Ep. 5: The Big Republican Bill: Is It Really Beautiful?

The House recently passed Trump's "One Big Beautiful Bill". Now it's on its way to the Senate, where it could face some changes. But what's in this bill. Is it really a boon for tax payers. Does it really spare Medicaid and SNAP. Let's take a look and see what the priorities of the President and the Republicans and who in America stands to benefit. 

Check out my substack page where I tackle some of the episode topics in depth and write about other issues our country and the world are facing today. https://substack.com/@ktdpodcast

Transcript

Raheel Khan 0:00

Hello, you're listening to Khannecting the Dots. Today I'm gonna focus in on the Republican so-called One Big Beautiful Bill. This thing is massive, over 1100 pages long, and it just barely passed the house by a single vote. I know it still has to go through the Senate where it might get changed, but how much it gets changed is up in the air. Plus, I think it's worth talking about what the president pushed for and the house passed. Because it speaks volumes what their priorities are and what the country can expect. Particularly if the Senate doesn't end up changing it that much. They say, this bill is about helping working families, jump starting the economy, and cutting waste. But does the bill actually do those things or is it just a bigger version of what we've seen from Republicans before? Who are the winners and losers from this bill? What will the long-term consequences be? There's a lot to unpack. Taxes, healthcare, food assistance, clean energy, and so much more. There's even a few provisions in there that critics argue threatens democracy. So let's dive in. Let's start with a top down view. There's probably three main things you've heard when people talk about this bill. First, it extends to 2017 Trump tax cuts that were set to expire soon. Second, it makes major cuts to safety net programs, things like Medicaid and food stamps. And third, it introduces some new tax breaks, like eliminating taxes on tips and overtime pay and increases the SALT deduction. The cost of all those tax breaks? A lot. According to the Congressional Budget Office or the CBO, this bill would add$4.8 trillion to the deficit over the next 10 years. While it saves about$1 trillion through spending cuts. That's still a net increase of about$3.8 trillion in debt. How does the party of financial responsibility justify this? By telling us there will be more money in your pocket, more freedom and less bureaucracy. But let's dig into who's actually getting that money. Let's start with the headline grabber, the Tax Cuts. Republicans are calling this a middle class rescue and that they're protecting working families and locking in tax relief for the middle class. But in reality numbers from the Institute on Taxation and Economic Policy, who use the same data as Congress' own. Joint Committee on Taxation found that the bottom 20%, folks making less than$29,000 a year, would only get$120 in tax cuts per year. The very middle of the country, about 20% of working folks who earn between$51,000 to$95,000 a year get about$1,100 per year in tax cuts. While the top 1%, those who make around$500,000 or more, they will get$69,000 a year in tax cuts. And the top 0.1%, the people making over$5 million a year, they get a whopping$255,670 every year. That translates to two thirds of all the tax cuts in this bill go to the richest 20% of Americans. The top 1% alone are getting more in the tax break than the bottom 80% combined. You might be thinking, what's the big deal? The rich pay more taxes, so of course they should get a bigger break. But here's the issue. Studies show that the wealthiest Americans already have plenty of ways to avoid paying their fair share. In fact, the top 1% failed to report about 21% of their income, and some billionaires pay as little as 1% to 3% on their wealth growth. This new Republican bill just makes that gap even wider, giving the biggest tax cuts to those at the very top, while ordinary families see little or even lose out. In fact, when you combine these tax cuts with the proposed cuts to Medicaid and SNAP, the poorest 20% could actually end up losing over$1,000 a year in net support. So I ask again, who is really benefiting here? One of the other main talking points that Trump has been promoting since the campaign trail is the idea of no taxes on tips and overtime. Every time he's mentioned it, people erupt in cheers. And it was so popular that Kamala Harris even adopted it as one of her proposals. But let's look at how impactful it can really be. There's one major catch, nearly 40% of tip workers, mostly servers and bartenders already make so little, they don't owe federal income tax, so this will do nothing for them. How about for the rest? The benefit phases out once your income hits$160,000. So many people in the service industry might see some increase in take home pay. One estimate, puts it, at an average of$1,700 per year. But other groups think the actual take home amount is more variable and possibly less. Plus, you need to have social security number, and if you're married, so does your spouse. So that cuts out a large number of tipped employees, making them ineligible for this benefit. And remember, the federal minimum wage for tipped workers is only$2.13 an hour. Sure, most states set it higher, but it's still usually less than the regular minimum wage of that state. Tips are supposed to make up the difference, and if they don't, employers are supposed to pay the rest. But even earning minimum wage or less is barely enough to get by anywhere in the country. And to make matters worse, only about a third of restaurant and bar workers have access to employer health insurance. Because many tip workers earn such low wages and lack job based coverage, they rely on Medicaid. And how about overtime? Only about 8% of hourly workers and 4% of salaried workers regularly get overtime pay. In fact, 70% of salaried workers don't even qualify for overtime because of the current rules. The Biden administration tried to expand overtime eligibility to 4 million more workers, but the Trump Labor Department scrapped that plan. So while you might not pay taxes on overtime, most workers aren't even eligible to earn it in the first place, and the Trump administration has made it even harder to become eligible. Just like in 2017, the individual tax cuts, including tips in overtime will expire in 2028, but the corporate tax breaks, they're permanent. So by 2033, the bottom 60% of Americans won't see any more benefit from this bill. While the top 1%, they will still likely pocket over$50,000 a year in tax cuts. The assumption, then and now, is that these gains will trickle down. But after the 2017 cuts, the top benefited most while middle class gains are modest and temporary. The deficit balloon and inequality widened. This bill also tweaks the SALT deduction, also known as state and local taxes. So what is that specifically? If you live in a high state tax like New York or California, you can deduct some of those state taxes from your federal taxes. Back in 2017. Trump capped this at$10,000. This current bill raises it to$40,000, but only for families making under$500,000 a year. Why does this matter? It mainly helps higher wage earners, those earning between a$100,000$500,000 a year in blue states. So if you live in a low tax state like Texas or Florida, this doesn't help you at all. And even in the blue states, it doesn't help the bottom 60% of wage earners. Now let's talk about the other side of this bill. The cuts. Because to pay for these tax breaks, republicans are making major changes to programs that help low income Americans. Let's first look at Medicaid. The bill adds work requirements for adults on Medicaid. On paper, it sounds reasonable. If you can work, you should work to get health insurance. But it's already been tried and the results, they were pretty bad. Arkansas did it in 2018. Within nine months, over 18,000 people lost coverage. Why? Not because they weren't working or refused to work? Because the system was so complicated and glitchy that people couldn't navigate it. They missed paperwork deadlines, couldn't get through on the phone or didn't even know how they had to report their work hours online. Most appaling of all though. Was that 71% to 90% of the folks required to report their activities were actually exempt from the work requirement. And did it lead to more employment? Nope. Zero change. What it did lead to was more medical debt. Half the people who lost coverage ended up with serious medical bills and most started skipping medications or avoiding the doctor entirely. Georgia has tried a similar plan more recently and spent$86 million and only enrolled 6,500 people. That's over$13,000 spent in bureaucracy for every person who got coverage. The CBO now estimates that if these work requirements go nationwide, around 5 million people could lose Medicaid coverage by 2026. And the consequences wouldn't stop with just those patients. If millions lose Medicaid, the fallout could be catastrophic across the entire healthcare system. Hospitals, especially rural and safety net providers can lose so much revenue that many might have to cut services, layoff staff, or shut down entirely. Up to 450,000 healthcare jobs could vanish from nurses and aides to billing clerks and janitors. Healthcare spending could drop by nearly$60 billion. While uncompensated care costs could spike by billions of dollars in a single year. The economic shock would ripple out shrinking state economies, closing clinics and pushing even healthcare workers to lose their own coverage. The bottom line, this isn't just a policy tweak, it's a potential crisis that could destabilize hospitals, wipe out jobs, and leave some communities without care altogether. This bill also takes a chainsaw to SNAP, also known as a supplemental nutrition assistance program, or more commonly referred to as food stamps. The CBO, they estimate that$267 billion in cuts over the next decade will occur. And currently SNAP helps 42 million people every month. The average household gets about$211 a month. In the new bill. It will force states to pay for part of the benefits themselves, expand work requirements to more adults, even parents with kids as young as seven. Freeze benefit levels, even as food prices go up, which will result in 3.2 million people who could lose food assistance in any given month, including 800,000 people who live with kids. Between 120,000 to 250,000 legal immigrants could also lose eligibility. And just like Medicaid, cutting SNAP isn't just a hit to vulnerable families. It's a blow to entire local economies. When families lose food aid, grocery sales drop, farms lose customers and trucking slows. Small businesses feel the squeeze, especially in rural towns already on edge. Food pantries already stretched the limit, can't absorb the extra demand, leaving more families without support. The ripple effect can mean job losses in food service, retail, and transportation. Shrinking the very communities this bill claims to help. Some estimates show that every SNAP dollar creates up to$1.79 in economic activity, so cutting$267 billion would be a huge economic devastation and could cost up to 200,000 jobs in agricultural, trucking and retail. So how does Medicare fare in this bill? Thankfully, there are some provisions that will actually help Medicare recipients, such as letting working seniors keep contributing to HSAs, boost access to rural emergency care, and use AI to help cut down on fraud, waste, and abuse. However, it also tightens Medicare eligibility. Potentially kicking off a lot of legal immigrants and most critically will likely trigger$500 billion in automatic Medicare cuts over eight years. So what does that mean overall, less coverage and higher costs for most seniors, while those legal in this country don't have any access to healthcare. Now here's something that sounds positive. The bill bumps the child tax credit from$2,000 a year to$2,500 a year until 2028. But surprisingly, or I guess unsurprisingly by this point now, it will still leave millions of kids in the lurch. Why? Because families that don't owe enough in federal income taxes can't get the full benefit. So if you're a low income family making under$30,000 a year, you might get only a fraction of the credit or none at all. Actually the way it's set up, the less you earn, the less you get. Plus, both parents now need social security numbers to claim it. Even if the child is a US citizen. That includes millions of kids in immigrant families. According to the center on budget and policy priorities, 20 million children won't get the full benefit. 17 million kids will get nothing at all. Compare that to the Biden era expansion during the pandemic. That version gave up to$3,600 per child, even to the lowest income families. Those with little or no earnings. As a result, it cut child poverty nearly in half. Unfortunately, it wasn't renewed by Congress in 2022, primarily because of Senate Republicans. Now house Republicans have come up with this new proposal, which doesn't come close to the same results. Just like in 2017. Corporations get permanent benefits while individuals get temporary ones. Corporations will get a hundred percent immediate write-offs for equipment, expanded research credits, and a permanent 23% reduction for certain business income. The estate tax exemption jumps from 10 million to$15 million per person helping the wealthiest of families. And as I mentioned before, the tax breaks for regular families. They expire in 2028. So we'll be right back here in a few years having the same fight about whether to extend them, which honestly is probably the point. It's a way for Republicans to dangle it over the taxpayer's heads convince us to vote for them instead of Democrats in that election cycle. In addition to gutting the social safety nets, this bill also goes after clean energy investments. According to Reuters, the house passed bill would effectively put the brakes on a clean energy production boom in the United States, spurred by tax credits enacted in 2022. What does it do? It ends the inflation reduction Acts tax credits years early, making them largely unusable for most projects. It moves up the expiration date for wind, solar, and battery storage credits to 2028 and requires projects to be in construction within 60 days of the bills passage. Plus, it bans the selling of tax credits to fund clean energy construction except for nuclear energy, of course, which the Republicans are fans of. It also tightens restrictions on credits for projects linked to foreign entities of concern, especially China, which sounds fine until you realize that China actually dominates the clean energy supply chain. And so a lot of these projects won't be able to get their supplies that they need to get their projects off the ground. Clean energy advocates say this would obliterate billions of dollars in investments nationwide, drive up electricity costs, and kill tens of thousands of jobs. Some have called the bill a meat cleaver to the industry. One analysis estimates that changes could raise household energy costs by 7%. How about the hidden provisions in this bill? When you come out with a bill that's over 1100 pages, there's bound to be a bunch of agenda items hiding in the minutia. And this"big beautiful bill" is packed with other major and sometimes surprising provisions. The first one affects the courts, and this is probably one of the most surprising aspects of this bill. It has a small provision that attacks democratic norms by stripping Federal courts, including the US Supreme Court, have the power to enforce their own rulings. Unless certain financial bonds are posted. And this bill just doesn't stymie judges going forward, it would apply retroactively to rulings already in place. According to Newsweek. This means that if ordinary Americans can't afford to post a bond, court orders, including those in civil rights, immigration or police reform cases could become unenforceable. Legal experts warn this could make it nearly impossible for courts to check unconstitutional actions by the executive branch and could gut the very foundation of our democracy. And there's a lot of provisions on immigration as well. First, there's a border wall'cause Trump is still not done with it. The bill provides 46 and a half billion dollars to revive construction of the wall and gives an additional$12 billion for states like Texas to recoup costs from their own border security efforts during the Biden administration. It'll also boost immigration enforcement by providing extra$150 billion over five years for Trump's mass deportation and border enforcement agenda, including$51 billion for new border barriers and facilities.$59 billion for detention and transportation of immigrants and more than$4 billion to hire thousands of new border patrol and ICE agents. It also increases military spending allocating nearly$150 billion in new money for the Pentagon, including$8.5 billion for military quality of life improvements,$34 billion for shipbuilding.$25 billion for the Golden Dome Missile Defense Shield, and$2 billion for defense health programs. Another strange provisions. This bill eliminates the$200 tax on gun silencers and removes them from the National Firearms Act, meaning silencers would no longer require registration or background checks for purchases. A boon for assassins everywhere. Another thing that it works on is increasing the debt ceiling by$4 trillion, bypassing a separate negotiation and pushing the next debt showdown several years into the future. There are some Senate Republicans that are balking at this. It also creates Trump savings accounts working, to ensure that Trump's name will live on in perpetuity. These are new tax advantaged accounts, kind of like 529 college plans. Under the plan, the federal government will contribute$1,000 to the accounts of children born between 2024 and 2028. Parents can contribute up to$5,000 a year, and the funds which can begin to be distributed once a child turns 18 can be used for higher education, job training, and eventually towards the purchase of their first home. In addition to the dangerous provisions about courts, republicans are working to make life harder for other longstanding political enemies. First, they have a proposal to ban Medicaid funding for Planned Parenthood and clinics that offer abortion or gender affirming care, even banning funding for non abortion services at those places. Next, going after universities. Another proposal that will substantially raise taxes on university endowments going from 1.4% to 21%. Targeting elite schools like Harvard or Yale. It covers more types of university income and will have a significant financial impact on research and innovation. And finally, nonprofits are not being spared. The bill would allow the Trump administration to revoke the tax exempt status of nonprofits that it says support terrorism. Without requiring them to even present their evidence. That will create what some nonprofits say, an arbitrary standard to financially punish charities that advocate for issues that don't align with Trump's agenda. Doing so will make it virtually impossible for these nonprofits to function. So what are experts saying about this bill? Well, the CBO warns that the lowest income Americans could see their resources dropped by up to 4%. The tax policy center confirms that 60% of the benefits go to the top 20% of earners. The Urban Institute's Research and Medicaid work requirements shows that they don't increase employment, they just increase medical debt and hardship. And the Penn Whartons. Budget model predicts that the bill might give the economy a short term boost, but warns about a much larger deficit and increasing inequality in the long run. So what happens now? Well, like I said earlier, the bill still needs to go to the Senate. Republicans have a 53 to 47 majority But Senate Republicans have issues with the bill as it stands. And according to Politico, are vowing to make major changes. Some want deeper spending cuts. Others wanna soften the house's Medicaid language or preserve more green energy incentives. Senator Ron Johnson said,"I'm hoping now we'll actually start looking at reality. We just can't afford it". Senator Rand Paul says he won't support the bill if it includes a debt ceiling hike, or Senator Susan Collins and Lisa Murkowski want changes to Medicaid and the clean energy provisions. Majority leader John Thune. He wants to get the bill through the Senate by July 4th. But so many factions and a slim margin. The final outcome is not certain. Right now. The Senate's version could potentially differ significantly from the houses and then the two versions will have to be reconciled before the bill can reach the President's desk. So what can we do at this time? If you're concerned about how this bill might impact you, your family, neighbors, or your community, here's what we can do. Contact your senators and representatives. Make your voice heard. Use apps like five calls to make it easier to contact them. Follow what's going on with the bill. Use multiple sources if you can to ensure that you're not missing any key information due to reporter's bias. If you can, follow non-partisan sources like the CBO and Tax Policy Center. The Urban Institute is also a decent option. Participate in community discussions, forums, or advocacy groups to amplify your voice and learn from others. Use your social media and other platforms to raise awareness about the bill's impacts, especially on vulnerable populations. Support groups working on food security, healthcare, and climate. if this bill passes, these groups will need all the support they can get. So what's the bottom line? Is this bill really what the US needs right now? If you're wealthy, I guess you're making out like a bandit. If you're a corporation, it's like Christmas time. If you're in the middle class, you might get a short term break, but you may lose valuable public services. If you're poor, you're likely to be worse off. It is the same story playing out again, tax cuts at the top, work requirements for the vulnerable, trickle down promises with little to show. We've seen this movie before and now the stakes are even higher. So stay informed and make your voice heard. Thanks for listening, and until next time, stay curious, stay critical, and stay connected.