The GOP Budget Takes From the Poor and Gives to the Rich
There has been a lot of discussion recently about what New York Times writer David Leonhardt has called the 'class inversion of American politics—with most professionals supporting Democrats and more working-class people backing Republicans.' If this political 'class inversion' is real, it seems awfully hard to square with the signature policy of the second Trump Administration: the so-called 'One Big, Beautiful Bill' (OBBB). This bill will result in easily the largest one-time upward redistribution of income in U.S. history.
Take one jarring symmetry: the spending cuts to health care and food assistance programs in the bill will average about $120 billion each year over the next decade while the new tax cuts for households already making over $500,000 each year will average just over $120 billion per year.
The OBBB combines staggeringly large benefits to the richest households in the country with outright cuts to incomes of the bottom 40%. This combination of spending cuts for the vulnerable and tax cuts for the rich leads to the stunning result summarized in a recent report by the Congressional Budget Office: the poorest 20% of U.S. households will see income losses of almost 4% under this bill while the richest 10% will see gains of over 2%. In dollar terms, the tax provisions of the OBBB are equivalent to writing annual checks of $296,000 to every single taxpayer with an annual income over $5 million, and checks of $55,300 to all taxpayers with annual incomes between $1 million and $5 million.
The steep cuts to Medicaid and health insurance subsidies in the marketplace exchanges established by the Affordable Care Act (ACA) will lead to 17 million people losing health insurance coverage. These coverage losses won't just cause suffering for those newly uninsured now unable to access needed health care without financial catastrophe, they will ripple through the health system and the larger economy, causing damage everywhere.
For example, rural hospitals have been huge beneficiaries of the ACA's Medicaid expansion. The rate of rural hospital closure in expansion states (that is, states that accepted the ACA money to expand Medicaid for their residents) is 62% lower than in states that refused the ACA expansions. Hospitals generally rely on Medicaid for 20% of their total revenue, and rural hospitals have razor-thin operating margins. The OBBB cuts to Medicaid are guaranteed to cause rural hospital closures. These closures will leave rural residents with fewer places to receive needed care and will starve weak rural economies of needed jobs.
Counties that currently rely heavily on Medicaid to cover their potential workers (those between the ages of 19 and 64) also have higher-than-average unemployment rates. This means that the Medicaid cuts called for in the OBBB will especially impact counties that are already struggling economically. If we just look at the Medicaid cuts likely to fall on counties with an unemployment rate that is 0.5% above the national average (a decent marker for a fragile local economy), this would imply roughly 850,000 jobs (only about a quarter of them directly in health care) could be destroyed by the Medicaid cuts in those counties.
Finally, it's worth noting that even with these highly destructive cuts, the Senate version adds nearly $4 trillion to the national debt over the next 10 years. This demonstrates again how staggeringly tilted to the top its tax cuts are. Take one example: if we took on $4 trillion in new debt and just distributed it on a lump-sum basis across the entire country, we could give $12,000 to every adult and child in the U.S. Instead, because the OBBB gives the very rich much more than this (more than 100 times more, in fact), other families (mostly poor) are forced to accept outright cuts to their incomes.
The OBBB is stunning only in how brazenly it takes from the bottom to give to the top. It should be embarrassing for any party to champion such a reverse-Robin Hood bill. It should be really embarrassing for a party hoping to convince people that it has changed its spots and is now really a champion for the working class. Given that it has been rammed through on a party-line vote with near-unanimous support from the GOP, we all know the truth.
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