Testimony by Michael Linden on “The Big Beautiful Betrayal—Working Folks Pay While The Mega Rich Profit”

Senator Kaine, Senator Murphy, and members of the Forum, thank you for the opportunity to be here today.

I’m going to make three key points.

First, the Republican budget bill that passed the House of Representatives and is now under consideration here in the Senate is an unprecedented transfer of income and wealth from the bottom to the top. Never in modern U.S. history has one single bill taken so much from working families and directly deposited it into the pockets of the wealthy.

Second, in addition to being morally indefensible, this budget bill is also economically backward, likely to impede growth and prosperity for everyone while directly making life worse for huge numbers of American families.

And, finally, distributional analyses of the current bill are, if anything, likely to be understating the degree to which the poor and the middle class will be harmed by this bill.

To begin with, let’s step back and understand the basic contours of the Republican budget bill. The bill starts by cutting more than $1 trillion in funding over the next decade from health care, nutrition assistance, and education. The bill then takes that $1 trillion and uses it to partially offset the cost of more than $4 trillion in tax cuts. The difference of roughly $3 trillion is added to the national debt. Those are the fundamental building blocks of this bill, and those facts are confirmed by every independent analysis, including from the official Congressional Budget Office.

But what does all that mean in practice? Well, fundamentally, it means that millions of Americans will lose their health care coverage, pay more for their health care, lose nutrition assistance, and pay more for higher education. And, critically, those costs will fall much more heavily on poorer Americans, while rich Americans will, by and large, not be affected at all by these cuts.

Sixteen million Americans will lose their health insurance if this budget plan becomes law.¹ Of those 16 million, none are wealthy. They are all middle-class and low-income people and families who rely on Medicaid and the Affordable Care Act for their health insurance. And, of course, the bill’s enormous cuts to the Supplemental Nutrition Assistance Program will fall entirely on people who are currently eligible for that program’s aid—households who are either living under the poverty line or are very near the poverty line.²

By contrast, the tax provisions in the law are heavily skewed to the top. Of the roughly $4 trillion in net tax cuts proposed by the House bill, more than half of the total benefit goes to the richest 10 percent of Americans.³ The average tax cut for someone in the top 0.1 percent is roughly $250,000.⁴

When you put these pieces together, it’s easy to see that this bill will directly take money out of the pockets of tens of millions of lower-income Americans and put that very money into the pockets of the rich. And that is precisely what every single independent analysis—from experts across the ideological spectrum—has found.

The conservative-leaning Penn-Wharton Budget Model found that roughly half of the total benefit of the bill goes to the richest 5 percent, while the bottom 40 percent will pay more.⁵ The independent, nonideological Tax Policy Center and Yale Budget Lab both found the same.⁶ The nonpartisan Congressional Budget Office similarly found that when the bill is fully phased in, the benefits actually are even more concentrated at the top, with more than 80 percent of the benefits going to the richest 5 percent. In fact, the CBO analysis found that, on average, over the course of the next 10 years, the bottom 10 percent of Americans will end up with $1,600 less, while the richest 10 percent will reap $12,000 more.⁷

In our lifetimes, there has never been a bill that so directly and brazenly takes from the poor to give to the rich. No major piece of U.S. legislation in at least the past 40 years—and likely much longer—has simultaneously made the poor poorer, while making the rich richer.⁸ It is true that there have been bills that have increased inequality. The 2017 tax law, for example, delivered much larger tax benefits to the rich than it did to the middle, and the poor were largely left out.⁹ But this bill goes even further than that, directly reducing the incomes of the poor, leaving the middle class out of most of the gains, and showering essentially all of the major benefits on the top. This is an unprecedented transfer of income and wealth from the bottom to the top.

Almost all Americans agree that taking money from the poor to give to the rich is morally indefensible. But it is also the case that making the rich richer at the expense of everyone else is a huge economic blunder. Growth and economic prosperity do not trickle down from the rich. Instead, shared growth and prosperity flows from the contributions of everyday Americans who participate in the economy to their fullest as workers, consumers, caregivers, and innovators. Extreme inequality is itself a barrier to and a drag on robust economic growth because it leads to fewer opportunities for the vast majority of everyday people, distorts economic incentives that would otherwise be aligned for better outcomes, and undermines our collective ability to solve economic problems.¹⁰

This bill will raise all of those barriers to growth and prosperity. It will reduce opportunities for economic mobility by making more costly the basic necessities that families need to give their children a better shot at prosperity. It will encourage the already-wealthy and powerful to further concentrate their resources by rewarding behavior that encourages taking a bigger share, rather than growing the pie. And, finally, by once again cutting taxes for the rich, it will further reduce the resources available to us as a society to solve the problems that can only be solved together. The reason why it always feels as though there is not enough funding to meet the basic expectations of the American people is because that money keeps getting spent on tax breaks for the rich.

This is one reason why several macroeconomic analyses of the bill have found that, far from boosting growth, it may very well impede it. The most recent analysis comes from American University’s Institute for Macroeconomics and Policy Analysis. It finds that the bill would reduce growth, resulting in a smaller economy by the end of the decade, in part due to its regressive nature.¹¹ Other analyses have also found that the bill will reduce growth in the medium and long term.¹²

Indeed, the negative effects on the overall economy are just one reason why the bill is actually likely to be even harsher on the middle class and the poor than it seems. The impacts of slower growth and a smaller economy are typically felt most acutely by middle- and low-income households. But there are additional reasons to be concerned that this bill is even more redistributive from the bottom to the top than it appears at first glance.

For one, many other policies pursued by this Trump administration—policies that they have explicitly tied to this budget bill—are also regressive in nature. The administration’s proposed cuts to science and technology research, to food and consumer safety, to disease prevention, and to housing are all going to hurt middle- and low-income families far more than they hurt the rich and large corporations. The promise of these future cuts has been explicitly tied to arguments in favor of passing this budget bill.

Similarly, the Trump administration’s across-the-board tariffs have recently been cited as another part of the overall package. Tariffs, similar to sales taxes, are regressive, as lower-income families have to pay out a larger share of their income in the form of higher prices than richer families do. In fact, one analysis from the Yale Budget Lab found that, after including the tariffs as part of the total budget package, 80 percent of Americans would pay more under the Trump and Republican budget plan, while the richest 1 percent would pay less.¹³

Regardless of one’s views on the usefulness and efficacy of tariffs as a tool of economic policy, I think we can all agree that they should never be used to pay for tax cuts that primarily benefit the wealthy and large corporations.

And finally, I must mention that the overall reduction in federal revenue is likely to once again lead to future cuts that fall most heavily on poor and middle-class families. Supporters of this very budget bill point to the federal fiscal imbalance as the primary reason why we “must” cut health care and nutrition assistance and why middle-income families must face higher costs for education and energy. But, in fact, the main culprit responsible for our weakened fiscal situation is the series of repeated, large tax cuts that primarily benefited wealthy individuals and corporations.¹⁴ Put simply, over the past 25 years, Congress has spent many trillions of dollars on unpaid-for tax breaks, and that is the main reason why our debt is on an upward trajectory.

Another series of expensive tax cuts that further reduces federal revenue and increases federal debt will inevitably lead to disingenuous future calls to reduce federal funding for critical services and basic necessities, even though the cause of that rising debt will have been tax cuts. Tax cuts for the rich are not free. Someone will pay for those tax cuts, and if this bill is any indication, it won’t be rich people in the future—it will be middle- and low-income people.

Let me be as plain as I can be. This bill will take money away from millions of poor and middle-class Americans and put that money into the bank accounts of the richest people on the planet. Underneath all of the policy details and analyses and talking points and distributional tables, that is the simple truth. This is the most upside-down bill in modern U.S. history.

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