How Trump’s ‘Populist’ Fiscal Policies Actually Hurt So Many People

By William Rice

Donald Trump presents himself as the champion of the “forgotten men and women of America.” He claims his economic policies will boost the working class. His off-the-cuff campaign proposal to end the taxation of tips is included in the Republican tax-and-spending plan now making its way through Congress. Yet several studies show that around half of American families–the lowest-income half–will be worse off if all Trump’s fiscal goals are achieved. 

A recent report from Americans for Tax Fairness (ATF) found that the bottom 60% of U.S. households would lose an average of $800 next year from the GOP’s fiscal agenda. That agenda consists of the tax and spending cuts in the Republican budget plus the Trump tariffs on imported goods. 

Those findings are consistent with those from other organizations. The Institute for Taxation and Economic Policy (ITEP) found that the Republican tax cuts recently passed by the House of Representatives, when combined with the Trump tariffs, would create higher overall costs for 40% of U.S. households, those making less than $53,000 a year. 

The Yale Budget Lab combined the tax cuts in the GOP budget with its cuts to essential services like Medicaid and nutritional assistance to figure out the overall impact on low-income families. This study again found that the bottom 40% would face higher costs overall as they pay more out of pocket for medical care and groceries than they receive in tax cuts. 

ATF’s report found the biggest negative impact on lower-income families of the three studies because it was the only one to look at tax cuts, service cuts and tariffs. 

In all the studies, the highest-income households would come out way ahead from the mix of Republican policies. The ATF report found that the top 1%–roughly every household with a million dollars or more of income–would come out almost $50,000 on the upside. ITEP determined that for folks with income roughly between $400,000 and $900,000 their economic condition would improve by over 3% after tax cuts and tariff-caused price hikes. The Budget Lab found that the highest-income 0.1% would enjoy a windfall of over $275,000 after accounting for both tax and service cuts. 

All of which goes to show that all the populist talk by Trump and his Republican enablers is just that–talk. It’s the same kind of misdirection and patter stage magicians use to fool you. The reality is the only people Trump’s really trying to serve are his billionaire donors and other hyper-wealthy people like himself. Just a little investigation into his policies reveals the truth. 

Start with the tax plan. Despite all the GOP blather about it being a “middle-class tax cut,” the reality is that the vast majority of the benefits are for the rich. Over two-thirds (68%) of the cuts will go to the highest-income fifth of households, folks already bringing in over roughly  $150,000 a year. The top 1%, with income of around a million dollars and up, will get an average tax cut next year alone of almost $69,000. Meanwhile, the middle class will get less than $5 a day–the lowest-income fifth less than fifty cents. 

Putting aside the injustice of that distribution, five bucks or even fifty cents is better than nothing, right? Not so fast. All those tax cuts mostly for the rich are expensive. And even though most of the $5.5 trillion cost will be added to the national debt (driving up interest rates for consumers–but that’s another story), Republicans also plan to pay for them in part with cuts to public services, the kind of services that currently lower costs for workers and families. 

The GOP budget now before the Senate would cut over $700 billion from Medicaid, the health insurance that pays for most nursing-home care and almost half of all births in the United States. It’s estimated that those Medicaid cuts, combined with damaging changes made to the Affordable Care Act (ACA), will result in 15 million people losing health coverage by 2034. Those people will then have to pay out-of-pocket for medical care–or much more likely, go without because they can’t afford it. 

What’s more, because it jacked up the deficit so much, the Republican budget will also trigger half a trillion dollars of automatic cuts over the next nine years to Medicare, the insurance program for older and disabled adults. Provider payments will be cut, forcing doctors out of the program and hospitals to close. 

The GOP spending plan also cuts $300 billion from the Supplemental Nutrition Assistance Plan (SNAP), the program formerly known as food stamps that makes food less expensive for lower-income families. More than three million people could lose SNAP coverage. 

Meanwhile, Trump’s tariffs are already starting to bite consumers. Targeted tariffs can shield American industries and workers from unfair foreign competition. But Trump’s blanket tariffs on all goods from friend and foe alike will only wind up hurting the American consumer. 

Populist policies are by definition supposed to help the population–specifically, that part of it with middle and low incomes. Trump and his fellow Republicans are pursuing policies that do just the opposite. If they want to claim the mantle of populism, they will have to reverse course.