As President Trump sought to pass his tax and domestic policy bill, he and his allies have insisted that the legislation would be a boon for seniors and the middle class.
The Senate narrowly passed its version on Tuesday, with Vice President JD Vance casting a tiebreaking vote. Now, both chambers of Congress will reconcile differences between their versions.
Still, some of their most repeated talking points — a warning about vast tax increases if the bill did not pass, a purported elimination of taxes on Social Security and boasts about a record tax cut for average Americans, or insistence that the bill would not balloon the deficit or cut Medicaid — are not accurate.
Here’s a fact-check.
What Was Said
“If it’s not approved, your taxes will go up by 68 percent.”
— Mr. Trump at a news conference on Friday
False. If the 2017 tax cuts expired, most taxpayers would see a modest increase in taxes, but nowhere near the 68 percent Mr. Trump cited.
The Tax Policy Center, a nonpartisan think tank, estimated that not extending the tax cuts would lead taxes to increase by 7.5 percent on average, or about $2,100. Taxes would increase for every income quintile, from 7 percent to nearly 12 percent.
The Tax Foundation, which generally favors lower taxes, has estimated that expiration would lead to an average tax increase of about $2,800. And an analysis from the Brookings Institution found that tax increases would average $1,900.
Mr. Trump may have been misconstruing a different statistic. Both tax think tanks have estimated that about two-thirds of taxpayers would see an increase in taxes if the 2017 law expired.
What Was Said
“There’s also no tax on tips, no tax on Social Security, no tax on overtime.”
— Mr. Trump, in an interview on Fox News on Sunday
This is exaggerated. The bill creates deductions for tips and overtime, but those breaks are temporary. And its tax reductions for Social Security benefits are even more limited.
The Senate bill would allow workers to deduct tips and overtime pay from the 2025 to 2028 tax years. The deductions are capped at $25,000 and $12,500, and decrease for individuals making more than $150,000 a year. (The House version of the bill did not include a cap, but only people making less than $160,000 annually qualified.)
Under current law, up to 85 percent of Social Security benefits are taxable for seniors making more than $25,000 and joint filers making more than $32,000. Seniors over 65 also qualify for an additional deduction. More than half of Social Security beneficiaries pay taxes on their benefits. Half of taxes paid on Social Security benefits shore up Social Security’s trust fund and 35 percent goes to the Medicare Hospital Insurance Trust Fund ($50.7 billion and $35 billion in 2023), according to the Congressional Research Service.
The Senate bill creates an additional deduction of $6,000 for seniors on top of that. (The House bill’s amount is $4,000.) That deduction phases out for higher incomes and would expire in 2028. That’s not quite eliminating all taxation on benefits.
The House’s $4,000 deduction would cost $66 billion from 2025 to 2028, according to the Joint Committee on Taxation. For context, eliminating all taxation of Social Security would cost more than $1.4 trillion over 10 years — almost 10 times as much as the Republicans’ deduction proposal.
Analyses from the Tax Foundation and the Bipartisan Policy Center found that the additional deduction would primarily benefit those with higher incomes.
What Was Said
“Senate Republicans are voting for the largest tax cut for middle-class Americans in history.”
— the Senate Republican conference on social media on Thursday
False. Several recent pieces of legislation provided bigger boosts to the middle class.
Analysis from the Tax Policy Center shows that the tax provisions in the Senate version of the bill would provide a tax cut of 1.9 percent or about $1,750 for the middle quintile of taxpayers. That amounts to a 2.2 percent increase to their after-tax income.
A coronavirus stimulus package in 2021 cut taxes by 6 percent, or $3,700, for the middle quintile. That was equal to a 6 percent increase in after-tax income, though the benefit was temporary.
Tax cuts signed into law in 2012 provided a cut of about 2.3 percent or nearly $1,200, not adjusted for inflation. That was equal to about a 2.8 increase in after-tax income.
And under the 1981 tax cut, a family of four earning $20,000 (roughly the median family income at the time) received an 11 percent tax cut, or $223, according to the Joint Committee on Taxation.
It is also worth noting that beyond tax cuts, both the Senate and the House bills contain numerous other provisions that may adversely affect the middle class. The Congressional Budget Office, in a distributional analysis of the House bill, estimated that the fifth and sixth deciles of households would see an increase of $853 and $1,256 from tax cuts, but see state and federal benefits reduced by $433 and $370.
What Was Said
“Here’s what we’re doing when it comes to Medicaid: It’s grown 50 percent in five years. It’s about to take over Medicare. What we’ve done is, we limited the growth of Medicaid to 6 percent for two years. After that, 4 percent growth. We haven’t cut Medicaid. We’ve reduced the growth.”
— Senator Lindsey Graham, Republican of South Carolina, in an interview on ABC News on Sunday
This is exaggerated. Mr. Graham has a point that Medicaid has grown substantially in recent years, but spending on Medicaid still remains significantly below that of Medicare. Moreover, his rejection of characterizing the bill’s Medicaid provisions as a “cut” is a familiar semantic argument in Washington, but ignores the effect on beneficiaries.
Federal spending on Medicaid grew from $409 billion in 2019 to $618 billion in 2024 — a 51 percent increase, but still below the nearly $1.1 trillion spent on Medicare that year. The Congressional Budget Office has projected that Medicaid spending will continue to steadily increase over the next decade, reaching over $1 trillion in 2035, but Medicare spending, too, will increase and top $2.1 trillion that year.
The Senate bill reduces federal spending on Medicaid by more than $1 trillion over a decade. Mr. Graham argued that this was not a “cut” because annual federal spending on Medicaid under the bill would still be higher annually from 2025 to 2034 than the $618 billion spent in 2024.
Semantics aside, the Senate bill would nonetheless reduce both benefits, including payments to hospitals, and enrollment by millions of people. Moreover, Mr. Graham has called reductions to future spending “cuts” in the past.
What Was Said
“The fact is that C.B.O. has scored this bill to have a $507 billion deficit reduction — you heard that right: a $507 billion deficit reduction.”
— Senator Mike Crapo, Republican of Idaho, on the Senate floor on Saturday
This is misleading. Mr. Crapo is referring to one of two scores produced by the Congressional Budget Office. The other, more traditionally accepted score shows the Senate bill ballooning the federal budget by more than $3 trillion.
The budget office released two estimates of the Senate bill’s effect on the federal budget. One compares the bill against a base line or current law, under which the 2017 tax cuts expire at the end of this year. That estimate showed that the Senate bill would increase the federal budget by nearly $3.3 trillion.
Separately, at the request of Senate Republicans, the budget office also released an estimate comparing the bill against a “current policy” base line, which assumes that the 2017 tax cuts would be extended. This estimate showed that the Senate bill would decrease the federal deficit by $507 billion.
The Committee for a Responsible Federal Budget, a nonpartisan group that calls for lower deficits, has characterized the “current policy” estimate as a “massive budget gimmick” used to hide the true cost of legislation. For example, the budget group argued, Congress could create a temporary universal health care or “Medicare for all” program with a single-year cost of $3 trillion and, in the next year, claim that making the program permanent would cost nothing under a “current policy” estimate.
Linda Qiu is a reporter who specializes in fact-checking statements made by politicians and public figures. She has been reporting and fact-checking public figures for nearly a decade.
The post Trump and Republicans Mislead on Policy Bill’s Effect appeared first on New York Times.
