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child tax credit
Trump’s Military Spending Request Is Really Big Money
For example, last year Democrats pushed to have the enhanced subsidies in the Affordable Care Act exchanges extended. This would have cost $30 billion a year, one twentieth of what Trump and Pentagon chief Pete Hegseth are demanding.
People may recall Elon Musk gleefully putting the US Agency for International Development into the “wood chipper” last spring. While ending this program is expected to lead to 4 million additional deaths over the next four years, it only saved around $35 billion a year. That is less than 6% of the increase in military spending that Trump is asking for.
Is the argument that in just 18 months in office, Trump has made the world so much less safe that we have to increase the defense budget by two-thirds?
The annual cost of extending the enhanced child tax credit, which cut child poverty in half, was around $100 billion a year, less than one-fifth of Trump’s proposed increase. And the annual appropriation for the Corporation for Public Broadcasting was $550 million, less than one thousandth of the additional spending for the military that Trump is demanding. (It’s in the chart, just small to see.)
People need to know that Trump’s military spending request is really big money, compared to almost anything else that ever comes up for public debate for Congress. Unfortunately, because of incompetent or corrupt budget reporting, few news accounts make any effort to put these huge numbers in a context that makes them understandable for their audience. As a result, most people will probably have little idea of what is at stake with this military request.
Any self-proclaimed deficit hawk who is not all hair on fire about Trump’s budget demand is a lying hypocrite who only uses concerns about the deficit to argue against programs they don’t like. We got along fine with the former level of military spending, which almost everyone, including Donald Trump in his first term, considered adequate.
Is the argument that in just 18 months in office, Trump has made the world so much less safe that we have to increase the defense budget by two-thirds? Most of us knew that making our former allies into enemies was not a good idea, but Trump is placing a huge price tag on this mistake. And remember, this is Trump’s own number, not his critics’.
The Morbidly Rich Have Killed the American Dream
This long decline has stripped away much of what there was of U.S. social mobility, which never did measure up to its mythic renderings. Let’s look closely at what the economic evidence, compiled in many meticulous studies, tells us about what passed for the American Dream, its demise, and what it would take to make its promised social mobility a reality.
The Long Decline
For at least two decades now, the Wall Street Journal has reported the dimming prospects of Americans getting ahead, each time with apparent surprise. In 2005, David Wessell presented the mounting evidence that had punctured the myth that social mobility is what distinguishes the United States from other advanced capitalist societies. A study conducted by economist Miles Corak put the lie to that claim. Corak found that the United States and United Kingdom were “the least mobile” societies among the rich countries he studied. In those two countries, children’s income increased the least from that of their parents. By that measure, social mobility in Germany was 1.5 times greater than social mobility in the United States; Canadian social mobility was almost 2.5 times greater than U.S. social mobility; and in Denmark, social mobility was three times greater than in the United States.
That U.S. social mobility lagged far behind the myth of America as a land of opportunity was probably no surprise to those who populated the work-a-day world of the U.S. economy in 2005. Corrected for inflation, the weekly wages of nonsupervisory workers in 2006 stood at just 85% of what they had been in 1973, over three decades earlier. An unrelenting increase in inequality had plagued the U.S. economy since the late 1970s. A Brookings Institution study of economic mobility published in 2007 reported that from 1979 to 2004, corrected for inflation, the after-tax income of the richest 1% of households increased 176% and increased 69% for the top one-fifth of households—but just 9% for the poorest fifth of households.
The Economist also found this increasing inequality worrisome. But its 2006 article, “Inequality and the American Dream,” assured readers that while greater inequality lengthens the ladder that spans the distance from poor to rich, it was “fine” if it had “rungs.” That is, widening inequality can be tolerated as long as “everybody has an opportunity to climb up through the system.”
Definitive proof that increasing U.S. inequality had not provided the rungs necessary to sustain social mobility came a decade later.
The American Dream Is Down for the Count
In late 2016, economist Raj Chetty and his multiple coauthors published their study, “The Fading American Dream: Trends.” They documented a sharp decline in mobility in the U.S economy over nearly half a century. In 1970, the household income (corrected for inflation) of 92% of 30-year-olds (born in 1940) exceeded their parents’ income at the same age. By 1990, just three-fifths (60.1%) of 30-year-olds (born in 1960) lived in households with more income than their parents earned at age 30. By 2014, that figure had dropped to nearly one-half. Only 50.3% of children born in 1984 earned more than their parents at age 30. (The figure below depicts this unrelenting decline in social mobility. It shows the relationship between a cohort’s birth year, on the horizontal axis, and the share of the cohort whose income exceeded that of their parents at age 30.)
The study from Chetty and his co-authors also documented that the reported decline in social mobility was widespread. It had declined in all 50 states over the 44 years covered by the study. In addition, their finding of declining social mobility still held after accounting for the effect of taxes and government transfers (including cash payments and payments in kind) on household income. All in all, their study showed that, “Severe Inequality Is Incompatible With the American Dream,” to quote the title of an Atlantic magazine article published at the time. Since then, the Chetty group and others have continued their investigations of inequality and social mobility, which are available on the Opportunity Insights website (opportunityinsights.org).
The stunning results of the Chetty group’s study got the attention of the Wall Street Journal. The headline of Bob Davis’s December 2016 Journal article summed up their findings succinctly: “Barely Half of 30-Year-Olds Earn More Than Their Parents: As wages stagnate in the middle class, it becomes hard to reverse this trend.”
Davis was correct to point to the study’s emphasis on the difficulty of reversing the trend of declining mobility. The Chetty group was convinced “that increasing GDP [gross domestic product] growth rates alone” would not restore social mobility. They argued that restoring the more equal distribution of income experienced by the 1940s cohort would be far more effective. In their estimation, it would “reverse more than 70% of the decline in mobility.”
Social Mobility Has Gotten Worse, Not Better
Since 2014, neither U.S. economic growth nor relative equality has recovered, let alone returned to the levels that undergirded the far greater social mobility of the 1940s cohort. Today, the economic position of young adults is no longer improving relative to that of their parents or their grandparents.
President Donald Trump was fond of claiming that he oversaw the “greatest economy in the history of our country,” during his first term (2017–2020). But even before the onset of the Covid-19-induced recession, his economy was neither the best nor good, especially when compared to the economic growth rates enjoyed by the 1940s cohorts who reached age 30 during the 1970s. During the 1950s and then again during the 1960s, U.S. economic growth averaged more than 4% a year corrected for inflation, and it was still growing at more than 3% a year during the 1970s. From 2015 to 2019, the U.S. economy grew a lackluster 2.6% a year and then just 2.4% a year during the 2020s (2020–2024).
Also, present-day inequality continues to be far worse than in earlier decades. In his book-length telling of the story of the American Dream, Ours Was the Shining Future, journalist David Leonhardt makes that clear. From 1980 to 2019, the household income of the richest 1% and the income of the richest 0.001% grew far faster than they had from 1946 to 1980, while the income of poorer households, from the 90th percentile on down, grew more slowly than they had during the 1946 to 1980 period. As a result, from 1980 to 2019, the income share of the richest 1% nearly doubled from 10.4% to 19%, while the income share of the bottom 50% fell from 25.6% to 19.2%, hardly more than what went to the top 1%. Beyond that, in 2019, the net worth (wealth minus debts) of median, or middle-income, households was less than it had been in 2001, which, as Leonhardt points out, was “the longest period of wealth stagnation since the Great Depression.”
No wonder the American Dream took such a beating in the July 2025 Wall Street Journal-NORC at the University of Chicago poll. Just 25% of people surveyed believed they “had a good chance of improving their standard of living,” the lowest figure since the survey began in 1987. And according to 70% of respondents, the American Dream no longer holds true or never did. That figure is the highest in 15 years.
In full carnival barker mode, Trump is once again claiming “we have the hottest economy on Earth.” But the respondents to the Wall Street Journal-NORC poll aren’t buying it. Just 17% agreed that the U.S. economy “stands above all other economies.” And more than twice that many, 39%, responded that “there are other economies better than the United States.” It’s a hard sell when the inflation-adjusted weekly wages of nonsupervisory workers are still lower than what they had been in 1973, now more than half a century ago.
And economic worries are pervasive. Three-fifths (59%) of respondents were concerned about their student loan debt, more than two-thirds (69%) were concerned about housing, and three-quarters (76%) were concerned about health care and prescription drug costs.
Rising housing costs have hit young adults especially hard. The median price of a home in 1990 was three times the median household income. In 2023, that figure had reached nearly five times the median household income. And the average age of a first-time homebuyer had increased from 29 in 1980 to 38 in 2024.
Finally, in their 2023 study, sociologists Rob J. Gruijters, Zachary Van Winkle, and Anette E. Fasang found that at age 35, less than half (48.8%) of millennials (born between 1980 and 1984) owned a home, well below the 61.6% of late baby boomers (born between 1957 and 1964) who had owned a home at the same age.
Dreaming Big
In their 2016 study, the Chetty group writes that, “These results imply that reviving the ‘American Dream’ of high rates of absolute mobility would require economic growth that is spread more broadly across the income distribution.”
That’s a tall order. Fundamental changes are needed to confront today’s economic inequality and economic woes. A progressive income tax with a top tax rate that rivals the 90% rate in the 1950s and early 1960s would be welcomed. But unlike the top tax rate of that period, the income tax should tax all capital gains (gains in wealth from the increased value of financial assets such as stocks) and tax them as they are accumulated and not wait until they are realized (sold for a profit). Also, a robust, fully refundable child tax credit is needed to combat childhood poverty, as are publicly supported childcare, access to better schooling, and enhanced access to higher education. Just as important is enacting universal single-payer health care and increased support for first-time homebuyers.
The belief that “their kids could do better than they were able to,” was what Chetty told the Wall Street Journal motivated his parents to emigrate from India to the United States. These fundamental changes could make the American Dream the reality that it never was.
Unpacking the House’s Highly Regressive Tax Plan
Figure 1
Differences in the average tax cut provided to each group would be dramatic, with the cuts rising significantly alongside income, as seen in Figure 2. While working-class families (defined here loosely as the bottom 40% of earners) could expect an average tax cut of $361 in 2027, the nation’s highest-income families (defined as the top 0.1%) would receive an average tax cut of at least $255,670 in that year. In reality, the average tax cut for affluent families is likely to be somewhat larger than this, as the JCT’s distributional figures do not include the bill’s estate tax cuts benefiting people with multimillion-dollar estates.
These figures also do not include other potential costs to families likely to be included in the bill, such as deep cuts to Medicaid and food assistance. The Congressional Budget Office recently predicted that the bill would put the nation on a path toward a future where 13.7 million fewer people would have health coverage. Of that amount, 8.6 million would lose coverage as a direct result of provisions contained in the bill, especially those slashing Medicaid. Another 5.1 million would lose coverage because of the expiration of temporary enhancements to the Affordable Care Act premium tax credits which, contrary to what we have seen in past Congresses, this current Congress appears to have no interest in making room for in its legislation.
Figure 2
The JCT has also published extremely detailed estimates of the revenue impact of most provisions in the bill. Exploring those estimates yields additional insights into the bill’s most significant changes.
The JCT estimates are reported in a way that mirrors the sorting of the bill itself, which is understandable given the JCT’s role in this debate. Unfortunately, however, the bill’s organizational structure is far from intuitive, and that makes it difficult for observers to understand the overall effects of this legislation.
One of the more remarkable takeaways from the JCT’s revenue estimates is just how insignificant the tax provisions discussed most during the last presidential campaign—especially tax breaks for tips, overtime, car loan interest, and senior citizens—are in the broader context of this very large bill.
The section of the bill titled “Make Rural America and Main Street Grow Again,” for example, includes everything from cutting taxes on multinational corporations’ offshore profits to repealing an excise tax on indoor tanning services. Similarly, the section titled “Make America Win Again” includes provisions as varied as scrapping tax credits that help homeowners purchase more energy efficient furnaces, significantly raising taxes on nonprofit foundations and colleges, and eliminating taxes on firearm silencers.
By sorting the JCT’s revenue estimates into more intuitive categories, we can gain a better understanding of how the bill would reshape our tax code. As seen in Figure 3, the bill includes $7.7 trillion in gross tax cuts over the next decade, before considering various offsetting tax increases discussed below. It bears noting that this $7.7 trillion tax cut would be significantly higher if the many temporary provisions in the bill were to be extended, as many lawmakers certainly hope.
Figure 3.
The largest single item in the JCT’s revenue estimates is a reduction in tax rates, which disproportionately benefits high-income earners and plays an important role in the overall regressive tilt of the bill. Other significant regressive tax cuts include a watering down of the Alternative Minimum Tax (AMT), which was designed to ensure that high-income earners pay some minimum amount of tax, as well as a variety of business tax cuts and a substantial estate tax cut on the transfer of extraordinary amounts of wealth from one generation to the next.
Other notable tax cuts include an increased standard deduction and Child Tax Credit (CTC), though it is important to recognize that these cuts are largely offset by certain tax increases affecting broadly similar policies. As seen below in Figure 4, the single largest revenue-raiser in the bill is repeal of personal and dependent exemptions that, prior to 2018, served a purpose very similar to the higher CTC and standard deduction amounts available today. This fact is important to understanding why the bulk of the more progressive tax cuts in the bill are illusory, and why the overall bill tilts regressive despite the presence of these isolated progressive features. According to the JCT score, almost 90% of the tax cuts associated with increasing the standard deduction and the Child Tax Credit are offset by tax increases associated with repealing personal and dependent exemptions.
In total, the bill contains $3.9 trillion in gross tax increases over the next 10 years, which are sorted into broad categories in Figure 4. When combined with the $7.7 trillion in gross tax cuts shown above, the net tax cut amounts to $3.8 trillion over the coming decade.
Figure 4
Aside from repealing personal exemptions, the most important revenue-raisers in the bill are the repeal or reduction of a variety of tax provisions meant to help accelerate the nation’s transition to a green energy economy, the paring back of premium tax credits meant to help families afford health insurance, and the extension of caps on the amount of state and local tax (SALT) that taxpayers—especially those living in blue states with more robust income and property taxes—can write off on their federal tax forms. In fairness, some of the tax increase associated with SALT shown in Figure 4 can be thought of as an offset to the AMT cuts shown in Figure 3, as the AMT functioned partly as a limitation on SALT deductions.
One of the more remarkable takeaways from the JCT’s revenue estimates is just how insignificant the tax provisions discussed most during the last presidential campaign—especially tax breaks for tips, overtime, car loan interest, and senior citizens—are in the broader context of this very large bill. These core features of the Trump campaign’s platform, which continue to dominate much of the debate over taxes today, come at a total cost of $293 billion. While that amount is not trivial, it equals just 3.8% of the $7.7 trillion gross tax cut being offered under this bill. The tax cuts being offered to businesses, by contrast, are more than four times larger.
The low price tag attached to the highest-profile tax changes is partly due to their limited reach (most Americans do not receive tips or overtime pay, for instance), and partly due to the fact that the bill’s authors have chosen to place four year sunsets on each of these provisions. The temporary nature of these policies ostensibly targeted toward the working class, as well as others such as temporary enhancements to the Child Tax Credit and the standard deduction, stands in sharp contrast to the permanent nature of some of the bill’s less-discussed provisions such as its permanent cuts to the estate tax and so-called GILTI taxes on multinational corporations’ offshore profits.
As seen in Figure 5, the vast majority (85%) of the tax bill represents an extension of the temporary portions of the same tax cuts first enacted by Republicans on a temporary basis in 2017. Of the remainder, only a small sliver are the highest-profile items getting an outsized share of the attention in the current tax debate.
Figure 5
Fully unpacking a bill of this size is no easy endeavor, and there is no doubt that many new and important findings regarding its effects will continue to trickle out in the weeks and months ahead. In the meantime, however, the JCT’s work offers a powerful starting point. The JCT has done a tremendous service in producing a range of very high-quality information in a very short amount of time to help the public understand this complex and, as it turns out, highly regressive piece of tax legislation.
Americans Deserve Better Than What This Horrific GOP Budget Will Impose on the Sick, Hungry, and Poor
House Republicans are trying to hide much of the impact of the SNAP cuts by slashing federal funding and then passing the buck to states. When a state can’t come up with the money to backfill for the large federal cuts totaling billions nationally, it will have to choose how to cut the number of people getting help or whether to opt out of having a SNAP program entirely. With this scheme, the plan walks away from the 50-year, bipartisan commitment to ensure that poor children get the help they need, whether they live in Alabama, Missouri, or California.
Proponents want to shift blame for the cuts to states, but the blame game won’t matter to children, families, seniors, people with disabilities, veterans, small business owners, and others when they are hungry and can’t afford food. (Republican portrayals of who gets helped by SNAP and Medicaid are selective at best — about 1 in 4 veterans and 1 in 4 small business owners live in a household getting help from SNAP, Medicaid, or CHIP at some point in the year, Census data show.)
This plan is replete with proposals that will add red tape, making things more cumbersome, more bureaucratic, and less user-friendly — and ultimately designed to fail families in ways that will leave people sicker, poorer, and hungrier.
At the same time, at least 13.7 million people would lose health coverage and become uninsured under the House Republicans’ Medicaid and Affordable Care Act marketplace agenda that deeply cuts Medicaid, erects new barriers to coverage, and allows the enhanced premium tax credits (PTCs) that help low- and middle-income families and small business owners afford health coverage to expire, the Congressional Budget Office (CBO) estimates. Some Republicans argue they shouldn’t be blamed for the 4 million people projected to lose coverage due to the PTCs’ expiration. That’s frankly absurd: they wrote a bill that extends all of the expiring 2017 tax cuts — and even expands provisions that benefit the wealthiest people in the country — yet chose not to extend the enhanced PTCs for people who need help affording coverage. That’s their agenda and they need to own it.
Like their approach to SNAP, House Republicans seek to obscure the impact of their health care cuts through complicated proposals, like limiting the ways states can fund Medicaid and adding lots of red tape and paperwork that makes it harder for people to get and keep health coverage. But here, too, there’s no hiding the outcome: millions of people, including children, will lose coverage and access to care for life-threatening and chronic illnesses as well as preventive care.
The House Republican plan targets some of its harshest attacks on people who are immigrants and their families. It would take away Medicare and marketplace coverage from certain immigrants, including people granted refugee and asylee status after proving they face persecution in their home countries, victims of trafficking and domestic violence, and people with Temporary Protected Status. The plan also takes away the Child Tax Credit from U.S. citizen children if both parents don’t have a Social Security number (even if one parent is a citizen), and strips access to SNAP benefits from people granted asylum and refugee status and other vulnerable groups who are living and working lawfully in the U.S.
Proponents of these cuts often falsely claim that they are restricting access for people who lack documentation, when the reality is that people without a documented immigration status already do not qualify for these benefits, and the cuts will largely impact lawfully present immigrants and U.S. citizen children in immigrant families.
Despite House Republicans’ rhetoric about supporting the “working class,” the plan targets working people and their families, making it much harder for them to get help weathering life’s ups and downs.Despite House Republicans’ rhetoric about supporting the “working class,” the plan targets working people and their families, making it much harder for them to get help weathering life’s ups and downs. Workers may need help because their employer lays them off or cuts their hours, or because they get sick or have to miss work to care for a sick loved one, and the House Republican plan takes help away from people in exactly these situations.
And for all of the rhetoric coming out of DOGE about making government work more efficiently, that commitment doesn’t seem to apply to working families who need help. This plan is replete with proposals that will add red tape, making things more cumbersome, more bureaucratic, and less user-friendly — and ultimately designed to fail families in ways that will leave people sicker, poorer, and hungrier.
Moreover, the House Republican plan would deny as many as 20 million children in working families from receiving the full $2,500 Child Tax Credit because their parents — who work important but low-paid jobs — don’t earn enough. The 17 million children who currently don’t get the full $2,000 Child Tax Credit would get nothing from the credit’s $500-per-child increase, even as families earning up to $400,000 would get the full increase. Last year 169 House Republicans voted to help most of the families they are now leaving out.
In contrast to its disdain for people whose budgets are stretched thin every month, the plan showers more tax cuts on the wealthy, extending the highly skewed provisions of the 2017 law and adding permanent expansions for wealthy households. In 2027 it gives households earning more than $1 million a year an annual tax cut of roughly $90,000, while low-income households receive an average of just $90 from the tax cuts — the same households who will then bear the brunt of cuts to Medicaid and SNAP.
This agenda won’t create a future of shared prosperity and economic opportunity, which is what’s required to build a country that’s truly great.
The plan’s tax cuts would cost nearly $4 trillion through 2034 — and over $5 trillion if one sees through its timing gimmicks like turning off tax cuts for middle-class families after four years while making some of its most top-tilted tax cuts — like the cut in the estate tax and the deduction for pass-through income — permanent. Moreover, the House Republicans cut more than $500 billion in clean energy tax credits — which would worsen health outcomes for communities facing high rates of pollution, and the plan’s health cuts would make it harder for them to access health care.
It’s been clear for some time that House Republicans were headed down this harmful path, but to see the contours of this bill emerge is somehow still shocking: that they would hurt so many people who struggle to afford basic needs and whom they have promised to help. And they continue to pursue this agenda at a time when the President’s tariffs, chaotically crafted and applied, have caused increased uncertainty and raised the risk of a recession, higher unemployment, and surging prices.
Whatever Republican policymakers may think, these policies aren’t popular with the public because they aren’t consistent with core American values, which include helping people when they fall on tough times and expecting wealthy people to pay their fair share.
This agenda won’t create a future of shared prosperity and economic opportunity, which is what’s required to build a country that’s truly great. There’s a better path forward, but it requires tearing up this legislation and replacing it with a plan that lowers costs and invests in people and families, while raising the revenues from the wealthy to make those investments and reduce economic risks associated with high debt.
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