Republicans' Tax Cut Gambit: Overlooking the Cost

As the Republican Party pushes for an extension of Trump's 2017 tax cuts, they seem to be conveniently overlooking the potential consequences and costs associated with this move. The proposed budget plan, released by House Republicans on Wednesday, sets the stage for advancing many of President Donald Trump's top domestic priorities, including a massive tax cut that could add trillions to the federal deficit.

The budget plan, which is more than just a policy blueprint, provides specific directions to House committees to rearrange the federal money flow. GOP leaders are eyeing cuts to social services, particularly Medicaid, as they seek massive savings. The Energy and Commerce Committee, which handles health care spending, is asked to cut $880 billion over the decade, while the Education and Workforce committee is asked to reduce spending by $330 billion. The Agriculture committee is asked to save $230 billion, while the Transportation and Infrastructure Committee is asked to find at least $10 billion in cuts through 2034.



Meanwhile, money would be shifted to other Trump priorities, including a $100 billion boost in defense spending over the next decade through the Armed Services Committee and an additional $90 billion for the Homeland Security Department, which is carrying out Trump's massive immigration deportation efforts.

The Republican tax plan is a double-edged sword. On one hand, it promises to lower taxes for many Americans, potentially stimulating economic growth. On the other hand, it could lead to a significant increase in the federal deficit, placing a greater burden on future generations. According to the Congressional Budget Office (CBO), extending the Trump tax cuts for the next 10 years would add $4.6 trillion to the deficit, increasing federal debt by 16 percent by 2054.

Moreover, the proposed cuts to social services, particularly Medicaid, could have severe consequences for the healthcare sector and related investments. Medicaid is a vital source of health insurance for low-income individuals, families with children, pregnant women, the elderly, and people with disabilities. Cuts to Medicaid could lead to a reduction in the number of people covered, making it more difficult for them to access necessary healthcare services. This could result in delayed or foregone care, leading to worse health outcomes and increased emergency room visits, which are more expensive than preventive care.



In conclusion, Republicans' push to extend Trump's 2017 tax cuts may have significant consequences for the federal budget, the healthcare sector, and related investments. While the tax cuts could stimulate economic growth, they could also lead to a substantial increase in the federal deficit and potential cuts to vital social services. Investors should be mindful of these potential impacts and consider the broader implications of the proposed budget plan on their portfolios.