Republicans Propose a Grab Bag of Social Program Cuts to Fund Tax Cuts for Billionaires
Health insurance, public health services, and more could be on the chopping block to help pay for tax cuts for the oligarchy.
Republicans are seeking to bring an expensive reconciliation bill to the congressional floor that would seek to package an extension to Trump’s 2017 tax cuts with even more immigration crackdown policy. Extending these tax cuts alone is expected to cost a staggering $5 trillion dollars over the course of 9 years. The policies are being packaged into a budget reconciliation package, because this form of legislation is easier to pass, requiring a simple majority of 51 votes in the Senate rather than a supermajority of 60, meaning that the legislation should easily pass with the Republicans’ recently attained 3 vote majority in the Senate. Even still, some Republicans fear that budget hawks in congress could tank the bill for its steep price tag. According to the New York Times, Republicans are passing around 50 pages of potential social spending cuts intended to mitigate fears from budget-conscious Republicans and help pay for the initiatives. Most of these proposed cuts would disproportionately impact working class and poor Americans. Amongst their proposals, some of the most notable include:
Various cuts and changes to Medicaid and Medicare, including but not limited to:
Work requirements for some Medicare recipients, which would cut health insurance for 600,000 people
The elimination or modification of Affordable Care Act subsidies for various groups, such as cutting off DACA recipients from them entirely
Modifications to how Medicare handles and covers “bad debt”, leaving hospitals footing more of the bill when debts for patient cost-sharing services are not paid by the patient
Elimination of the Social Services Block Grant, a grant to states designed to help supplement spending on social programs targeting children, the sick, and elderly
Cutting energy efficiency and clean energy programs passed in the Inflation Reduction Act, impacting jobs, training, and work for up to 3.2 million people
Cuts or modifications to the SNAP (food stamp) program, including cutting a Biden-era expansion in benefits and raising the maximum age of work requirements
Elimination of the ability to deduct home mortgage interest from taxes
Although the laundry list of programs potentially on the chopping block here would have meaningful, detrimental impacts on working class people, those most likely to pass are unlikely to put a meaningful dent in the $5 trillion cost of the tax cut extension, let alone Trump’s mass deportation effort, which, by some estimates, could cost $1 trillion over the course of a decade. Barring the fact that Trump’s immigration proposals would impart needless cruelty and devastating economic effects, the follow-up to the crowning legislative achievement of his first term in the form of an even greater tax cut is likely to be just as wasteful an upwards wealth transfer as the first time around.
While it may seem intuitive and obvious that providing tax cuts to the economic elite would necessarily reduce revenue to a government already struggling to pay for and execute essential programs and services, especially relative to the rest of the developed world, the argument from conservatives for cutting spending in lieu of tax cuts for the ultra-wealthy is one dating all the way back to the Reagan era. Often referred to as trickle-down economics, this political ideology is characterized by the idea that a financially stimulated upper class would create total economic expansion that would “trickle down” to the working class via new jobs, services, and private-sector-driven innovation. Over 40 years on, however, the verdict seems to be in: as demonstrated in a 2020 study which analyzed major tax cut events between 1965 and 2015 across 18 countries, these tax cuts for the wealthy disproportionately put more wealth into the pockets of the richest cohort of people, with little-to-no positive economic impact on the masses of working people, resulting in an exacerbating effect on wealth inequality. Even markers of broad economic performance, like GDP and unemployment, seemed to exhibit no real positive impact from these tax cuts, while each tax cut event seemed to correlate strongly with a significant bump in the income of the top bracket of the economy. What’s more, the Center on Budget and Policy Priorities examined Trump’s first tax cut legislation from 2017, and found, unsurprisingly, that this legislation disproportionately benefitted the top cohort of earners. The policy included a steep permanent reduction in the corporate tax rate from 35 percent down to 21 percent, and other aspects of the bill also focused primarily on high earners, like a weakening of the alternative minimum tax and a doubling of the estate tax exemption (a tax exemption for inheritances up to $22 million), while the meager middle class tax reductions from the bill are set to expire this year.
With nearly half of Americans living paycheck to paycheck, many of these already feeble social programs are likely narrowly supporting huge contingencies of people in precarious economic circumstances. Even implementing just a few of these proposed cuts would likely have devastating impacts for hundreds of thousands of people. To do so in service of yet another handout to billionaires, in spite of very scant evidence that doing so would have any real benefit for the economy writ large, let alone working people, would be grossly irresponsible.