A new Trump-backed bill is coming through Congress, aiming to cut $625 billion from Medicaid, overhaul SNAP benefits, and introduce sweeping tax breaks. As lawmakers push for a vote this week, the proposed changes could have major consequences for millions of low-income Americans. Thus, let’s look into the breakdown of what’s in the bill and what’s at stake.
Medicaid in the Crosshairs: $625 Billion in Cuts Proposed
The proposed $625 billion cut to Medicaid in the Trump-backed “One Big Beautiful Bill Act” has sparked significant debate and concerns among lawmakers, healthcare experts, and advocacy groups. The Congressional Budget Office (CBO) estimates that these cuts could result in 7.6 million Americans losing their healthcare insurance over the next decade.
Key provisions of the bill include imposing work requirements for able-bodied adults aged 19 to 65, introducing co-payments for certain services, and implementing stricter asset tests for eligibility. For example, individuals with homes valued at over $1 million would be ineligible for Medicaid. Additionally, the bill proposes reducing federal matching funds to states that provide Medicaid coverage to undocumented immigrants.
Healthcare experts warn that these changes could have dire consequences. A study by the National Bureau of Economic Research found that Medicaid expansion under the Affordable Care Act saved around 27,400 lives between 2010 and 2022. Restricting access to Medicaid could reverse these gains, particularly affecting low-income and vulnerable populations.
What do the SNAP Changes mean for food assistance recipients?
The proposed cuts to the Supplemental Nutrition Assistance Program (SNAP) under the Trump-backed “One Big Beautiful Bill Act” have raised concerns about their impact on food assistance recipients. Key SNAP changes in the Trump-backed bill are:
- $300 Billion in SNAP Cuts Over 10 Years: The House Agriculture Committee has approved nearly $300 billion in cuts to SNAP benefits over the next decade, representing a significant reduction in the program’s funding.
- Expanded Work Requirements: The bill proposes raising the age for mandatory work requirements from 54 to 64, affecting able-bodied adults without dependents. Such a change could lead to around 3 million individuals losing access to SNAP benefits each month.
- Stricter Eligibility and Documentation Rules: New provisions would impose more stringent eligibility criteria and require additional documentation, making it more challenging for individuals to qualify for assistance.
- Shift in Financial Responsibility to States: The legislation would require states to cover at least 25% of SNAP benefit costs and 75% of administrative expenses. It is up from the current 50% for administrative costs and no contribution to benefits. Thus, this shift could strain state budgets and lead to reduced benefits or stricter eligibility requirements.
- Disproportionate Impact on Vulnerable Communities: Communities with high SNAP enrollment, such as Houston’s Fifth Ward, are expected to be affected by the proposed changes. Thus, exacerbating food insecurity among low-income and minority populations.
Scope of Proposed Tax Cut
The act proposed by Trump introduces tax reforms with varied implications across different income groups. The key provisions and their beneficiaries are:
- Extension of 2017 Tax Cuts: The bill aims to make the 2017 Tax Cuts and Jobs Act (TCJA) permanent, preventing an average tax increase of 22% for many Americans. Therefore, this move is projected to save the average family approximately $1,700 annually and increase real take-home pay by $3,300 per worker.
- Elimination of Taxes on Tips and Overtime: To benefit service and hourly workers, the legislation proposes exempting tips and overtime pay from federal income taxes through 2028. Thus, this measure is designed to increase disposable income for workers in industries like hospitality and retail.
- Enhanced Child Tax Credit: Individuals aged 65 and older with incomes up to $75,000 or $150,000 for joint filers would be eligible for an additional $4,000 deduction, aiming to provide tax relief to seniors on fixed incomes.
- Enhanced Child Tax Credit: The bill proposes increasing the Child Tax Credit and making it more accessible to families with children. Thus, raising the maximum refundable credit to $2,000 per child by 2025.
- State and Local Tax (SALT) Deduction Cap Adjustment: For residents in high-tax states, the SALT deduction cap would be raised to $40,000 for household earnings up to $751,000. Therefore, providing significant relief to upper-middle-income taxpayers in states like New York and California.
1. Distribution of Benefits
- Top 10% of Earners: Analyses indicate that approximately two-thirds of the tax benefits would accrue to the top 10% of income earners. Furthermore, low-income households experience a net loss of over $1,000 annually due to concurrent cuts in social programs.
- Working-Class Families: The elimination of taxes on tips and overtime, along with the enhanced Child Tax Credit, is designed to increase disposable income for working-class families.
- Seniors: The additional $4,000 deduction aims to provide financial relief to seniors, particularly those on fixed incomes.
2. Fiscal Impact
The Congressional Budget Office projects that the bill would increase the federal deficit by approximately $3.8 trillion over the next decade, even after accounting for proposed spending cuts. The Tax Foundation estimates a $4.5 trillion reduction in federal tax revenue from 2025 to 2034, with a projected 1.1% increase in a long-run GDP offsetting only 16% of the revenue losses.
Breaking Down the Budget: What’s Driving the GOP Push?
The GOP’s push for the act is driven by a combination of ideological goals, political strategy, and fiscal considerations. The key factors motivating this legislative effort are:
- Increased Funding for Defense and Border Security: The legislation allocates substantial funds for defense and border security, including $150 billion for the Pentagon and $70 billion for border security measures. Thus, it reflects the GOP’s commitment to strengthening national security and addressing immigration concerns.
- Political Strategy and Party Unity: President Donald Trump is actively lobbying for the bill’s passage, emphasizing the importance of party unity. He has warned Republican lawmakers of political consequences if they oppose the legislation, particularly targeting dissenters on issues like Medicaid cuts and state and local tax (SALT) deduction. Trump’s involvement underscores the political strategy behind the bill, aiming to consolidate support within the GOP.
Conclusion
The Trump-backed bill marks a pivotal shift in federal priorities, favoring tax relief and defense spending while significantly cutting social programs. If passed, it could reshape Medicaid, SNAP, and tax policy for years, with sweeping consequences for low-income Americans, working families, and the broader economy. Thus, the stakes are high this week.
About The Author
