One factor has been true about each the Republican and Democratic events on Capitol Hill in current a long time — even because the partisan divide has widened. Regardless of how a lot they might speak in regards to the deficit and reining in spending, that is by no means stopped both social gathering in energy from passing payments that do not precisely add up in the case of balancing the books of the federal authorities.
Will this time be totally different?
Chief monetary officers are betting it will not in the case of President Trump’s “One Large Stunning Invoice.”
A majority (86%) of CFOs at firms throughout the financial system surveyed by CNBC say there will likely be vital adjustments made to the invoice, however it would turn out to be regulation. They usually anticipate the company tax breaks briefly made regulation by Trump’s 2017 tax act to nonetheless be on the books as they face expiration at year-end.
The quarterly CNBC CFO Council Survey is a sampling of views from its members who symbolize organizations throughout the financial system. The Q2 2025 survey fielded responses from 30 CFOs.
President Trump has demanded lawmakers cross the invoice by July 4, and this week, he stated no lawmaker might go on trip till they did so. In the meantime, Home members are pushing again on the already vital adjustments the Senate has made to their model of the invoice, comparable to extending some clear vitality tax breaks on a brief foundation, and there are divisions in each chambers over cuts to social security internet packages and therapy of the SALT taxes. And a few Republican senators, led by Wisconsin’s Ron Johnson, who referred to as the invoice “immoral,” are balking on the value rag.
Nonetheless, Senate Majority Chief John Thune stated he was pushing for a vote this week, and Treasury Secretary Scott Bessent stated he anticipated the Senate to have the ability to vote by Friday.
In the long run, there could also be extra time for lawmakers to iron out their variations past July 4 if wanted, in keeping with tax consultants, and it will be no shock in the event that they take each alternative to maximise their leverage. It was not way back that headlines proclaimed the since-passed Home model of the invoice as being on the ropes and comparable headlines have emerged in regards to the Senate effort. Phrases like “revolt” and “mutiny” are nonetheless within the headlines in regards to the invoice’s destiny in a fractious Capitol Hill setting.
Congress, because the outdated saying goes, has by no means been good about getting its homework in on time.
On this case, at the same time as deficit issues and an estimated trillions that the invoice would add to it are extra widespread — inside the GOP, within the C-suite, and on Wall Avenue, the place bond merchants have pushed their weight round this 12 months within the type of increased rates of interest — it is potential the actual deadline for the laws wouldn’t arrive till what’s often called “X date.” That is the date on which the U.S. wouldn’t be capable of pay its debt to bondholders with out elevating the debt ceiling.
Congress has tied the laws’s destiny to the debt ceiling challenge — although some lawmakers together with Sen. Rand Paul have referred to as for stripping it out. If it stays a part of the legislative package deal, it’s a plus in giving lawmakers motivation to cross the invoice, and giving them wiggle room to work out variations and proceed to be vocal in pushing for his or her most well-liked legislative initiatives previous the July 4 deadline.
Bessent warned this week that the X date might arrive prior to anticipated (the estimated date is in early August, although no extra particular date is given) however he stated potential courtroom selections requiring the federal government to refund tariff funds made below emergency acts might transfer that date up. There’s additionally the difficulty of the price range math, with fiscal 2025 set to finish in September, which means if Congress did not make this regulation earlier than then, it must begin over with fiscal 2026 numbers.
So there’s nonetheless room for Congress to kick the can down the street, hold negotiating, and use no matter leverage they’ve, particularly in a narrowly divided Congress, and consequently offers every member extra leverage over their vote.
The massive threat for companies is not that enterprise tax charges go up — it is the distinction between making the company tax cuts enacted in 2017 everlasting somewhat than extending them on a brief foundation once more. The Senate is pushing for everlasting cuts. As well as, the laws goals to carry again a trio of most well-liked enterprise tax gadgets on bonus depreciation, curiosity expense, and full expensing therapy for analysis and improvement prices, which has been a political soccer lately and topic to a number of failed makes an attempt by Congress to revive it, even with bipartisan help.
Companies have stated all 12 months that regardless of President Trump’s feedback about bringing down enterprise tax charges as little as 15%, their concept of a “win” isn’t seeing charges go up on the finish of the 12 months if the present 2017 tax cuts had been to run out — any lack of a everlasting extension within the laws would nonetheless be a win, if arguably lower than a game-changing one. What companies say they want proper now’s for the tax lower certainty to assist de-risk the setting for enterprise, particularly as tariffs are anticipated to function headwind for the financial system within the months forward.
The CFO survey discovered nearly all of CFOs (64%) saying tariffs will harm the financial system. In the meantime, 100% of CFOs taking the survey stated present coverage uncertainty is affecting their skill to make enterprise selections, with about one-third saying it’s having a “vital affect.”
The specter of automated tax will increase set to kick in subsequent 12 months could be what the company world sees as a self-inflicted harm in starting of 2026 on the a part of the GOP, and in keeping with the survey, companies anticipate the GOP to keep away from that.
In different survey findings of word:
Bond yields: As Congress battles over tax cuts and the deficit, and a few Fed officers say they’re open to charge cuts as quickly as July, CFOs anticipate yields on the 10-year Treasury to stay elevated, with 86% of the CFOs surveyed saying charges will stay between 4% and 5% at year-end. It’s at the moment close to 4.3%, and a 3rd of CFOs anticipate it to be even increased by December even because the Fed is anticipated to enact a minimum of a number of charge cuts later this 12 months.
Inflation: CFOs are extra optimistic in regards to the inflation outlook, at the same time as they are saying tariffs will weigh on the financial system. Just a few CFOs cited inflation as the most important present threat to their enterprise, with client demand and commerce coverage the extra feared elements.
However practically 60% of CFOs surveyed say the Fed will be unable to get inflation again right down to the goal charge of two% earlier than the second half of 2026, at earliest.
The inventory market: As shares have rallied again from the April lows, CFOs have like buyers gone again right into a extra bullish mode according to current years. Every quarter, we ask CFOS which sector will carry out the perfect over the subsequent six months. In current quarters, there was uncommon division amongst CFOs, and a comparatively excessive share of respondents not citing expertise as the perfect sector for progress. That is now again to what has been the norm in current historical past, with near 60% of CFOS saying tech is the sector finest positioned for progress.
However the current volatility continues to be weighing on general market confidence, with nearly half of CFOs surveyed saying they assume it’s extra seemingly the S&P 500 falls again under 5,500 than attain above 6,500 for the primary time. The index has been flirting with an all-time excessive in current buying and selling.
The financial system: A recession continues to be within the playing cards, in keeping with the CFOs, with over half (55%) saying they anticipate a downturn both within the second half of this 12 months, or in 2026. Most of that pessimism is geared to the second half of this 12 months, and is probably going tied to tariffs and CFO issues about shoppers who they consider should not totally ready for value hikes, in addition to issues in regards to the labor market softening.
And in the case of a intestine examine on the general route within the financial system, the CFOs are near evenly cut up, with just a little below half saying they’re “considerably optimistic” in regards to the financial system, however nonetheless a slight tilt to the “pessimistic” camp.
On a current name of CFO Council members often scheduled to debate the financial outlook on weeks when the Federal Reserve’s FOMC meets to set charge coverage, one retail CFO advised their friends, “my fundamental concern is that the patron feels just like the pricing that they are seeing immediately, it is already impacted by tariffs … and they also’re respiration a sigh of reduction that they’ve already seen the affect of tariffs, what it may price them. … it is August and past the place we’re actually going to see these points. … My huge concern is the patron thinks that they are in nice form … that they’ve seen the affect, and so they have not seen it but.”
One other CFO added, “I really feel just like the Fed has an particularly tough job proper now, provided that we’re beginning to see some cracks within the financial knowledge, however the impacts of tariffs in actuality could not come till a a lot, a lot later cut-off date.”
Seventy-two p.c of CFOs stated tariffs will trigger resurgent inflation.