President Donald Trump Speaker of the House Mike Johnson speak to members of the media at the U.S. Capitol in Washington, D.C., Tuesday, May 20, 2025, before meeting with the House GOP Conference about passing his budget bill. (Official White House Photo by Molly Riley)
With the so-called Big Beautiful Bill moving its way through Congress, there has been a lot of talk about what will be cut, and what won’t. At the Cato Institute, Michael F. Cannon suggests the GOP should cut Medicaid spending. He also assumes that they won’t. 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 existing debt − now more than $36 trillion or more than 120% of GDP, a peacetime record − would require a tax of more than $266,000 per household.
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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