Trump budget bill passed: more military spending, social cuts and rising debt

The 10-year budget is certainly consequential, a harbinger for analysts of profound changes in the direction of US finances. But it is equally certainly problematic, with economic and political outcomes all to be seen. Huge across-the-board tax cuts of almost five trillion (largely enacted by the first Trump administration and expiring in December) are renewed and strengthened, for individuals and corporations. They are flanked by unprecedented cuts in social spending, one trillion just to the Medicaid health programme for the poor, as to Snap food assistance for 42 million Americans. Incentives for clean energy vanish and new investments are concentrated in border security and the fight against migrants (175 billion) and in defence.

The Republicans have also given way to some new, more openly populist-inspired ideas: forms of partial tax relief on tips and overtime and bonuses (of $6,000 per year) for the elderly. And the timetable sees the reliefs rolling out without delay while welfare cuts slip past the 2026 Midterm elections for Congress. Not surprisingly. Indeed, these savings pose no easy challenge for Trump: his Republican party now captures votes from the working class and lower middle class, among the main users of social services, in a reversal of traditional 'class support' with the Democrats. Another aspect worries the Republican coalition: the budget exacerbates the debt, by at least 3.3 trillion over a decade, a figure hidden by accounting manoeuvres (the cost of renewed relief was excluded by authority). The absence of fiscal restraint is still anathema among many conservatives.

There is no shortage, in the bill's 900-plus pages, of votes wrested through ad hoc concessions that run counter to the administration's promises to fight waste: among the senators, Alaska moderate Lisa Murkowski's crucial consensus came through incentives for whaling captains and paradoxical temporary narrow exemptions in the Snap for states with high error rates in care (Alaska stands out).

The overall result of the legislation, in the calculations of Yale's Budget Lab, is thus less than guaranteed to be popular: the wealthiest fifth of Americans will see their after-tax incomes rise by 2.3%, the poorest fifth will lose at least as much. Perhaps 14 million Americans, in particular, will lose healthcare, through a mixture of work obligations to be certified and shifts of burdens from the federal government to the states.

The Democratic opposition dragged out the debate on the vote yesterday with speeches denouncing what it apostrophises as Trump's budget traumas: House Minority Leader Hakeem Jeffries spoke for 8 hours 45 minutes, reading testimonies of Americans, even in Republican constituencies, deprived of health coverage. "How can you celebrate a law that undermines the quality of life for Americans?" he asked. Jeffries could only claim one record, however: that of authoring the longest speech by a congressman on the floor.

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