Trump's tax bill will crush the rural voters who chose him

Yahoo

21-07-2025

Our nation was born in an epic struggle over the radical ideals of our founding — that we each have value and government exists to preserve rights bestowed by our creator. The ideals of that Revolution, which was already upon us 250 summers ago, remain radical and new.
We Americans have been at our best when we work hard and sacrifice for an idea. Some of these ideas are mighty and bold — freeing slaves, defeating Nazis or communists. Sometimes the struggles are more down to earth — building a family business, getting an education or raising children.
Our success has required more than just determination and sacrifice. Success also demanded that we look a problem squarely in the eye without false optimism or self-delusion. Then we moved forward with grim or confident determination, based on facts, not fantasy.
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As a democracy, it often takes us an agonizingly long time to come to grips with these epic challenges. As Winston Churchill, perhaps apocryphally quipped, 'Americans will always do the right thing, when they've exhausted all other options.'
That moment is now upon us.
America's debt belongs to all of us
The U.S. faces a large and growing federal debt. It is not an acute crisis, but a chronic one that threatens to make our economy grow sickly and deprive a generation or two of prosperity. The only way to address this honestly is to face the facts of it, with unvarnished eyes.
The federal debt belongs to us all. Many have deceived Americans about simple solutions — whether closing agencies, as DOGE promised, or taxing billionaires at 100%. Even if the government only issued Social Security checks and paid Medicare and Medicaid, we'd still run a deficit.
In the end, it has been citizens — plain, ordinary, voters — who allowed this. We haven't balanced the budget in 25 years, across 12 years of GOP presidents, 12 years of Democratic presidents and more swings of the House and Senate than are worth counting.
Congress has now passed President Trump's Big Beautiful Bill, the largest, most expansive increase in American debt in peacetime history. I am somewhat sanguine about its passage, for I feel Churchill was right about us.
We are at the end of our options, and it is time for some grim truth.
The Big Beautiful Bill just made everything worse
The U.S. federal budget has run a surplus only when total tax and spending runs between 19% and 20% of our gross domestic product. Today, our taxes are at 17.4% of GDP, while our spending is at 23.4% of GDP.
The only way to run a surplus is to significantly raise federal taxes and trim all types of federal spending, including the so-called entitlements of Social Security, Medicare and Medicaid. We cannot get there any other way.
This will be painful in unforeseen ways. Take Medicaid cuts in the Big Beautiful Bill, which will affect more than 1 in 7 recipients — many in rural areas that voted for Trump.
Those people will still get sick, but instead of seeking preventive care, they'll use costly emergency rooms. In urban areas, families with insurance will bear higher costs. In rural areas, hospitals will close — I expect at least eight in Indiana alone.
The only consolation will be that the vast majority of local voters supported this approach. It was clearly laid out in Project 2025 for everyone to read (see pages 462-470).
I don't make this point to defend or oppose Medicaid or Medicaid expansions, nor to criticize this part of the BBB. I merely mention this because cutting Medicaid is certain to backfire, particularly in the places that supported Trump. In the words of Thomas Sowell, 'there are no solutions, only trade-offs.'
This bill will look disastrous by next year
This BBB will likely be the last huge peacetime spending bill, as rising debt service costs constrain future spending while spilling into capital markets, raising mortgage, car loan and credit card rates. This will slow growth and increase economic pain, bringing more pressure to bear.
The second big reason why the BBB will look so disastrous in the long run is that most Americans will see the ill effects of it by this time next year. The cuts are deep in places that will be visible quickly — health care, SNAP, water/sewer improvements, energy production and other infrastructure.
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In contrast, the tax cuts will affect very few Americans. The roughly 1 in 50 workers who now earn tips, or the 1 in 50 who earn more than $400,000 will see some benefits. Everyone in between will struggle to discern any change.
Future budgets will have to make trade-offs in spending and taxes that demand courage from our elected leaders. Our forthcoming experience with the BBB will do much to frame the nature of those trade-offs. It is also likely to usher in a very different Congress in next year's elections.
That's OK with me. In fixing the budget, we cannot get worse than this one.
Michael J. Hicks is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University.
This article originally appeared on Indianapolis Star: Trump tax bill will close rural Indiana hospitals | Opinion
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