One of my objectives in this daily letter is to equip you with the facts you need. As the Senate approaches a vote on Trump’s giant “big beautiful” tax and budget bill, I want to be as clear as possible about it.
First, it will cost a budget-busting $3.3 trillion. According to new estimates by the nonpartisan Congressional Budget Office, the Senate bill would add at least $3.3 trillion to the already out-of-control national debt over a decade. That’s nearly $1 trillion more than the House-passed version.
Second, it will cause 11.8 million Americans to lose their health coverage. The Senate version would result in even deeper cuts in federal support for health insurance, and more Americans losing coverage, than the House version. Federal spending on Medicaid, Medicare, and Obamacare would be reduced by more than $1.1 trillion over that period — with more than $1 trillion of those cuts coming from Medicaid alone.
All told, this will leave 11.8 million more Americans uninsured by 2034.
Third, it will cut food stamps and other nutrition assistance for lower-income Americans. According to the CBO, the legislation will not only cut Medicaid by about 18 percent, it will cut Supplemental Nutrition Assistance Program (food stamps) by roughly 20 percent. These cuts will constitute the most dramatic reductions in safety net spending in modern U.S. history.
Fourth, it will overwhelmingly benefit the rich and big corporations. The CBO projects that those in the bottom tenth of the income distribution will end up poorer, while the top tenth will be substantially richer.
The bill also makes permanent the business tax cuts from the 2017 legislation, further benefiting the largest corporations.
Finally, it will not help the economy. Trickle-down economics has proven to be a cruel hoax. Over the last 50 years, Congress has passed four major bills that cut taxes: the 1981 Reagan tax cuts; the 2001 and 2003 George W. Bush tax cuts; and the 2017 Trump tax cuts. Each time, the same three arguments were made in favor of the tax cuts: (1) They’d pay for themselves. (2) They’d supercharge economic growth. (3) They’d benefit everyone.
All have been proven wrong. Here’s what in fact happened:
(1) Did the tax cuts pay for themselves?
No. Rather than paying for themselves, the Reagan, Bush, and Trump tax cuts each significantly increased the federal deficit. In total, those tax cuts have added over $10.4 trillion to the federal deficit since 1981 compared to the Congressional Budget Office’s baseline projections.
(2) Did the tax cuts supercharge economic growth, create millions of jobs, and raise wages?
Absolutely not. Rather than growing, the economy shrank after passage of the Reagan tax cuts. And unemployment surged to over 10 percent. Following the enactment of the Bush and Trump tax cuts, the economy did grow a bit, but at rates much lower than their supporters predicted.
(3) Did the tax cuts benefit everyone?
Heavens, no. Rather than benefiting everyone, the savings from the Reagan, Bush, and Trump tax cuts flowed mainly to the richest Americans. The average tax cut for households in the top 1 percent under the Reagan tax cut ($47,147) was 68 times largerthan the average tax cut for middle-class households ($695). The Bush tax cut for households in the top 1 percent was 16 times larger than the average tax cut for the middle class. The 2017 Trump tax cut for households in the top 1 percent was 36 times larger than for middle-class households.
Summary: If the bill now being considered by the Senate is enacted, 11.8 million Americans will lose their health insurance, millions will fall into poverty, and the national debt will increase by $3.3 trillion, all to provide a major tax cut mainly to the rich and big corporations. There is no justification for this.
Never before in the history of this nation has such a large redistribution of income been directed upward, for no reason at all. It comes at a time of near-record inequalities of income and wealth.
What you can do: Call your senators and tell them to vote “no” on this calamitous tax and budget bill. Congressional switchboard: (202) 224-3121.
Beyond this, help ensure that senators who vote in favor of this monstrosity are booted out of the Senate as soon as they’re up for reelection.
Robert Reich is a professor of public policy at Berkeley and former secretary of labor. His writings can be found at https://robertreich.substack.com/.