Trump's big bill achieved what conservatives have been trying to do for decades

The Guardian

2 days ago

For decades, Republicans have argued that the US would be better off if taxes were low, and programs to help low-income Americans were harder to access. With Donald Trump's marquee tax and spending bill now set to become law, the country will find out what it's like to live under that sort of system.
The massive legislation that Trump plans to sign Friday will make his campaign promises a reality by extending tax cuts enacted during his first term, and creating new deductions aimed at the working-class voters who backed his re-election.
But it will also fundamentally reorder two major social safety net programs, slashing funding and imposing new work requirements that nonpartisan estimates say will cost millions of people their benefits. The ripple effects, experts say, will be felt across the country, and not just by the poor.
'Sometimes people like to feel like this is an us versus them [issue], but this is really all of us. It is the people that your kids are going to school with it, is your neighbor, the people that you play soccer with,' said Lelaine Bigelow, executive director of the Georgetown Center on Poverty and Inequality 'This is going to have a massive effect on a lot of people around this country.'
The 'one big, beautiful bill', as Trump calls it, won final approval by the House of Representatives on Thursday, in time for his signature on 4 July, the US Independence Day holiday. In addition to the tax cuts, it will also channel tens of billions in dollars towards immigration enforcement and building a wall along the Mexican border.
To cut costs, Republicans included provisions to end green energy incentives created under Joe Biden, but the bulk of the savings will come from changes to two programs: Medicaid, which provides healthcare to low-income and disabled Americans, and the Supplemental Nutrition Assistance Program (Snap), which helps low-income Americans afford food.
Both programs will face new and stricter work requirements, and states will be forced to share part of the cost of Snap for the first time ever. The nonpartisan Congressional Budget Office (CBO) estimates the bill's Medicaid changes could cost as many as 11.8 million people their healthcare, and the left-leaning Center on Budget and Policy Priorities forecasts about 8 million people, or one in five recipients, may lose their Snap benefits.
The GOP argues that the bill will not cut Medicaid or Snap, but weed out 'waste, fraud and abuse' thereby making the programs more efficient. At one point, House speaker Mike Johnson circulated research from the conservative American Enterprise Institute finding that, after sleeping, playing video games was how Medicaid recipients who do not work spend most of their time.
If they did not act, Republicans warned, the 2017 tax cuts would expire this year, many Americans would be forced to pay more, and economic growth would suffer. However, analyses of the law found that it was the highest earners who felt most of the benefit from the tax regimen.
Bigelow warns that the benefit cuts will be the most widespread effect of the bill. Her center's research found that 34% of the country's population will be negatively affected by the bill, mostly through the Snap and Medicaid cuts, while just under 2% of taxpayers are in the income bracket that will get most of the tax relief.
And though the bill cuts taxes on tips, overtime and car loan interest, they only to last through 2028.
Even Americans who do not interact with federal safety programs could feel the economic effects of its retrenchment. Fewer Snap enrollees could mean less business for grocery stores, while rural hospitals could be hard hit by the Medicaid cuts, even with a $50bn fund included in the bill to help those in poor financial shape.
Robert Manduca, a University of Michigan sociology professor, forecast a $120bn per year hit to local economies from the benefit cuts. Employees and business owners, he warned, 'might see their job become less secure because the demand in their local economy is getting reduced'.
Paradoxically, the bill is still hugely expensive. The CBO forecasts it will add $3.3tn to the deficit through 2034, mostly due to the tax cuts. For fiscal hawks concerned about the sustainability of the country's budget deficit, which has yawned higher in recent years as Washington DC battled the Covid-19 pandemic with massive fiscal stimulus, there's little beauty in Trump's bill.
'Yes, the economy may well enjoy a sugar-high the next couple of years, as borrowing stimulates near-term consumption,' said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which advocates for lowering the deficit.
'But a sugar-high won't be sustained, it will do real damage, and often what comes next is the crash. The longer-term health of our economy, American families, and our children will be worse off due to this debt-financed bill.'