How Awful is the Republican Megabill? Here are Four of the Worst Parts.
Jacob S. Hacker and
Mr. Hacker is a co-author of “Let Them Eat Tweets:
How the Right Rules in an Age of Extreme Inequality.”
Mr. Sullivan is a postdoctoral fellow at Yale.
The Trump-era Republican Party, we’re told, is a working-class party standing up for ordinary citizens against powerful elites. One section of the Republicans’ major policy bill is even titled “Working Families Over Elites.”
But that bill — the one and only major legislative effort of Trump 2.0 — is the most regressive, least populist policy package in memory. With its distinctive mix of tax cuts laser-focused on the rich and spending cuts that most hurt middle- and low-income Americans, it would shift more resources up the income ladder than any bill passed since scorekeepers started keeping track. And when voters learn what it would do — even Republican voters — they recoil from it.
We know, because we asked them. In a survey we ran after the House version of the bill passed, we showed a random selection of voters how the bill would affect the take-home income of less affluent Americans versus the top 1 percent. Opposition exploded, with only 11 percent of Americans supporting the bill — one-third the level of support seen among those not shown the distributional results. Among Republicans, the shift was even larger: Support and opposition flipped — to nearly 3 to 1 opposition from nearly 3 to 1 support.
As unpopular as the bill is, however, Americans have yet to fully understand the special alchemy of inegalitarianism that defines it. Break through the deception and misdirection, and Republicans’ signature policy bill, which President Trump and G.O.P. lawmakers call the One Big Beautiful Bill, seems more aptly named Elites Over Working Families.
The bill is awful for most Americans in many ways. Here are four of the worst.
1. It is epically regressive
To understand why the G.O.P. initiative is so upwardly skewed, it helps to think of it as combining the two most unpopular major billssince 1990 — both of which were pushed by Mr. Trump and congressional Republicans in 2017. Bill 1 (which passed) was the Trump tax cuts, which showered most of their largess on the superaffluent. Bill 2 (which failed) was Republicans’ Affordable Care Act “repeal and replace” drive, which would have slashed health care benefits received mostly by middle- and lower-income Americans.
The current bill is basically a mix tape of these 2017 tracks, with some bonus material thrown in, including the biggest retrenchment of SNAP, also known as food stamps, in its history, and big cuts to loans and Pell grants for nonaffluent college students. (In the Senate last week, the parliamentarian rejectedthe SNAP cuts.)
When you combine those two epically unpopular bills you get an epically regressive result — the only such bill since at least the mid-1980s (when distributional analyses became available) that reduces disposable income among the bottom 20 percent by the same magnitude as it raises it among the top 20 percent (by on average 4 percent of after-tax income, according to our colleagues at the Budget Lab at Yale University).
The George W. Bush tax cuts of 2001 did even more for the rich. But they could be sold as helping everyone, even as they helped those at the top the most. What defines the current G.O.P. bill is that Republicans are willing to finance their beneficence for the rich — or at least a share of it — with painful spending cuts for the non-affluent. (The rest of the cost would be piled onto the country’s already astronomical debt.)
2. The hyper-regressive tax cuts you haven’t heard enough about
You might think Americans know that the tax cuts in the Republican bill are targeted at the top. But that’s not what our survey found. Voters had heard a lot about Mr. Trump’s “no tax on tips” and “no tax on overtime” ideas — provisions that Vice President JD Vance recently pointed to as proof of the party’s populist priorities.
But those tax cuts are a rounding error compared with the big-ticket tax cuts focused on the rich, about which voters have heard almost nothing.
Take two of these mystery provisions: an expanded and permanent deduction for “pass through” business income and a higher (and also permanently indexed) threshold for the estate tax. Together, those two items would cost more than $1 trillion — over six times the combined cost of the two “no tax” provisions that Mr. Vance highlighted. And both the “pass through” and estate tax changes would benefit the richest of the rich.
There’s only one thing you need to know about pass-through business income: almost 70 percent of it goes to the top 1 percent of filers. (By comparison, 45 percent of corporate income does.) Much of the skyrocketing inequality in the United States reflects the reality that, while most Americans rely on easily traced and taxed wages, those at the top can take their income in whatever form is hardest to verify and most lightly taxed.
Pass-through business entities like sole proprietorships and partnerships are increasingly a form of choice. No surprise, then, that the biggest beneficiaries of this tax change would be the richest 0.1 percent of taxpayers, who would, on average, see their incomes rise by more than $120,000 (or 1.4 percent) just from this change.
The estate-tax exemption is slightly better known, but it’s still worth emphasizing its skew toward the ultrawealthy. Already, only the largest 0.1 percent of estates — that is, 1 in 1,000 — face any federal estate tax liability. A higher, permanent exemption of $30 million for couples ($15 million for individuals) would exclusively benefit an infinitesimally small group of individuals who seek to leave enormous fortunes to their heirs.
And we haven’t even discussed the lower top marginal tax rate in the bill, which applies only to single filers with taxable incomes of more than $626,350 and married couples filing jointly with taxable incomes of more than $751,600. Even though the bill also cuts marginal rates on lower levels of income, the biggest beneficiaries of the bill’s rate and bracket changes would be households in the top 1 percent, who would see their after-tax incomes increase by 2 percent, or almost $45,000, on average.
3. A war on the I.R.S. could make the bill even more costly.
In parallel with targeted tax cuts for the rich, Republicans, led by Mr. Trump, have promised to gut the Internal Revenue Service. If they succeed, the deficits caused by the bill, as well as its tilt to the affluent, would dramatically increase.
The Budget Lab at Yale University estimates that if I.R.S. staffing is halved, as the president is seeking, the amount of unpaid taxes could increase by $2.4 trillion over the next 10 years. If that number sounds familiar, it’s how much the Republican bill is already estimated to increase the national debt (not counting interest) over the same period.
So if the assault on the I.R.S. succeeds, the revenue loss from the bill could plausibly double in size. And guess what? The richest 5 percent of taxpayers — who, again, earn much of their incomes in ways that are not automatically taxed as wages — account for half of all underreported taxes.
4. It is another “skinny” attempt to repeal Obamacare.
Voters have heard about the regressive spending cuts in the bill — particularly those to Medicaid. But Republicans have cloaked those cuts in so much duplicitous rhetoric about “deserving” beneficiaries that what they’re actually doing remains murky.
What they are not doing is encouraging people to work to get benefits. Congress’s own budget scorekeeper says the Medicaid provisions of the bill will have no effect on employment. Based on past experience with the types of work rules in the bill, two of three Americans denied Medicaid because of these new administrative burdens will, in fact, be working or would have a qualified exemption, such as having a disability.
Meanwhile, the bill will reduce the number of Americans with health insurance by 11 million — and 16 million if you take into account the fact that Republicans refuse to extend expanded tax credits for private health insurance in the Obamacare marketplaces. That 16 million is eerily close to the number of people who were projected to lose coverage under the “skinny” A.C.A. repeal bill that failed to pass the Senate in 2017.
This time, G.O.P. lawmakers hope to escape the wrath of voters by shifting the responsibility to the state level. States are already under mounting fiscal pressure. Now, with dwindling resources and rising need, they will face new restrictions and requirements. Just as the tax cuts could balloon, the losses experienced by working-class Americans could cascade. Only now they will be the states’ problem, or so Republicans seem to believe.
The more voters know about this bill, the less they like it. The real question is what G.O.P. lawmakers think. Are they the party of working people or of the rich and powerful? Legislation speaks louder than words.
