Several years ago, I came home to find my young son wearing a Spider-Man costume, cowboy boots, and holding a whiffle ball bat. I smiled and thought, “That kid has a lot going on.” The current Congress isn’t wearing a Spider-Man costume, but they have a lot going on, too.
It would be an understatement to say that the government has a lot going on during President Trump’s second term. With tariffs, border security, airstrikes against ISIS, cabinet appointment hearings, and so much more, it is easy to get distracted by which congressional goals will affect the financial services space.
The 119th Congress is only a month in, but there has been more activity in that month than usually happens in a year. They have several big items they need to tackle immediately. Below, I see five prominent congressional priorities that could significantly impact markets: Taxes, Deregulation, Capital Formation, AI Framework, and the Debt Limit.
- Taxes. Trump spoke a lot about taxes in his campaign, so I expect tax policy will be front and center. Many individual and small business tax provisions from 2017’s Tax Cuts and Jobs Act expire at the end of 2025. Congress and the Trump Administration will try to extend or make many of these provisions permanent. Their hope is that tariff income and the taking back of unspent funds from the Inflation Reduction Act will offset the cost of the tax cuts.
- Deregulation. The Trump administration has begun rolling back and pausing many of the prior administration’s regulatory priorities. Deregulation usually lowers the costs of operating a business, leading to job growth and lower consumer prices.
- Capital Formation. This is a fancy way of saying they want to help business owners and business startups have an easier time getting affordable loans that will, in turn, help the economy. The Senate Banking Committee and the House Financial Services Committee hope to expand on the progress made on the “Expanding Access to Capital Act” (H.R. 2799), by including growth incentives to increase access to the markets for small businesses.
- AI Framework. Obviously, there is a lot of excitement around AI. Congress and the various government agencies hope to build an AI framework that encourages growth and innovation and safeguards our systems from countries and groups that could threaten our national security. Congress and the SEC have also announced similar plans to develop a thorough regulatory framework for crypto assets.
- Debt Limit. Last but not least, America still has a big debt problem. Congress must prioritize the debt limit, which expired on January 1, 2025. The Treasury Department is already using “extraordinary measures,” and unless something is done, the US will default on its debt in the spring or summer of 2025.
The current situation remains fluid, and investors should be prepared for the possibility of volatility in news in any of these areas. There is a lot to work through, and this complex combination of factors will likely create some swings in the market as corporate America sorts out the scale and impact of these new policies.
I don’t know Spider-Man’s full power, but I have to believe all this uncertainty would be a little easier if our congressional representatives wore Spider-Man costumes every Friday. Just a thought.
Have a blessed week!
Richard Baker
Opinions voiced above are for general information only & not intended as specific advice or recommendations for any person. All performance cited is historical & is no guarantee of future results. All indices are unmanaged and may not be invested directly.
The economic forecast outlined in this material may not develop as predicted & there can be no guarantee that strategies promoted will be successful.
Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.