The big bill is not beautiful; it’s pernicious

The “Big Beautiful Bill” Congress and President Trump foisted on America is best described as “pernicious,” which means creating long-lasting harm, often in a somewhat hidden way.

Sure, much of the havoc this legislation wreaks is blatantly obvious. For instance, by all objective accounts, the BBB’s $4.2 trillion in tax cuts — that are partially paid for by slashing spending on Medicaid, SNAP and environmental protection — line the pockets of the uber-rich, whilst shrinking the income of poor folks. Indeed, the Yale Budget Lab found that by 2027, the bottom 20% of households, which earn less than $14,000 per year on average, will lose $800 annually under the BBB, whereas the richest 1% gain $63,000.

Incredibly, things get more tilted to the wealthiest after that. The non-partisan Joint Committee on Taxation found that by 2029, the BBB increases taxes on workers making $30,000 a year or less, while bestowing an annual tax cut of $309,000 on the richest 0.1%. For perspective, that tax break is nearly four times greater than the median annual income in America of $80,610.

Meanwhile according to IRS data, from 1979 through 2020, the average incomes of the top 1% jumped by 125%, from $818,660 to $1.84 million per year. Over that same time frame, the average annual income for the bottom 99% — i.e., everyone else — went from $65,577 to $73,286, an increase of just 12%, or roughly 0.003% per year. Considering the tremendous growth in income inequality that’s happening in America, the BBB’s massive transfer of wealth to the richest at the expense of the poorest is immoral.

With so much glaring damage created in its wake, does the BBB really cause any “hidden” harm? The short answer is yes, and more than can be covered in one op-ed. But here are two examples. Start with Medicare, the federal health insurance program that primarily covers individuals aged 65 and older. Because senior citizens tend to vote, Medicare cuts are anathema to most politicians, President Trump and Republican House Speaker Mike Johnson included. Which is why both repeatedly asserted Medicare won’t be touched to pay for the tax breaks in the BBB. But in fact it will.

See, the federal “Pay-As-You-Go” statute establishes a process dubbed “sequestration,” which requires any growth in the deficit caused by newly enacted legislation, like the BBB, be automatically offset by cuts in spending. While some federal programs are exempt from sequestration, Medicare isn’t. The Congressional Budget Office projects sequestration will result in $536 billion in Medicare cuts over the next decade, which means Trump and Johnson were either ignorant of the law or lying.

Then there’s the BBB’s impact on Illinois’ General Fund, the state’s primary operating budget. Over 94% of all General Fund spending on services goes to the core areas of education, health care, human services and public safety. Unfortunately, the General Fund has a structural deficit, which simply means annual revenue growth is inadequate to continue funding the same level of those core services from year-to-year, even when the economy is growing.

Because Illinois’ income tax is based on federal law, when the feds cut taxes, so does Illinois. As the tax cuts in the BBB filter down to Illinois, they’ll worsen the structural deficit by $923 million over the next 10 years.

And that’s just the tip of the iceberg. Combined with the cuts to Medicaid and SNAP, the BBB’s potential impact on the General Fund is a 10-year financial hit that exceeds $20 billion. Which means Illinois either has to raise taxes, or slash spending on core services like K-12 education, just because Trump decided to line the pockets of his bagillionaire cronies.

• Ralph Martire, rmartire@ctbaonline.org, is Executive Director of the Center for Tax and Budget Accountability, a fiscal policy think tank, and the Arthur Rubloff Professor of Public Policy at Roosevelt University.