, saying supply-side tax cuts have “always resonated positively with voters,” including referencing President Ronald Reagan and President George W. Bush, who he said won the midterms in 2002 by defending America and implementing “across-the-board tax cuts.”

Kudlow also argued that inflation-indexed capital gains could support home sales and help address a housing slump, and that lowering marginal tax rates for middle-income earners could help.

Claims of waste, fraud, and abuse and deficit-reduction potential

Kudlow said the budget should also include measures to address waste, fraud, and abuse. He claimed that the Medicare administrator, Mehmet Oz, “has already found $100 billion worth at Los Angeles alone,” and asked where that is reflected in the budget.

He argued that filling out government waste, fraud, and abuse efforts could produce “hundreds of billions of dollars multiplied over 10 years,” which he said would be “phenomenal deficit reduction,” in addition to supporting a “growthier economy.”

Outlook for the budget process and midterm politics

Kudlow said he has not seen discussion of what he called “crucial policies,” and suggested that only one major budget package may be possible, similar to last year. He urged Republicans to pursue “popular policies” that could attract more support for a more ambitious budget bill ahead of midterm elections.

He concluded by urging Republicans to stop focusing on what they “can’t do” and instead communicate what can be done to help working people and make the economy “growthier again,” framing it as a “midterm victory.”