In 2012, an exhaustive study by the Congressional Research Service (CRS) showed conclusively that lowering tax rates for the wealthy does not increase economic growth. The authors looked at decades of data on top tax rates and economic growth, going all the way back to the mid 20th century. They found zero correlation between reductions in tax rates for the wealthy and economic growth. Instead, they found that cutting taxes for the wealthy increased the concentration of income at the top of the distribution. In other words, cutting taxes for the wealthy doesn't grow the economic pie, but it does give the wealthy a bigger slice.
Let's apply this study to Trump's budget. Trump gives the wealthy a massive tax cut, even though compared to other developed countries America's wealthy are under-taxed. To make this appear fiscally responsible, Trump claims it will boost growth to 3%. The CRS study makes it clear that this will not happen, which means that big tax cut will add $7.6 trillion to the debt. The debt would go from 77% of GDP to 98% of GDP in a decade. Instead of growing the economy, Trump's tax cuts will grow the slice of the economy that goes to the wealthiest Americans.
Trump's budget has the opposite effect on low income Americans, who face $616 billion in Medicaid cuts (on top of $800 billion in Medicaid cuts in the healthcare bill), and $192 billion in cuts to food assistance. The disabled are hit with $72 billion in cuts to disability benefits. The program that helps low income households pay their energy bills is completely eliminated, leaving 6.7 million low income families who can't afford heat in the winter or air conditioning in the summer. These cuts introduce a level and extent of deprivation previously unknown in America. The massive cuts to Medicaid mean millions of low income men, women and children will be without healthcare for the first time. For no reason other than poverty poor people will sicken and die for want of healthcare. A study done before the Affordable Care Act found 45,000 people died every year due to lack of health insurance. The Trump budget's Medicaid cuts will rob millions of their healthcare, and tens of thousands are likely to die as a result.
Due to massive cuts to food assistance, for the first time, the minimum SNAP benefit will no longer be based on the cost of a basic, bare bones diet for every household member, a requirement that has made the program an effective tool against hunger for generations. Now, with the budget cut by 30%, the minimum SNAP benefit will be whatever states can afford to pay. The full cost of SNAP has always been federally funded, because the states that have the most poverty can least afford to provide food assistance. Under Trump's budget states will bear 25% of the cost, however strapped they may be. The SNAP benefits they provide will no longer be calculated to provide a basic diet for every member of the household, but will be reduced by the 30% cut to SNAP's budget and the shift of $116 billion of cost to the states. These benefit cuts mean households will receive substantially less than the cost of a basic diet (which before the budget cut averaged $1.40 per meal, per person, the bare minimum to keep hunger at bay). Other arbitrary rule changes mean that millions of hungry households will now receive no food assistance at all. That includes a million poor unemployed households in an average month, and another million households that can't afford food because of high housing and/or childcare costs (90% of these households work). Food assistance for these two million households has been cut to zero. SNAP currently provides food assistance to over 40 million Americans. If this budget passes, their protection from hunger will be badly compromised. Under this budget Americans will go hungry to an extent undreamed of today, with grim consequences for health, child development, academic achievement and productivity.
Slashing hundreds of billions of dollars in healthcare, food, energy assistance, disability benefits, college aid and job training for low income Americans hurts the economy in two ways. It hurts directly, as hundreds of billions of dollars no longer flow into the economy and stimulate growth. Indirectly, it hurts because people deprived of healthcare, food, warmth, disability benefits, help with college and job training are less able to participate in and contribute to the economic life of the country. Between them these direct and indirect costs of slashing support for the living standards of low income Americans are a sizable drain on the economy.
Tax cuts for the wealthiest Americans that do nothing to grow the economy but plenty to grow their slice of it, while adding $7.6 trillion to the debt.
Hundreds of billions of dollars in cuts of healthcare, food assistance, home energy assistance, disability benefits, college aid and job training for low income Americans. Cuts that do enormous harm to the most vulnerable members of our society and negatively impact our economy.
A massive transfer of resources from those who have the least to those who have the most, creating unprecedented levels of hardship, weakening our social fabric and our economy and increasing the debt from 77% of GDP to 98% of GDP in a decade.
This budget is as unwise as it is unjust, a disaster for our country being sold with lies about the magic of tax cuts for the rich, lies which the study linked to this post conclusively proves false. Share this study, explained with great clarity, and call your members of Congress to say no to this nightmare of a budget.
There is plenty more that is terribly wrong with this budget, especially the crippling 31% cut to the Environmental Protection Agency, which would be a public health disaster, unleashing pollution unseen in a generation. To give a simple example, EPA programs to safely dispose of lead save far more than they cost by sparing the healthcare, special education and lost future earnings associated with lead poisoning in children. We need to invest more in cleaning up lead, not less. The pollution unleashed by these EPA cuts will cost a fortune in disease, disability and death. Years of Republican budgets have left the EPA underfunded. Congress needs to be told to invest more, not less, in protecting public health and the environment.
The same can be said about funding cuts for infrastructure, scientific research and clean energy. These are all areas where we urgently need to increase our investment, and will reap great social and economic benefits from doing so.
I'm sorry for the length of this post. Everything about this budget is wrong. We need to ask the wealthy to pay more and make long overdue investments in infrastructure, education, clean energy, healthcare and the environment. We need to do more, not less, to ensure that all Americans have healthcare, food, energy for their homes, help with the expense of college and training to get a good job. These investments pay rich dividends to the benefit of all.