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The radical Republican budget bill steals from the poor to give tax cuts to the rich

Posted July 2, 2025 at 4:53 pm by Heidi Shierholz

Yesterday, the Senate passed a budget bill that will create a weaker and more unequal U.S. economy. It is even more radical than the House version, with deeper Medicaid cuts that will destroy rural hospitals and strain state budgets, while adding nearly $4 trillion to the federal deficit. The House should reject this legislation and start from scratch. The stakes couldn’t be higher—the bill being rushed to passage will do grave damage to the economy and the well-being of U.S. families for years to come.

The bill is designed to cause a shocking upward redistribution of income. It includes draconian spending cuts—mostly to health care and food assistance for children and families—in order to give massive tax cuts to the wealthiest households. Because these cuts to health care and food assistance are so broad and deep, and because the tax cuts for anybody who is not already rich are so paltry, the bill will cause the bottom 40% of households to actually lose income on average. This group includes roughly 125 million people, and for a family of three it will include households with incomes up to $85,000. Meanwhile, households in the top 0.1% (those making over $3.3 million per year) will gain over $100,000 annually under this bill.

The spending cuts will also help finance the administration’s dream of an authoritarian-style immigration enforcement regime, providing funding at staggering levels to expand internment camps and surveillance across the country. This enforcement, of course, won’t help workers or create more jobs—on the contrary, it will cause massive job losses for both immigrants and U.S.-born workers.

Because the bill structures its painful cuts on cynical political timelines in an effort to avoid accountability, the suffering will unfold steadily over the next decade. But just because the pain will be strategically doled out over a longer timeline does not make it any less real or urgent. People will die. Children will lose access to food, and families will lose access to health care. Hospitals will be forced to downsize and close, particularly in rural areas. This will cause huge disruptions to local economies as the spillover effects from the loss of health care jobs will trigger significant job losses outside of health care.

The bill’s Medicaid cuts will hit the hardest in precisely those areas that can weather it the least, given that the counties with the highest share of people on Medicaid are also the counties with the highest unemployment rates. But the GOP has decided that it doesn’t matter if kids go hungry, parents can’t afford the medicine they need, towns can’t properly fund public schools, or jobs are wiped out in struggling rural counties—as long as the wealthiest Americans get a big, beautiful tax break.

And, those tax breaks are such massive giveaways to the rich that they will increase the deficit by close to $4 trillion, even with the draconian cuts for the most vulnerable. It’s worth noting that the GOP is desperately trying to hide that fact. They have taken the extraordinary step of coming up with a new and utterly bogus baseline against which to measure the cost of the bill. Their gimmicky methodology “finds” that the bill will reduce deficits by about $500 billion. Through this sleight of hand, Republicans are shamelessly lying to the public about the cost of the bill in order to make it sound less grotesque and damaging than it actually is.

If this bill becomes law, there will be a protracted period of economic pain that takes years to play out. By sharply raising deficits at a time when inflation and interest rates are already too high, the bill will gradually suppress productivity-boosting private investment—including in clean energy and much-needed housing. This crowding out of investment will be on top of the expanded scope of deportations made possible in this bill, which will shrink the nation’s labor supply. It’s further compounded by the Trump administration’s historically broad and steep tariffs that will raise prices and disrupt supply chains, along with deep cuts to crucial federal workforces that are key complements to private-sector growth.

In short, this bill will be another key contributor to weaker economic growth over the next decade, making us and our children reliably poorer for no reason other than to write larger tax cut checks to the richest people in the country. This bill is one of the most destructive economic proposals we’ve seen in the U.S. in generations.
 

[Heidi Shierholz (she/her) is the president of the Economic Policy Institute, a nonprofit, nonpartisan think tank that uses the power of its research on economic trends and on the impact of economic policies to advance reforms that serve working people, deliver racial justice, and guarantee gender equity. In 2021 she became the fourth president EPI has had since its founding in 1986.

Shierholz, who served the Obama administration as chief economist at the Department of Labor, has been a consistent and leading voice for a worker-centered policy agenda that prioritizes economic and racial justice. Taking the helm at EPI after former President Thea Lee departed to work for the Biden administration, Shierholz is strengthening EPI’s ability to deliver economic analysis that challenges and transforms the mainstream narrative about the economy. Under her leadership, EPI is focused on fighting for and winning federal, state, and local legislative and regulatory reforms that support collective bargaining; increase worker power; improve wages, benefits, and working conditions; and reduce racial and gender inequities.]

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