On July 1, following hours of voting on the Senate floor in Washington, lawmakers approved a law that is set to reshape the American economy. It is possible to make it seem immensely complicated — its 900-plus pages cover a wide range of subjects, such as defense spending, clean-energy tax credits and the national debt. Entire pieces could be written about each of these ideas, but it’s worth zooming in on something a bit simpler: A transfer of wealth.
Recently, experts at Budget Lab at Yale, a research center, concluded that the law’s benefits will be disproportionately spread across wealth classes. In a New York Times data analysis, Tony Romm wrote that “the bottom fifth of earners would see their after-tax incomes fall, on average, by 2.3 percent within the next decade, while those at the top would see about a 2.3 percent boost.”
The fact that those numbers mirror each other is almost comically on the nose, given the bill’s tax cuts will be paid for by gutting programs targeted principally at poorer Americans: Medicaid and the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps. Treasury Secretary Scott Bessent called the bill a “deal for the working people,” but that is hard to believe at best. In effect, the bill’s authors have proposed slicing a hole in the social safety net in exchange for cutting taxes on the nation’s richest people.
Yes, most Americans stand to see tax cuts because of the bill. But that, too, is likely to be uneven. The Urban-Brookings Tax Policy Center recently estimated that a person making $217,000 a year would receive a tax cut of about $12,500; a person making $35,000, by contrast, would get $150 taken off the top.
The disparities are perhaps best illustrated in the ways the bill will change health care. The bill’s authors have proposed sharply reducing funding for Medicaid and SNAP. Given these programs most benefit lower-income Americans, the long-term effect of this will be, in essence, cutting poor Americans’ access to health care and making it harder for them to afford food.
Over the next decade, according to the Congressional Budget Office’s analysis, federal spending on those programs would fall by about $700 billion and $267 billion respectively. (On the other end of the income scale, the bill includes approximately $1 trillion in tax cuts for people making over $500,000 a year — another bit of grim symmetry.) In Minnesota, an estimated 173,000 people will lose health care coverage.
The bill is not wholly axing Medicaid or SNAP, but it is doing something to a similar effect — and in a way that’s unnecessarily complicated. Its authors have proposed introducing more work requirements, which is the kind of thing that sounds fine on paper but often comes out a bit slanted. Working through complex paperwork, decoding legalese and matching up forms asks beneficiaries to use free time and expertise that they may not have in the first place, effectively booting many Americans off the programs.
In March, Donald Trump said: “I want to do what has not been done in 24 years: balance the federal budget. We’re going to balance it.” As it currently stands, without accounting for interest, this bill — the signature piece of legislation of his second term in the White House — is set to add at least $2.5 trillion to the federal debt.
Perhaps this is the most frustrating thing about the bill: its hypocrisy. Taken strictly on its face, and read as generously as possible, this is a dangerous and irresponsible piece of legislation. The folks who pushed the bill claim to represent “working people” but have made it harder for many Americans to stay on federally-subsidized health care; they cut the tax credits that might fuel the wind, solar, electric vehicle and nuclear power industries (all spaces which could help boost American labor in the coming years); and they proposed a transfer of wealth from the poor to the rich and dressed it up as a tax break.