Trump has begun pabout making significant changes to Medicaid, food stamps and other federal safety net programs

Donald Trump’s economic advisers and congressional Republicans are considering significant cuts to Medicaid, food stamps, and other welfare programs to offset the costs of extending the 2017 tax cuts, which are set to expire next year. According to the Washington Post, discussions include adding work requirements and imposing spending caps as part of the proposed measures. The plans involve input from Trump’s transition team and key Republican lawmakers.

Extending the tax cuts could add $4 trillion to the national debt, which already exceeds $36 trillion. While Republicans are eager to maintain the tax cuts—widely criticized for disproportionately benefiting the wealthy—they are concerned about the political fallout of slashing programs that serve approximately 70 million Americans.

Background on the 2017 Tax Cuts

The 2017 tax cuts provided substantial benefits to high-income earners, with households in the top 1% projected to save $60,000 annually by 2025, compared to less than $500 for those in the bottom 60%, per the Center on Budget and Policy Priorities. Trump has campaigned on making these cuts permanent while also proposing to abolish taxes on tips for restaurant workers.

Republicans broadly support the extension but are exploring savings in other areas to address concerns over escalating government borrowing. Ideas on the table include redirecting clean energy funds passed under the Biden administration and imposing stricter eligibility criteria for safety net programs.

Proposed Cuts and Changes

Medicaid, which serves low-income individuals, people with disabilities, and those with certain illnesses, has become a primary target for cost reductions. The GOP argues that Medicaid expenses have surged following the Affordable Care Act's expansion.

Rep. Jodey Arrington, chair of the House Budget Committee, suggested that implementing work requirements could reduce Medicaid costs by $100 billion. Additionally, more frequent eligibility checks might save another $160 billion. A recent study by the right-leaning Paragon Health Institute proposed a decade-long savings of $500 billion through various Medicaid cuts.

For food stamps, officially known as the Supplemental Nutrition Assistance Program (SNAP), potential changes include restricting allowable purchases and broadening work requirements, as outlined in the Heritage Foundation’s Project 2025 blueprint. Current SNAP eligibility is income-based, with thresholds designed to assist the nation’s poorest households.

Broader Fiscal Challenges

These proposed cuts coincide with Republicans taking control of the White House and Congress following the recent election. The U.S. is currently running a budget deficit equivalent to 6% of its GDP, and the national debt held by the public amounts to approximately 97% of the country’s economy.

As part of Trump’s push for fiscal reform, Elon Musk and Vivek Ramaswamy have been tapped to lead the newly established Department of Government Efficiency. Their mandate includes identifying and eliminating up to $2 trillion in federal spending waste. Musk has publicly discussed the potential for aggressive spending cuts as part of a broader effort to streamline government operations.

These fiscal moves, if implemented, could reshape entitlement programs and redefine the scope of federal assistance, potentially sparking widespread debate about their economic and social implications.