A Shameful Moment in American History

“I don’t remember on any past Fourth of July being so ashamed of an action my country had just taken,” says former Treasury Secretary Larry Summers about the “big, beautiful bill.”

Concerns about the bill that was passed ten days ago by the US Congress have mounted in the wake of revelations that the new law gives Immigration and Customs Enforcement (ICE) an inflow of money that will make ICE the largest law enforcement body in the history of the US.  Its funding will be more than the combined funding of the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, Drug Enforcement Administration; the U.S. Marshals Service; and the Bureau of Prisons.

Harvard sociologist Theda Skocpol has spoken of the  “massive militarization of ICE” as the real heart of Trump’s new bill. Previously, it has been assumed that state and local government control of the police would prevent a bid by the Federal government to create a police state. But in the area of immigration, the President has unlimited powers to direct law enforcement nationwide.  This huge infusion of funds will allow President Trump to expand ICE through the building of detention facilities and hiring more people to make arrests. Then he will be free to use these assets more broadly. Timothy Snyder warns of an archipelago of concentration camps, which could lead to a twenty-first century form of slavery whereby incarcerated immigrant workers could be put under the authority of employers who will use them in the fields as unpaid labor. Says Skocpol,  “[Administration officials] are not interested only in rounding up undocumented immigrants…They will step up using ICE and DOJ enforcements…to harass Democrats [and] citizen critics, and subvert future elections if they can.”

Images coming from Los Angeles have begun to show us what this ramping up of anti-immigrant policy will look like. A few days ago, we saw on the national TV news photos of masked ICE operatives walking across MacArthur Park in Los Angeles in a military formation, aiming to pull in anyone in their way. Ironically, there were few people in the park – Angelinos have already figured out ways to get the word out when ICE raids are imminent.  And, truth to tell, there just are fewer people on the streets in LA these days. The use of masks by ICE agents is a matter of particular concern.  If allowed to continue, it will encourage agents to act in irregular or illegal ways because no one will be able to identify them. It will also allow people to masquerade as ICE agents in order to commit crimes.

On a macroeconomic level, the bill will slow growth, contribute to trade deficits and threaten security by reducing the US’s borrowing power, says Summers.  But these concerns, dire as they are, mask the ramifications for real people right now.  

The nonpartisan Congressional Budget Office (CBO) estimates that the bill will cut federal spending on medical insurance for the disadvantaged (Medicaid) and on children’s health insurance to a tune of $1.02 trillion. New federal limits on eligibility for Medicaid, as well as restrictions on states’ ability to raise revenue for Medicaid, are likely to lead to states are likely to abandon some optional benefits.  Hospital closures are also included in the bill, again, reducing the availability of services.

The bill makes permanent the tax breaks for the wealthy that Trump passed in his first term. It is estimated that households in the top 10% of wealth will be the beneficiaries of 80% of this law.  The households in the bottom 20% of the wealth hierarchy will lose about $835 in the year 2030, as various parts of this law come into force. Medicaid, the medical assistance program for low income people is going to lose $890 billion over the next ten years.  In addition the Supplemental Nutrition Assistance Program that address food insecurity of low income people, loses $230 billion. 

Penn Wharton projects the top 10% of households will receive about 80% of the total value of this law. Those in the top 20% of earners can expect to see nearly $13,000 a year from the bill, while those in the bottom 20% of households will lose about $885 in 2030 as the pieces of the law take effect.

The bill is projected to increase the national debt by $3.4 trillion in the next ten years.

The notion that tax breaks for the wealthy will stimulate the economy has been a fiction promoted by Republicans since the early 1980s and here we are, over forty years on, with no indication whatsoever that tax breaks have that effect. Rather, they have encouraged budget deficits and increased the national debt.  Mark Zandi, Chief Economist for Moody’s Analytics, estimates there will be a very slight initial boost to the economy from the bill declining over time to an effective wash.

Between 1981 and 2021 tax breaks have shifted wealth from the bottom 90% to the top 1% to a tune of $50 trillion.  From 1981 to 2021, tax cuts moved more than $50 trillion from the bottom 90% to the top 1%.