Weekly Beat: Issue 6, February 28th, 2025
- Judy Stahl
- Feb 28
- 4 min read
A Note From VFV Founder Judy Stahl: Take A Break!
We have seen in recent weeks, the ground swell of outrage from the American people transformed into direct action, the sleeping dragon has truly awoken. Across this country, in cities and in rural areas, in red districts and blue, people are leaving their houses and marching, protesting, showing up at town halls and directing their representatives to do their jobs. Americans are letting them know in no uncertain terms that they're not OK with Elon Musk, who was never elected by anybody, destroying our federal government.
So, in these days that are filled with chaos, it couldn't be more important that we take care of ourselves. Only we ourselves can make the choice to experience joy in our daily lives. Representative Alexandria Ocasio-Cortez said recently "Experiencing joy is an act of resistance." She could not be more correct.
The power of our burgeoning community is such that those of us who are concerned and have been working for years to protect our Democracy can finally get some respite. Take a break! We can pass the baton to our fellow Americans, who are finally standing up. When we are refreshed, we can come back and start again, ready for battle. I wish it wasn't a battle, but it is. So let's relish the moments that we get to enjoy.
Main Story: Budget Battles and Government Shutdowns
Our main story this week is the looming government shutdown slated for March 14th, 2025. If you feel like you’ve heard this story before, you’re right. Congress has not passed a budget on time since 1997. For context, that was the same year most of the Voice for Values staff was born!
Instead, Congress has relied on what’s called a Continuing Resolution (CR), a temporary spending bill intended to buy time before they can pass a new budget. The current one was passed last fall and is set to expire on March 14th. If it expires without a further CR, critical government services will have to be halted until Congress can get a bill passed. Here’s what can happen once the government shuts down.
These are just a few of the things that can happen during a shutdown, depending on how long it lasts. Particularly long shutdowns can often slow Gross Domestic Product (GDP) growth and increase uncertainty in markets, as well as impact our global credit rating.
So, why are we here again?
Senate and House Republicans are battling over how to pass Trump’s agenda through the budget. Trump has given conflicting directives over how to handle the debt ceiling and meet his priorities. Many Senate Republicans are opposing the budget resolution passed by House Republicans for two key reasons: 1.) It makes steep cuts to programs like Medicaid & SNAP. 2.) It does not permanently extend the The Tax Cuts & Jobs Act (TCJA), Trump’s top budgetary priority.
The TCJA, passed in 2017 made steep cuts to taxes for top earners while eliminating key deductions for most earners. This resulted in cuts of more than $60,000 for top earners while relief for earners in the bottom 60% was less than $500 on average. Moreover, it failed to meet the promise of increasing wages. In 2017, Trump’s advisers claimed that workers would see an average wage increase of $4,000 per year. Since then, earnings have remained stagnant for the bottom 90% of workers. Meanwhile, the top 10% of workers, primarily executives and high-ranking managers saw consistent wage hikes, regardless of company performance.
When the TCJA was enacted, the Congressional Budget Office (CBO) estimated it would cost about $1.9 trillion over 10 years. This year, the CBO estimates that extending the TCJA would cost us an additional $400 billion per year beginning in 2027. This figure includes the increased interest we, the taxpayers, fund on our country’s debt.
Which brings us to the next problem: Trump wants a balanced budget. A feat that is essentially impossible with the extension of the TCJA. Though the House has not taken up the TCJA extension, the cuts they have made are not enough to balance the budget, and may actually increase the deficit long term.
The house spending blueprint includes steep cuts to life saving programs, including $880 billion from Medicaid over 10 years, and $230 billion from food assistance programs such as SNAP. It also instructs committees to find cuts amounting to:
$880 billion in Energy and Commerce Programs
$330 billion in the Education and Labor Programs
$230 billion in Agricultural Programs
$50 billion in Government Oversight Programs
This approach is counterintuitive when one considers that many of these line items, particularly SNAP & Medicaid, actually generate more revenue in the economy than they cost through the benefits provided to the American people. The loss in GDP over time from these cuts will only make budget deficits that much worse as those losses translate into erosion of the revenue needed to pay that debt.
Without the extension of the TCJA, these cuts are not enough to balance the budget and will result in cuts to direct services. In fact, House Republicans recognized this and authorized a $4 trillion debt ceiling increase, a limit we are likely to reach by November this year. With the inclusion of the TCJA that the Senate is calling for, a balanced budget is nothing more than a fever dream.
Our Take
There is no doubt that Americans will feel immediate economic strain in the case of a shut down. However, we are heading into a budget reconciliation process which will likely result in an even more bloated deficit and cuts to revenue-generating, life-saving programs. These policies will result in increasing economic strain for most Americans for years to come. In our view, the temporary pain of a shutdown may be the only way to avoid economic disaster.
The American people have been placed in an untenable position, but one thing is clear, we need a better approach to the budget than what is being presented. That approach cannot include an extension of the TCJA under any circumstances. Spending cuts are absolutely needed but should be focused on the programs that inhibit our economy, not the programs that help it grow.
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