'Start Over From Scratch': Nobel Laureate Economists Denounce GOP Budget Bill

Half a dozen Nobel Prize-winning economists on Monday expressed their "grave concerns" about the sprawling budget reconciliation package passed last month by the Republican-controlled U.S. House of Representatives, warning that slashing an already frayed social safety net and exploding the record deficit in service of massive tax cuts for the wealthiest households will worsen the nation's economic woes.

"The most acute and immediate damage stemming from this bill would be felt by the millions of American families losing key safety net protections like Medicaid and Supplemental Nutrition Assistance Program (SNAP) benefits," Daron Acemoglu, Peter Diamond, Oliver Hart, Simon Johnson, Paul Krugman, and Joseph Stiglitz wrote in an open letter published by the Economic Policy Institute (EPI), a progressive think tank in Washington, D.C.

"The Medicaid cuts constitute a sad step backward in the nation's commitment to providing access to healthcare for all," the economists continued. "Proponents of the House bill often claim that these Medicaid cuts can be achieved simply by imposing work reporting requirements on healthy, working-age adults. But healthy, working-age adults are by definition not heavy consumers of health spending, so achieving the budgeted Medicaid cuts will obviously harm others as well."

Addressing the bill's staggering impact on public debt, the letter asserts that "U.S. structural deficits are already too high, with real debt service payments approaching their historic highs in the past year."

"The House bill layers $3.8 trillion in additional tax cuts ($5.3 trillion if all provisions are made permanent) on top of these existing fiscal gaps—and these tax cuts are overwhelmingly tilted toward the highest-income households," the Nobel laureates noted. "Even with the safety net cuts, the House bill leads to public debt rising by over $3 trillion in coming years (and over $5 trillion over the next decade if provisions are made permanent rather than phasing out). The higher debt and deficits will put noticeable upward pressure on both inflation and interest rates in coming years."

"The combination of cuts to key safety net programs like Medicaid and SNAP and tax cuts disproportionately benefiting higher-income households means that the House budget constitutes an extremely large upward redistribution of income," the economists warned. "Given how much this bill adds to the U.S. debt, it is shocking that it still imposes absolute losses on the bottom 40% of U.S households."

"The United States has a number of pressing economic challenges to address, many of which require a greater level of state capacity to navigate—capacity that will be eroded by large tax cuts," the letter concludes. "The House bill addresses none of the nation's key economic challenges usefully and exacerbates many of them. The Senate should refuse to pass this bill and start over from scratch on the budget."

The so-called Big Beautiful Bill is now in the Senate, where Minority Leader Chuck Schumer (D-N.Y.) has vowed on behalf of Democrats to "fight it with everything we've got."

"The Republican plan is simple: Sell out working and middle-class families to pay off the rich and well-connected," Schumer said in a "dear colleague" letter on Sunday. "The bill would raise costs and taxes by an average of more than $800 for 40% of American families. Twenty million Americans would see their healthcare costs skyrocket, while almost 14 million would lose their health insurance all together, including millions of children and seniors."

Furthermore, Schumer noted that "11 million people, including 4 million children, could lose access to safe and affordable food, while every one of the 40 million Americans receiving federal food assistance would get less support every month. All the while, their radical plan would see double-digit energy cost increases for American households and businesses, and threaten close to 800,000 good-paying jobs in the clean-energy economy."

"Their entire agenda," Schumer said of Republicans, "can be boiled down to this: Billionaires win and families lose."