Donald Trump's economic team and congressional Republicans are engaged in discussions to cover the expenses of extending the 2017 tax cut by potentially slashing Medicaid, food stamps, and other government welfare programmes. This move has sparked significant debate and concerns among various sectors.

Unraveling Trump's Welfare Cut Plans

Medicaid Cuts and Work Requirements

Donald Trump's economic advisers and congressional Republicans are considering possible cuts to Medicaid. According to the Washington Post, these cuts could involve new work requirements and spending caps. Extending the 2017 tax cuts, which are set to expire next year and could add $4tn to the national debt already at $36tn, is prompting these discussions. Republicans fear a political backlash from slashing programmes that serve approximately 70 million Americans while disproportionately benefiting the wealthy. For instance, households in the top 1% income bracket are set to receive a $60,000 reduction in 2025, while those in the bottom 60% will get less than $500. Jodey Arrington, the chair of the House of Representatives' budget committee, claims that a "responsible and reasonable work requirement" could save $100bn in Medicaid costs, and an additional $160bn could be cut by checking eligibility more than once a year.The Paragon Health Institute, a rightwing thinktank, published a study suggesting other reductions that could save $500bn over a decade. It also pointed out that rule changes to Medicaid enacted by the Biden administration in the past year could cost up to $135bn nationally and between $46.3bn and $82.3bn at the state level over the next five years.

Food Stamp Alterations

Alterations to food stamps, officially known as the Supplemental Nutrition Assistance Program, could take various forms. This might include limiting the items recipients can purchase with benefits or broadening work requirements. The latter proposal was floated in the Heritage Foundation's Project 2025 blueprint for overhauling the US government. Qualifying criteria for food stamps are tailored to assist the poorest households, with eligibility determined by income and household size. A single person with no dependents needs to earn less than $1,354 a month to qualify, while a household with two or more people earning $1,800 per month would also be eligible.

Republican Priorities and Challenges

Republicans support extending the 2017 tax cut but worry about the loss of revenue adding to government borrowing. In addition to considering cuts to safety net programmes, some Republicans are looking at re-purposing clean energy funds passed by Democrats. The GOP has warned that the cost of Medicaid has ballooned with the expansion of the Affordable Care Act. As the Republicans prepare to control the White House and both chambers of Congress after this month's election, these proposed cuts to welfare entitlement programmes are a significant part of their agenda.It also coincides with Trump's choice of Elon Musk and Vivek Ramaswamy to head a newly formed Department of Government Efficiency with the goal of slashing waste from federal spending. Musk has spoken of making around $2tn in spending cuts. The US is currently running a budget deficit at around 6% of its gross domestic product, and the national debt held by the public is currently worth around 97% of the national economy. The non-partisan Committee for a Responsible Federal Budget argues that without major spending reductions, the deficit would widen significantly in the next 10 years, and the US national debt could soar to 143% of the economy.