President Donald Trump delivers remarks announcing the MAHA (Make America Healthy Again) Commission, Thursday, May 22, 2025, in the East Room of the White House. (Official White House Photo by Joyce N. Boghosian)
Can President Donald Trump balance the federal budget without Medicaid cuts? Michael F. Cannon of the Cato Institute thinks that’s impossible. He writes:
Let’s be honest. Republicans aren’t cutting Medicaid − but they should.
If, as Democrats fear, Republicans were to reduce future Medicaid spending $880 billion by 2035, the program’s annual growth rate would merely fall from 4.5% to 3%. You know an entitlement program is enormous when 1.5 percentage points of growth equals almost $1 trillion.
President Donald Trump promises to balance the budget without touching Medicaid. But keeping both promises is impossible. Unless Congress significantly cuts federal health care subsidies, it could trigger a debt crisis with wrenching cuts that hit Medicaid enrollees hardest.
Trump on May 20 warned House Republicans once again not to cut Medicaid even as he pressed them to pass a major tax cut and spending bill this week.
National Debt Threatens Americans’ Financial Security
Yet, the rapidly growing federal debt threatens staggering obligations on future taxpayers. Retiring federal debt held by the public—now $30 trillion or 100 percent of GDP, a peacetime record—would require a tax of $236,000 per household.
Runaway spending adds another 6 percent of GDP to the pile each year. As shares of GDP, current federal revenues are roughly equal to the historical average (17.1 percent vs. 17.3 percent, respectively), but spending is significantly higher than the historical average (23.3 percent vs. 21.1 percent).
As a share of GDP, federal spending is now at 23.1%. That is higher than at any point in the past century, with the exceptions of World War II, the Great Recession in 2009 and the COVID-19 pandemic in 2020.
The main driver in increased federal spending is health care subsidies. At more than $1.8 trillion annually, health care is the largest category of federal spending − larger than Social Security ($1.7 trillion), national defense and veterans’ benefits ($1.3 trillion), or interest on the debt ($952 billion).
Balancing the budget without touching health care would require 40% across-the-board cuts to all other spending. There is no practical way to balance the budget while sparing health care subsidies.
Read more here.
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