Rearranging the Chairs in the US Economy

A rewrite of a much shorter story about state and local funding and what Trump’s Beautiful Bill (or piece of garbage) does to states. Much of Trump’s cuts are meant to fund a new tax break for the upper 10% and 1% in income.

Over ten years, The Big Beautiful Bill (BBB) will cut taxes for the richest 10 percent of Americans by more than $14,700 per year per household and cut taxes for the richest 1 percent of Americans by more than $50,000 per year, according to estimates from the nonpartisan Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT). This is how it will be done:

The federal program retrenchment is shifting costs downward from the Federal Government to states. States then must choose between three options: filling gaps using their own revenues, rationing benefits through stricter eligibility criteria, and or reducing services outright.

Both wealthy and poor states will face serious constraints and decisions for their population.

Wealthier states with progressive tax bases may seem better positioned to backfill federal reductions. In practice, many of these states (including California) serve large beneficiary populations. These states already devote substantial resources to program administration. face with limitations on their ability to leverage provider taxes. This leaves even high-fiscal-capacity states with little room to maneuver. 

Poorer states such as Louisiana and Mississippi are already heavily reliant on federal aid. Their situation is even more acute. States relying heavily on federal transfers often lack the fiscal capacity to replace lost funding. This results in making deeper cuts unavoidable. The result is a widening gap in social protection across states. State-level fiscal capacity rather than national standards will largely determine access to healthcare.

The next two section consist of one and two sentence outcomes by program resulting from Pres Trump’s “One Big Beautiful Bill Act.” Again, this is broken down by program. There are links in each portion which lead to greater detail.

What Trump is doing is throwing people off of programs. The ones being eliminated more likely than not do not have the income to sustain themselves and family. Healthcare will cost more by taking such action.

Key Aspects of Welfare Reductions in 2026:

• Medicaid Cuts: The 2026 fiscal environment is characterized by sweeping cuts. Projections indicate a potential $1 trillion cut over 10 years, heavily impacting the 72 million Americans receiving coverage.
• SNAP Reductions: The SNAP (food stamps) program faces an ~20.6% funding cut. This represents over $22 billion in lost federal funding in 2026.
• Eligibility Hurdles: Stricter work-oriented requirements are being implemented which target low-income families. Such cuts reduce the overall scope of social safety nets.
• Immigrant Eligibility: Lawfully present immigrants (including some refugees and asylum seekers) are losing SNAP eligibility.
• Housing and Social Services: The fiscal year 2026 budget proposals signal deep cuts to Department of Housing and Urban Development (HUD) programs. Such impacts affordable housing and homelessness services.

Impact and Outlook:

• State-Level Burden: States are facing higher costs and increased administrative burdens to cover the gaps left by federal funding reductions.
• Economic Impact: The cuts to Medicaid and SNAP are projected to trigger job losses and reduce state GDPs. It is estimated, over one million jobs will be at risk by 2029.
• Increased Poverty Risks: The reductions make the American social safety net significantly less generous, with predictions that millions will become uninsured or lose access to essential services.

-“Shrinking Welfare in the United States Will Bring Political and Social Consequences,” Carnegie Endowment for International Peace