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The House’s ‘One Big Beautiful Bill’ Is Only Beautiful If You’re Rich
The bill will cut 8.6 million people off Medicaid to pay for tax cuts that overwhelmingly benefit the wealthy, among other provisions that most Americans oppose.
May 22, 2025
The old professor in me thinks the best way to convey to you how utterly awful the so-called “one big beautiful bill” passed by the House last night actually is would be to give you this short 10-question exam. (Answers are in parenthesis but first try to answer without looking at them.)
1. Does the House’s “one big beautiful bill” cut Medicare? (Answer: Yes, by an estimated $500 billion.)
2. Because the bill cuts Medicaid, how many Americans are expected to lose Medicaid coverage? (At least 8.6 million.)
3. Will the tax cut in the bill benefit the rich or the poor or everyone?(Overwhelmingly, the rich.)
4. How much will the top 0.1% of earners stand to gain from it? (Nearly $390,000 per year).
5. If you figure in the benefit cuts and the tax cuts, will Americans making between about $17,000 and $51,000 gain or lose? (They’ll lose about $700 a year).
6. How about Americans with incomes less than $17,000? (They’ll lose more than $1,000 per year on average).
7. How much will the bill add to the federal debt? ($3.8 trillion over 10 years.)
8. Who will pay the interest on this extra debt? (All of us, in both our tax payments and higher interest rates for mortgages, car loans, and all other longer-term borrowing.)
9. Who collects this interest? (People who lend to the U.S. government, 70% of whom are American and most of whom are wealthy.)
10. Bonus question: Is the $400 million airplane from Qatar a gift to the United States for every future president to use, or a gift to U.S. President Donald Trump for his own personal use? (It’s a personal gift because he’ll get to use it after he leaves the presidency.)
Most Americans are strongly opposed to all of these things, according to polls. But if you knew the answers to these 10 questions, you’re likely to be in a very tiny minority. That’s because of (1) distortions and cover-ups emanating from Trump and magnified by Fox News and other rightwing outlets. (2) A public that’s overwhelmed with the blitzkrieg of everything Trump is doing, and can’t focus on this. (3) Outright silencing of many in the media who fear retaliation from the Trump regime if they reveal things that Trump doesn’t want revealed.
Please do your part: Share this as widely as possible.
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A House Tax Break Would Help the Rich at the Expense of the Rest
Extending or increasing a deduction for pass-through businesses is likely to exacerbate economic inequality, while delivering no economic benefits in the long run.
May 22, 2025
House Republicans’ tax plan would expand a tax break in the 2017 tax reform for “pass-through” businesses that has overwhelmingly benefited high earners. “Pass-throughs” are entities structured so that profits are not taxed at the business level but instead at the owners’ individual income tax rate.
The 2017 Tax Cuts and Jobs Act introduced a 20% deduction for Qualified Business Income (QBI) for pass-through businesses. House Republicans want to extend this tax break and increase it to 23%.
Contrary to proponents’ claims that the QBI deduction stimulates economic growth, economic research suggests a more nuanced and challenging reality. Recent analysis from our team at American University’s Institute for Macroeconomic and Policy Analysis (IMPA) reveals that extending or increasing the QBI is likely to exacerbate economic inequality, while delivering no economic benefits in the long run.
Extending the QBI deduction would systematically redistribute economic resources in ways that amplify existing inequalities.
Importantly, extending the QBI deduction would reduce government revenue significantly—by approximately 1.9% annually in the long run. Permanently increasing it would reduce revenue by 2.2% annually. These revenue losses represent a substantial fiscal challenge that cannot be overlooked.
Understanding Pass-Through Businesses
Traditional C corporations must pay the federal corporate income tax. Shareholders then pay individual income taxes on any profits distributed as dividends. In contrast, sole proprietorships, S corporations, and partnerships, as well as certain other types of businesses, are called “pass-throughs” because the businesses themselves do not pay taxes; instead, profits are passed through to individual owners, who then are taxed at their own individual tax rate. The QBI deduction reduces the amount of income from pass-throughs that is taxed.
According to Internal Revenue Service data, the number of nonfarm businesses organized as pass-throughs grew by 15% between 1980 and 2015, at which time more than 95% of all businesses were pass-throughs. But pass-through income is highly concentrated among top earners. Congressional Budget Office data show that, while income from pass-through businesses represents more than 20% of total household income for the top 1%, it accounts for merely 3% of income for the bottom 80% of households.
Think high-powered law firm partners or private equity fund executives. Without this tax break, they might owe the top marginal income tax rate of 37%. Under the current Republican proposal, they would owe just a 28.49% pass-through rate.
How Would Extending the QBI Deduction Affect the Economy?
Economic theory suggests that such tax deductions on business income have very little direct effects on real business activity if investment costs can be deducted from taxable income. And that is the case for pass-throughs. Because they can use accelerated depreciation provisions, taxes on their business income don’t change their investment decisions.
It’s not just theory: A recent study using tax record data finds no clear impact on investment, wages, or employment among pass-throughs that got an earlier tax break. A separate study found no impact on wages.
Even if tax breaks for businesses have no effect on individual business decisions, they can have negative effects on the economy as a whole. For example, such tax breaks reduce government revenue. If the revenue shortfall is financed by government borrowing, it can crowd out private investment. If the revenue shortfall is matched by reduced spending on public investment, such as scientific research, it is likely to reduce our standard of living in the long run. Such tax breaks also increase the after-tax required return to investors, which could cause businesses to distribute more profit, leaving less for investment.
We find that extending the QBI deduction would decrease government revenue by about 1.6% annually after 10 years and 1.9% in the long run.
Finally, such tax breaks increase after-tax profits and the market value of businesses, which raises the wealth of already-wealthy owners.
Our estimates using the IMPA macroeconomic policy model confirm that making the QBI deduction permanent would not boost economic activity, as is commonly claimed. Instead, we find that there would be a small decrease in GDP of 0.07% in the long run. Increasing the deduction to 23% would magnify the negative impact on economic activity.
Extending the QBI deduction would systematically redistribute economic resources in ways that amplify existing inequalities. Extending the QBI deduction would increase the share of the wealth owned by the top 1% by approximately 1.1%, while the bottom 50% would see their share fall by approximately 2.4%. Increasing the deduction, of course, redistributes even more wealth from the lower half of the distribution to the top.
Finally, we find that extending the QBI deduction would decrease government revenue by about 1.6% annually after 10 years and 1.9% in the long run. Increasing it permanently to 23% would reduce revenue 2.2% in the long run. How much is that? In the 2023 budget, 2% was enough to cover about three-quarters of the annual cost of the Supplemental Nutrition Assistance Program (SNAP). Or it would support 12 years of cancer research at 2023 levels.
To sum it up: QBI deduction costs taxpayers a lot, does not stimulate growth, and has regressive distributional consequences. There is no economic justification for its continuation.
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'Call This What It Is—Theft': Republicans Approve Largest Medicaid, SNAP Cuts in US History
"The people stealing from Americans are not folks with tattoos and hoodies—it's people wearing suits and ties and congressional pins, sitting in this Capitol right now," said Rep. Maxwell Frost.
May 22, 2025
House Republicans on Thursday morning passed their sprawling budget reconciliation package after making last-minute changes to the legislation to mollify far-right hardliners.
The final count was 215-214, with every Democrat voting no and Rep. Andy Harris (R-Md.)—chairman of the House Freedom Caucus—voting present. Two Republicans, Thomas Massie of Kentucky and Warren Davidson of Ohio, opposed the bill.
Earlier Thursday, the House voted to begin floor debate on the legislation after the GOP-controlled rules panel approved a slew of amendments to the bill, including a change that would move up the start date of draconian Medicaid work requirements to December 31, 2026—resulting in even bigger cuts to the program and more people losing coverage. Under an earlier version of the legislation, the work requirements would have taken effect at the start of 2029.
The updated bill would also "give states a financial incentive not to expand" Medicaid coverage under the Affordable Care Act "to people with higher incomes than traditional enrollees, though still near the poverty line," Politicoreported.
If enacted, the House GOP's legislation would slash roughly $1 trillion combined from Medicaid and the Supplemental Nutrition Assistance Program (SNAP), potentially stripping health coverage and food aid from tens of millions of low-income Americans to help fund trillions of dollars in tax cuts that would disproportionately benefit the wealthiest.
The bill, which runs over 1,100 pages, would also trigger cuts to Medicare, slash clean energy tax credits, and hand the U.S. military an additional $150 billion.
"Republicans just voted for the largest cuts to healthcare in American history—cuts to Medicare, Medicaid, and the Affordable Care Act," said Rep. Brendan Boyle (D-Pa.), the top Democrat on the House Budget Committee. "At least 13.7 million will now lose their healthcare as a result. And why? To pay for tax cuts for billionaires and special interests. This is a betrayal of the middle class."
I’ve literally never seen anything like this before. There’s no legislation in history that does so much, so fast, w/ so many last-minute changes, with so little analysis of the bill. Of course that’s the point. They’re going at warp speed to avoid analysis because they know it’s wildly unpopular.
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— Bobby Kogan (@bbkogan.bsky.social) May 21, 2025 at 11:40 PM
A Congressional Budget Office analysis released earlier this week showed that U.S. households in the bottom 10% of the income distribution would be worse off if the House Republican bill became law, while the top 10% would end up wealthier.
"Let's call this what it is—theft," said Rep. Jim McGovern (D-Mass.), the ranking member of the House Rules Committee. "Stealing from those with the least to give to those with the most. It's not just bad policy, it's a betrayal of the American people."
Rep. Maxwell Frost (D-Fla.) said in floor remarks just after midnight Thursday that "at least here tonight, the people stealing from Americans are not folks with tattoos and hoodies—it's people wearing suits and ties and congressional pins, sitting in this Capitol right now."
"Not in some random alley wrapped in darkness," Frost added as Republican lawmakers booed, "but in the United States Congress wrapped in the flag. It is disgusting, and we will never forget this."
Frost: Tonight the people stealing are not folks with tattoos and hoodies but people wearing suits and ties and congressional pins sitting in the capitol now, not in some alley wrapped in darkness but in the US congress wrapped in the flag. It is disgusting and we will never… pic.twitter.com/7BpiNS0Ezs
— Acyn (@Acyn) May 22, 2025
One GOP lawmaker, Massie of Kentucky, blasted his party for advancing the legislation while most Americans were asleep.
"If something is beautiful, you don't do it after midnight," said Massie, alluding to the official title of the legislation—the One Big Beautiful Bill Act.
Republican lawmakers teed up the final House vote after days of marathon hearings, jockeying behind closed doors, and private meetings with President Donald Trump, who pressured far-right Republicans to drop their objections and fall in line.
The legislation still must clear the Republican-controlled Senate, which is expected to make significant changes. The House would then have to pass the bill again.
Rep. Rashida Tlaib (D-Mich.) said in a statement following Thursday's vote that "Trump's 'big, beautiful bill' is a betrayal of our families and a $7 trillion handout to billionaires."
"So many families in our communities are already struggling to put food on the table and pay for their healthcare. For the over 324,000 children, seniors, and people with disabilities who rely on Medicaid in our district, it is the difference between life and death," said Tlaib. "This budget makes $880 billion in cuts that will decimate Medicaid, nearly $300 billion in cuts to food assistance, but increases the Pentagon war machine by $150 billion."
"It's tax cuts for billionaires, and healthcare cuts for our families," she added. "It will take food out of the mouths of hungry kids. Nearly 14 million Americans will lose their healthcare, and thousands of people will needlessly die. We will not stop fighting to block this budget from being signed into law."
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