The Senate is rushing forward with a corporate tax giveaway that keeps changing by the day. The congressional GOP tax bill is so complicated and filled with so many special interest carve-outs that even tax experts are struggling to figure out all the new loopholes it may create. But the basic contours are clear: It would raise taxes on 87 million families making less than $200,000 a year in order to pay for permanent tax cuts for corporations.
That’s why the bill is being rushed, as the more the American people find out about it, the less they like it. But this secretive process has obscured another important issue. In order to cover the roughly $1.4 trillion cost of the bill over the next decade, the Trump administration must implement automatic and devastating cuts to a range of programs starting in 2018 and lasting the next 10 years. Here’s the irony: those cuts would significantly hurt Trump’s own supporters.
It’s no wonder that these automatic cuts have received little attention. The tax bill’s Senate authors have not discussed it; the Trump administration has not acknowledged it; and the text of the bill itself does not even mention it. But under the Statutory Pay-As-You-Go Act (PAYGO Act), Congress must pay for all the costs of the bills it passes. At the end of the year, any unpaid costs are offset by automatic cuts to a range of programs. While the Senate pays for some of the cost of corporate tax cuts by raising taxes on middle-class families, even those increases are not sufficient to cover the massive giveaways in the bill. That means deep and immediate cuts will be triggered.
But not all programs will bear the brunt of these cuts equally. The PAYGO Act exempts Social Security, Medicaid, SNAP, and a number of other programs. However, programs that will be most affected include those that provide benefits to older people and rural communities — core Trump constituencies.
According to the non-partisan Congressional Budget Office, covering the cost of the Senate bill would require a $25 billion cut to Medicare in 2018 alone; over the next 10 years, Medicare would be cut more than $400 billion. The automatic cuts would also eliminate funding that is used to prevent elder abuse, support Meals on Wheels, and provide food donations to help the elderly. And they would abolish funding for a program that combats waste and fraud in federal health-care spending — meaning more money for fraudsters and less money for everyone else.
The cuts would be just as bad for programs for farmers and rural communities. Farm price-support programs would be eliminated. And so would programs that provide funding for conservation efforts on private lands and encourage the exportation of agricultural commodities and products. Another casualty would be a program that supports rural air travel.
Western states would be particularly hard hit. Under federal law, the government must split the revenue from oil, gas, and coal extraction from federal lands with the states in which the extraction occurs. (The deal is even better for Alaska, which receives 90 percent of the revenue.) These payments to western states total around $1.3 billion a year, including tens of millions of dollars for states like Alaska, Montana, North Dakota, Colorado, and Utah. But thanks to the automatic cuts that would be triggered by the Senate bill, the federal government would keep all revenue from extractive industries for the next 10 years, including any revenue from drilling in the Arctic National Wildlife Refuge. This drilling is allowed by a provision added to the Senate bill to win Alaska Senator Lisa Murkowski’s vote. But the PAYGO cuts mean Alaska would not see a fiscal benefit from this change.
These are not the only programs that would be eviscerated by the cuts. Others that would be affected include programs that help people with disabilities find and maintain employment; protect children from abuse and ensure permanent homes for foster children; and offer college aid to the children of service members who lost their lives in Iraq or Afghanistan. The cuts would also eliminate mandatory funding for U.S. Customs and Border Protection, U.S. Citizens and Immigration Services, and U.S. Immigration and Customs Enforcement.
Given all the programs that would be cut, why is the Senate moving forward with the bill at all? One Congressman in the House explained: “My donors are basically saying, ‘Get it done or don’t ever call me again.’” So Trump’s donors will get their tax cuts, Trump’s supporters will get tax hikes and Medicare cuts, and Trump and his allies in Congress hope to get their bill rushed through before the American people put two and two together.
Sam Berger served as senior counselor and policy advisor at the Office of Management and Budget.