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'Start Over From Scratch': Nobel Laureate Economists Denounce GOP Budget Bill
"The House bill addresses none of the nation's key economic challenges usefully and exacerbates many of them."
Jun 02, 2025
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."
🚨NEW: 6 Nobel laureate economists signed an open letter opposing the House budget bill 🚨 The bill adds significantly to the national debt while reducing incomes for the bottom 40%, they say. The most acute & immediate damage? Millions losing Medicaid & SNAP benefits: www.epi.org/publication/...
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— Economic Policy Institute (@epi.org) June 2, 2025 at 10:16 AM
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."
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Congressional Analysis: GOP Tax Gifts to Rich Would Explode Deficit They Always Complain About
"This bill gives enormous additional tax cuts to wealthy people and corporations, spikes the deficit, and strips healthcare from millions of Americans," said one critic.
May 13, 2025
While Republicans on Capitol Hill—including the leaders of both chambers of Congress—have long argued for reducing the national debt, the GOP is now pushing a tax bill that would not only fund giveaways to the rich by gutting programs that serve the working class, but also add $3.8 trillion to the U.S. deficit.
The national debt is currently $36.2 trillion. The Joint Committee on Taxation (JCT) on Tuesday released an analysis showing that the Republican bill would cost $3.8 trillion through 2034, or 1.1% of gross domestic product.
The JCT document notes that some estimates—such as the impact of modifications to de minimis entry privilege for commercial shipments and to Medicare, including limiting coverage—will be provided by the Congressional Budget Office.
The JCT's release coincides with a key meeting in the U.S. House of Representatives. As Politicodetailed:
The newly revised estimate released Tuesday afternoon is up slightly from the $3.7 trillion price tag budget forecasters had previously put on the plan, and it comes as the tax-writing Ways and Means Committee began formally debating the package. Additional changes are possible there, and also later, when Republicans are preparing to take the legislation to the House floor."
[...]
Under the House GOP's budget, the size of their tax cuts is contingent on lawmakers simultaneously cutting spending, and Republicans are hoping to match $4 trillion in tax cuts with $1.5 trillion in spending reductions.
Ahead of the markup, Amy Hanauer, executive director of the Institute on Taxation and Economic Policy (ITEP), said in a statement that "this bill gives enormous additional tax cuts to wealthy people and corporations, spikes the deficit, and strips healthcare from millions of Americans."
"Reckless tax cuts for the top and new corporate loopholes appear to be the big features of this bill, and they're paid for by cutting our healthcare and making American communities more vulnerable to floods, fires, and storms," she stressed. "The revenue raisers—which don't stop this from being extremely expensive—seem to be about picking winners and losers, rather than passing rational, consistent policies."
ITEP's statement also lists the bill's major provisions, including making changes to personal income tax rates and brackets from the GOP's 2017 Tax Cuts and Jobs Act permanent; making permanent and increasing the "pass-through" business deduction; increasing the estate tax exemption; and temporarily increasing the child tax credit, but excluding millions of children.
Americans for Tax Fairness (ATF) similarly listed provisions on social media Tuesday—and highlighted their impacts.
What's the result of maintaining the top income tax rate cut? "25% of the benefits go straight to the top 1%," the group noted. "The average top 1% household makes $2.5 million a year. They would get a $55k tax break. The top 400 taxpayers would get an $800 MILLION tax cut each year."
"Since they're deficit-financing most of this, every penny of the 'savings' DOGE has found... is paying for tax breaks for the wealthy."
What about widening the "pass-through" loophole? "Half of this break goes to millionaires," ATF continued. "The top 0.1% would get a $107,000 tax cut. The top 1% would get an average $22,500 tax cut. Working families would get around $40 to $50. White households get 90% of the benefit."
The group pointed out that "the package doubles how much rich heirs can inherit without paying taxes. That means a couple could pass on $30 MILLION without paying a penny in taxes. This tax break ONLY benefits the richest 0.2% of households. Weakening the estate tax is projected to cost $200 BILLION."
"It also gives corporations $642 BILLION in tax breaks," ATF said. "Most of the benefit of corporate tax cuts goes to CEOs, rich shareholders, and foreign investors. One provision gives Apple, Amazon, Google, Meta, and Tesla alone a $75 BILLION tax cut. Another encourages offshoring."
ATF also tied the proposal to supposed cost-cutting efforts by President Donald Trump's Department of Government Efficiency (DOGE) and its de facto leader, Elon Musk—who also happens to be the CEO of Tesla and the richest man on Earth.
"The part they won't say out loud?" the group wrote. "Since they're deficit-financing most of this, every penny of the 'savings' DOGE has found by cutting the [the Department of Veterans Affairs], Department of Education, and Social Security Administration is paying for tax breaks for the wealthy. Really."
Although Republicans control both chambers and the White House, their majorities are slim, meaning absences and disagreements over issues like increasing the deficit or cuts that will anger constituents in swing districts could slow or even impede their ability to send "one big, beautiful bill" to Trump's desk.
As Common Dreamsreported earlier Tuesday, U.S. Sen. Bernie Sanders (I-Vt.) is deploying organizers to mobilize opposition against the GOP's emerging reconciliation package, focusing on districts he has visited as part of his Fighting Oligarchy Tour.
Materials that organizers plan to distribute encourage constituents to call their representatives and request they vote no "on a bill to cut Medicaid, nutrition assistance, and education to pay for hundreds of billions of dollars in more tax breaks for billionaires."
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Trump Admin Will Garnish Struggling Borrowers' Wages as Student Loan Payments Resume
"This is just cruel and doesn't have to happen," said the Debt Collective.
Apr 21, 2025
The Trump administration on Monday announced that it will resume involuntary collection measures against defaulted federal student loan recipients, including garnishing wages, tax refunds, and Social Security benefits and "other actions to help borrowers get back into repayment," as the U.S. Department of Education euphemistically said.
"Resuming collections protects taxpayers from shouldering the cost of federal student loans that borrowers willingly undertook to finance their postsecondary education," DOE said in a statement notifying the public that collections will resume May 5. "This initiative will be paired with a comprehensive communications and outreach campaign to ensure borrowers understand how to return to repayment or get out of default."
The DOE said the U.S. Treasury Offset Program will administer borrower garnishments, which are expected to resume this summer.
DOE continued:
While Congress mandated that student and parent borrowers begin to repay their student loans in October 2023, the Biden-Harris administration refused to lift the collections pause and kept borrowers in a confusing limbo. The previous administration failed to process applications for borrowers who applied for income-driven repayment and continued to push misguided "on-ramps" and illegal loan forgiveness schemes to win points with borrowers and mask rising delinquency and default rates.
"American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies," billionaire U.S. Education Secretary Linda McMahon said on Monday.
The repayment resumption is part of the Trump administration's three-pronged, $1.6 trillion overhaul of the federal student loan system. In addition to moving to collect on defaulted loans, the administration is looking to end former President Joe Biden's Saving on a Valuable Education (SAVE) plan, an income-driven repayment program currently blocked by a federal appellate court. President Donald Trump also signed an executive order narrowing eligibility for the Public Service Loan Forgiveness program.
Last month, the American Federation of Teachers led a lawsuit against the Trump administration after the DOE cut off access to income-driven repayment plan applications and secretly ordered student loan services to stop accepting and processing such applications.
The government has not collected on defaulted student loans since March 2020, when the first Trump administration paused repayments due to the burgeoning Covid-19 pandemic. The reprieve, which was subsequently extended several times, was set to end in September 2023. Efforts by the Biden administration to forgive some or all loan debt for more than 45 million student borrowers were thwarted by the right-wing U.S. Supreme Court in 2023.
"The Biden administration misled borrowers: The executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear," said McMahon. "Hundreds of billions have already been transferred to taxpayers."
"Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment—both for the sake of their own financial health and our nation's economic outlook," she added.
As McMahon and the Trump administration work toward ending the DOE—a key goal of Project 2025, the Heritage Foundation-led plan to eviscerate the federal government—Trump has ordered the administration of federal student loans to be transferred to the Small Business Administration (SBA), which was headed by McMahon during Trump's first term.
Approximately 5.6 million student borrowers were in default at the end of 2024. The DOE warns that "there could be almost 10 million borrowers in default in a few months" after repayments resume. That's roughly 25% of the current student loan portfolio. Failure to make timely student loan repayments results in lower credit scores for borrowers, who in turn generate less economic activity—a domino effect with implications for the entire slowing U.S. economy.
"They bailed out banks, corporations, and airlines. But when it comes to student debt? Suddenly it's 'too expensive.'"
"Many of the households required to resume paying on their student loans are also struggling with credit card debt at near-record interest rates and high-rate mortgages they thought they would be able to refinance into a lower rate, but haven't," explained Moody's Analytics chief economist Mark Zandi in a Monday interview with The New York Times.
Some critics slammed the Trump administration for resuming student loan repayments amid an affordability and housing crisis during which a record number of people are unhoused.
"Parents delaying retirement. Grads postponing families. This isn't 45 million separate problems, it's one national crisis," the Student Debt Crisis Center (SDCC) said on social media. "They bailed out banks, corporations, and airlines. But when it comes to student debt? Suddenly it's 'too expensive.'"
SDCC executive director Mike Pierce said that "federal law gives borrowers a way out of default and the right to make loan payments they can afford. Since February, Donald Trump and Linda McMahon have blocked these borrowers' path out of default and are now feeding them into the maw of the government debt collection machine."
"This is cruel, unnecessary, and will further fan the flames of economic chaos for working families across this country," Pierce added.
Tuition-free college would help make America great. Those who need loans to attend college come from working class families, the elites don’t need loans. 40% of student debt holders don’t hold a degree. This will hurt the working class.
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— Nina Turner (@ninaturner.bsky.social) April 21, 2025 at 2:07 PM
Others offered solutions enjoyed by people in other countries, including simply not collecting the debt and making colleges and universities tuition-free—even if their chances of implementation under what many leftists call U.S. "late-stage capitalism" are next to nil.
"If the Trump/Musk administration really wanted 'government efficiency,' then they wouldn't be collecting on debts people cannot and will not pay,"
said the Debt Collective, a debtors' union, referring to Elon Musk, who heads the Department of Government Efficiency. "They would just cancel it and boost the economy."
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