Washington Post Says Trump Proposes Tax Cut that is More Than 10 Times “Vast”

March 14, 2020

Of course they wouldn’t say that directly about a Trump proposal, but that is effectively what they said to fans of arithmetic. The Post ran a news article on the anti-recession package negotiated between Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin. The piece referred to Pelosi’s original proposal to increase the federal share of the joint state-federal Medicaid program.

“A controversial provision in the bill as originally introduced by House Democrats would have increased the percentage of Medicaid spending borne by the federal government by eight percentage points through Sept. 30, 2021. That would be a welcome relief to states, which could see an influx of Medicaid enrollees in a time of economic crisis. But the price tag for the federal government could have been vast — stretching easily into the tens of billions of dollars. By Friday morning that 8 percentage point increase had been reduce to 6.2 percentage points, according to the draft legislation.”

Okay, so in Washington Post land, an increase in federal support of Medicaid of 8 percentage points  is a “vast” price tag. If we check current spending, we see that the Medicaid spending is projected to be a bit over $1 trillion over the year and half period. This means that it would cost the federal government approximately $80 billion to pick up an additional 8 percentage points of the Medicaid tab.

By contrast, Trump has proposed eliminating the payroll tax through the rest of the year. While it is not entirely clear what Trump is proposing, if he eliminates the tax completely for 2020 the cost would be roughly $950 billion, according to the Tax Foundation. That is more than ten times the cost of increased Medicaid funding that the Post described as “vast.”

Furthermore, this $950 billion revenue loss would take place over nine months. By contrast, the proposed increase in Medicaid spending would take place over eighteen months, a period that is twice as long.

In short, the proposal from Trump is more than an order of magnitude larger than the proposal put forward by the Democrats. For another comparison, the Democrats original proposal would have been a bit more than 1.0 percent of federal spending. Trump’s tax would be more than 20 percent of federal spending over the nine month period in question. 

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