GOP Tax Bill Will Hurt the Vulnerable and the Deficit: Jack Lew

The budget working its way through Congress is upside down. On the heels of a US credit rating downgrade due to unsustainable projected deficits and debt, Washington should be asking how to control the deficit. But this budget would increase the debt by $3 trillion to $5 trillion—that’s trillion with a “t"—over 10 years.

At a time when the economy was otherwise headed toward continued growth, gyrating trade policies have created sufficient uncertainty to raise the threat of a recession. And at a time when economic forecasts now suggest a weaker economy in the year ahead, this budget would raise costs for families by taking health care coverage and food assistance away from millions of vulnerable people.

Causing pain to the most vulnerable while reducing taxes for the most fortunate is upside down enough, but doing so while driving the debt to historically high levels fails on all fronts.

With a strong economy projected back in January, one could have made a good case for a balanced bipartisan approach to reduce our deficit with careful controls on spending and measures that would increase revenue. Even in the context of a debate over extending tax cuts that are scheduled to expire, such a conversation could have taken place in a different political environment.

We now see a split in the ranks of congressional Republicans in pursuit of one “big, beautiful bill.” Some are calling for greater concern about growing deficits. Others are making the case that the burden of cuts shouldn’t take health care and nutrition benefits away from families.

But this split is on the margin—they have already agreed to march headlong into massive tax cuts, treating the first $2.5 trillion as free even though every penny will add to deficits and debt. The markets are already sending signals that this is a nightmare to worry about.

There appears to be a division among Republicans between those who say it is unacceptable to take health care and food assistance from millions of people and those who hide behind assertions that only fraud and waste will be cut.

If the House debate repeats itself in the Senate, I fear that misleading rhetoric will overwhelm the better judgment of legislators trying to do less harm. This is a critical moment to insist on facing the facts and consequences of the proposed cuts.

House Republicans managed to pass a bill with a one-vote margin, but only by producing a package that adds $3 trillion of debt and interest over 10 years, and almost twice that if the new temporary tax cuts fail to sunset. We know from experience that the sun rarely sets on expiring tax cuts, so these sunsets are really a fiction hiding longer term costs that will be the reality.

This means that the deficit will be more than 6% of the gross domestic product, even counting revenue from the Trump tariffs, a far cry from Treasury Secretary Scott Bessent’s goal of bringing the deficit to 3% of GDP. Total debt, already on a path to hit 156% of GDP, would now be on a path to hit 200% of GDP by 2050. That would put us in the company of Sudan—hardly a fiscal badge of honor.

If we can still borrow domestically and internationally, why is the House budget such a problem?

• It will hurt the economy because it means higher interest rates for both business investment and consumer mortgages.
• It will make it harder to meet our national needs, because the share of the budget devoted to paying interest on the debts—already bigger than the share of the budget devoted to national defense—will grow even larger and crowd out other national priorities.
• It will threaten rural and urban hospitals because taking insurance away from 16 million people will increase uncompensated care and create financial pressure that will force many to close, and shift costs to other payers, which means rising health insurance bills for businesses and individuals who will pay higher rates.
• It will hurt children in households where there is less food on the table and less access to health care. We can all agree that people who are able to work should work, but it’s not fraud or abuse to offer food assistance to a single parent working reduced hours so they can be there when an 8-year-old comes home from school.

Reducing support for working families to buy health insurance won’t mean that employers will provide health coverage. It means that millions will lose health coverage. Targeting child tax credits so that more affluent families will benefit fully, while lower income families don’t, means children in those lower income households will lose out.

I have worked on many budget agreements over the decades that reduced the deficit and even balanced the budget. Republicans worked with Democrats in the 1980s and 1990s on numerous occasions, from Social Security reforms under President Ronald Reagan, to the 1990 Budget Enforcement Act under President George H.W. Bush.

Under President Bill Clinton, Republicans worked across the aisle to pass the Balanced Budget Act of 1997, leading to three years of surplus when I served as director of the Office of Management and Budget. All of these agreements were bipartisan, and there were others.

There is a reason: Real deficit reduction requires compromise and shared pain—some combination of cutting spending and raising revenues. Bipartisan cooperation is the only way to share the political pain as well.

If this was a serious fiscal debate, we would be discussing how to extend the solvency of the Social Security program with a balanced approach like the reforms of 1983. Instead, along with business tax cuts, there is now a competition among popular-sounding but unaffordable tax breaks, like reversing the 1983 decision to tax the Social Security benefits of higher income beneficiaries; and exempting income like tips and overtime from any taxation at all.

If this was a serious conversation, there would be debate about how to control the cost of health care, not the pretense that taking health care away from millions of people is simply reducing fraud and abuse.

As the Senate turns to its version of a budget plan, this is a critical moment to face the reality of honest numbers, and real consequences that can’t be wished away by simply repeating that there is no harm.

There is still time to avoid outcomes that will cause a generation or more of fiscal and family pain, but only if the Senate steps up to the challenge of righting this upside-down budget.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Jacob J. Lew was the 76th Secretary of the Treasury, twice Director of the Office of Management and Budget, and is currently a professor at Columbia University’s School of International and Public Affairs.

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