House Republicans have unveiled their plans to cut federal spending and extend tax cuts, but experts warn that funding the cuts by slashing Medicaid and other entitlements will largely benefit families with higher incomes.
The House Energy and Commerce Committee released its budget reconciliation proposal late Sunday after being tasked with identifying at least $880 billion in spending cuts. A preliminary analysis from the Congressional Budget Office estimates the bill would reduce the federal deficit by $912 billion, with $715 billion of that coming from cuts in healthcare.
A report from the left-leaning think tank Urban Institute projects that while the wealthy will feel the bulk of the benefit from tax cuts, the spending reductions in programs like Medicaid and the Supplemental Nutrition Assistance Program (SNAP) would disproportionately impact lower-income families and individuals.
The study estimates the impact of cuts based on $880 billion in reductions to Medicaid and $230 billion in cuts to SNAP over the next decade. The study found that families with incomes of $30,000 or less would be worse off on average under these changes.
Families with incomes below $10,000 would lose nearly 15% of their incomes under the proposal, or about $2,700. Families bringing in between $30,000 and $40,000 would not see a change, per the report.
However, families with incomes of between $50,000 and $75,000 would see a thin, 1.3% gain in income, about $680. Families with incomes over $200,000 would see gains on average of $13,000, the Urban analysts project.
Meanwhile, the largest gains would be felt among families with incomes of $1 million or more, according to the report, averaging increases of $80,000 or more.
“Our analysis shows the benefits of these combined policies would be concentrated in families with higher incomes, while the lowest-income families would suffer significant losses in net income,” said Jessica Banthin, senior fellow at the Urban Institute and one of the study's authors, in a press release.
Based on $230 billion in cuts to SNAP, the report estimates that SNAP benefits would decrease by 31%, or about $24.1 billion, in 2026 alone. For Medicaid, the study projects that $880 billion in total cuts would decrease benefits by 16%, or $81.5 billion, in 2026.
The impact of the cuts on low-income families significantly outweighs the savings they may feel from tax reductions, ultimately leaving them worse off, according to the study.
“Congress is seeking to play the role of a reverse Robin Hood by raiding the safety net to finance tax cuts for the wealthy,” said Avenel Joseph, interim executive vice president of the Robert Wood Johnson Foundation, which supported the study. “Medicaid and SNAP are critical lifelines that allow millions of people to care for themselves and their families and live their healthiest lives. Gutting these vital programs in favor of regressive tax policies will harm health and weaken local economies."