The challenge of restoring financial responsibility will be fully exhibited in the next few monthswThe 2025 House of Representatives Budget resolution passed on February 25th.
It set the stage for laws that avoided the Senate's 60-vote threshold and could pass with a simple majority. It does not include any specific changes to spending or taxes, but it specifies which House committees should fund the deficit in the Settlement Act.
FY2025 Housing budget adjustment instructions They are seeking a 10-year, $2 trillion in forced spending. Of this total, $880 billion will come from the Energy and Commerce Board, which oversees Medicaid, a joint federal and state health insurance program aimed at 72 million low-income and disabled Americans. Benefits include nursing home care, personal care services, and payment of premiums and other expenses.
Congressional Republicans are willing to tackle Medicaid because they believe the program has moved far beyond its original design to support the poor and disabled. But President Trump sent Mixed signal As to whether he is on board to cut Medicaid. House Speaker Michael Johnson (R-La.) said the program cuts would be treated as “.fraud, waste, abuse.”
Medicaid spending is Affordable Care Methods It was enacted in 2010 and 50% has been enacted since the Covid-19 pandemic was attacked in 2020.
The spread of Medicaid during the Covid-19 pandemic came as workers who lost their jobs and were eligible for Medicaid qualifying for workers who had been in employer-sponsored health insurance. Established by the federal government Family's first coronavirus response This has increased federal Medicaid coincidence funding in exchange for states that guarantee ongoing compensation during public health emergency periods.
Amount and properties of Medicaid cuts are currently being reviewed House Republican. The proposals include lowering the federal game rate for 90% of new Medicaid enrollees in the Affordable Care Act and implementing per capita restrictions on those consistent with state programs. There is also a consideration that Medicaid recipients should have work requirements, which is expected to save only about $100 million over a decade.
According to Wall Street Journal Editorial Committee, The claim that Republicans want to destroy Medicaid is false. Under the Congressional Budget Office's baseline forecast, it points out that Medicaid spending is expected to increase by $2.4 trillion by 2035. As a result, even if $880 billion is shaved from this tally, Medicaid spending should increase by $1.5 trillion in the next decade or 2% per year.
Many observers believe Congress needs to set boundaries for Medicaid and other essential programs. Because they constitute an ever-increasing share of total spending. Fifty years ago, compulsory programs and net interest costs accounted for around 50% of total federal spending, but these items now account for nearly 75%, and are steadily rising.
That said, even if Republicans achieve targeted spending cuts, federal debt is projected to rise by $2.8 trillion over the next decade. That's the main reason Tax revenue is projected to decline by $4.5 trillion If key provisions of the Tax Reduction and Employment Act are extended.
When the law was enacted at the end of 2017, the bill was complicated and contained both positive and negative elements.
The reduction in the US corporate tax rate from 35% to 21% would be in line with the major industrial economy. One of the main advantages is that US companies have reduced incentives to outsource production overseas, while US companies have created incentives to invest in factories and equipment. The lower corporate tax rate is a permanent feature of the tax cuts and employment laws and does not require extensions.
By comparison, the personal income tax rate reduction will require an extension by the end of this year. They were sold as tax cuts for middle-income workers, Focus on budget and policy priorities This act was “distorted by a rich and expensive person and was unable to fulfill his promise.” Policymakers argue that they should work for tax laws that generate more revenue, and are more progressive and fair.
Tax Policy Center We estimate that households with income in the top 1% will receive an average tax cut of more than $60,000 compared to the lower 60% households under $500. However, it also points out that certain provisions of the law have different distribution effects, such as standard deductions and increased childcare credits.
They conclude that individual provisions for tax cuts and employment “contain a combination of give and take that affect households differently depending on their income and other characteristics.”
Republicans and Democrats have not addressed tax cut provisions that have been maintained or revised so far, but one thing is clear. Mid-term Democratic Campaign of 2026 It depicts extensions of the law and cuts in medicine as evidence that Republicans are seeking to benefit the rich at the expense of middle-income and poor people.
The strategy was successful in helping Democrats win a decisive victory in the middle of 2018. To counter this, Republicans should focus their tax cuts on middle- and low-income households that provide greater support to the economy than the tax cuts for the wealthy.
“Dr. Nicholas Salgen is an economic consultant for investment advisors at Fort Washington and is a member of the University of Virginia's Darden Business School. He has written three books, including “Investing in the Trump Era: How Economic Policy Impacts Financial Markets.”
