The Trump tax bill could "enormously" hit low income. Here's why.

Washington

The Trump tax bill is projected to have significant effects on low-income Americans, with estimates suggesting that between 11 to 16 million people could lose their health insurance coverage and around 3 million may lose food assistance. While the bill extends certain tax cuts and introduces temporary measures, it also includes substantial reductions to programs such as Medicaid and food stamps, which are relied upon by many low-income families.

Analyses from sources such as the Congressional Budget Office and Penn Wharton indicate that the lowest income groups could lose an average of $1,600 per year, while the wealthiest 1% are expected to see much larger benefits. The bill's broader economic impact, including on inflation and energy policy, remains debated, but concerns persist about the distributive effects and the justification for such measures given the current state of the U.S. economy.

Why the Trump tax bill could "enormously" hit low income

The human impacts what's getting a lot of attention and I think it bears repeating is that you know it's anywhere from 11 to 16 million people stand to lose their health insurance coverage as a consequence. Three million or so will lose food assistance. So that's what I mean when I talk about the human impacts. You talk about things like what this bill does to energy policy. And you think at a time in which we need to be producing energy we have a I we need to be able to to feed the grid and to supply the energy that people need. We don't need rolling blackouts. We don't need energy costs soaring exacerbating the cost of living crisis in virtually every state across this country. So that's the kind of thing I mean when I talk about energy. So energy and inflation. You know what are the inflationary impacts of this bill. If you look at the way CBO scored it it's de minimis. They say there's essentially no inflation impulse associated with this massive bill that may or may not turn out to be correct. It's very hard to gauge when you've got moving parts with tariffs and immigration. It makes it much more difficult in my mind to think about the inflationary impacts. But those are the kinds of things that concern me. I am curious. And I ask Congressman Brady about how members of Congress are going to sell this to their constituents assuming it does pass. There's been a lot of studies showing that the lower income folks will certainly see some benefit some direct financial benefit. But it also shows that people at the top echelon the 1 percent are going to see an incredible outsized benefit that is disproportionate to what the lower income receives. How do you sell that. Well I don't know. And I would I would say people at the bottom would see a benefit if they were just doing the tax cuts. If this looked more like 2017 than this new bill if they were just extending and then building with some no tax on tips and overtime and that sort of thing. Absolutely. There's a little bit of stuff. There's a little bit of something for everybody. But that's not what this bill does. This bill takes the tax cuts extends them adds a little bit of temporary stuff for the next few years but then takes resources away in the form of right cuts to Medicaid and food stamps. So if you look at Penn Wharton if you look at CBO if you look at the other estimates people in the bottom decile bottom 20 percent lose enormously. Sixteen hundred dollars a year on average for people in the lowest 10 percent. That's 16000 over the budget scoring period. This gets to something that you've talked about before and written a lot about before which is the idea of whether deficits matter and the idea of I guess the direction of where those deficits where that money is actually is going on because some of these programs are being stripped ostensibly to pay for the tax cuts. And I do wonder about the idea of the distributive effects of bills like this and whether we're doing it properly. That's what's going to be very difficult to sell. It's hard to imagine again if you could have just done sort of what I'll call normal Republican things do the tax cuts do some deregulation. That stuff's easy to sell. And you know did it produce an enormous windfall. Did we get the 6 percent GDP growth that Trump President Trump talked about back in 2017. No. But did it help at the margins. Yeah. The economy grew a little bit faster. Unemployment went down. It didn't create an inflation problem. But this time you've got these trillion dollar plus cuts to programs that millions and millions of families depend upon. Roll the potential for rolling blackouts. I mean we're talking about something that's going to be really hard to defend much less sell once it all starts to take effect. Do we need stimulus right now. When you look at the state of the economy do we need this. You know we were doing OK. You had the wind at our backs. If you think about where we were at the start of the year this the U.S. economy was the envy of the world. This was an economy that was sort of you could have left the thing on autopilot and we would have still been the envy of the world. It's very hard for me to understand why you'd come in and kneecap this economy with tariffs and then a whole bunch of spending cuts and the like. So did it need stimulus. No. But is this the kind of policy that's going to put us in a better place. Are we going to be more competitive vis a vis the rest of the world in terms of energy policy and the economy. No I don't think we are.

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