Democrats exaggerate
Republicans lie
One is not like the other
Fact-checking Trump and Democratic claims about tax and spending bill
President falsely claims ‘biggest tax cuts ever’ while Democrats add in the impact of a Biden-era policy
President Donald Trump signed into law last week a sweeping package of tax cuts and spending cuts, which passed the Senate and House with narrow majorities and no Democratic support. As is his practice, Trump keeps making false or misleading claims about the law. Democrats, too, exaggerated the impact. Below is a quick roundup.
“It includes the largest tax cut in American history.”
-- Trump, remarks at July Fourth celebration, July 4
“All they [Republicans] have to do now is talk about how good it is, the biggest tax cuts ever.”
-- Trump, remarks at dinner with Israeli Prime Minister Benjamin Netanyahu, July 7
False. During his first term, Trump often claimed his 2017 tax cut was the biggest tax cut in history, when in reality it ranked eighth over the last century, when measured as a percentage of the overall economy. Now, he’s playing the same game again — and ignoring a legislative maneuver used by Senate Republicans to ensure passage.
To advance the bill, Republicans deemed that extending Trump’s 2017 tax cut would result in no revenue loss as that reflected current policy (even though the tax cuts were due to expire). Over ten years, this math would suggest the tax cut is just 0.2 percent of gross domestic product. That would make it among the smaller tax cuts enacted in the last century.
If one assumes all temporary tax provisions stay in place for ten years, that gets you to 0.5 percent of GDP. That’s still relatively small.
On the other hand, if the 2017 tax-cut extension is considered a revenue loser, then the overall bill amounts to 1.25 percent of GDP, making it the seventh largest since 1918. If all expiring provisions are counted, then the bill would be 1.8 percent of GDP, tying it for fourth place with a Barack Obama tax cut in 2013.
“Measured appropriately, it is a historically large tax cut,” said Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget. “Measured the way they prefer, it is not. You can’t have it both ways.”
In any case, the record holder is still Ronald Reagan, whose 1981 tax cut amounted to 2.9 percent of GDP. But federal deficits increased so much that a year later Reagan signed into a law a tax increase amounting to almost one percent of GDP, according to a Treasury Department analysis.
“They're voting for no tax on tips, no tax on Social Security, no tax on overtime and many, many other things.”
-- Trump, at a Cabinet meeting, July 8
Exaggerated. Trump suggests he fulfilled several of his 2024 campaign promises, but fails to mention the fine print, including that these tax cuts expire after 2028 — conveniently, when he is no longer president.
The law does not eliminate all taxes on Social Security, as Trump had pledged; instead, it offers a temporary $6,000 deduction for seniors who earn as much as $75,000 a year, or $12,000 for joint filers earning as much as $150,000. This change will modestly reduce the number of seniors who pay taxes on Social Security benefits, but it won’t eliminate all taxes on Social Security. (Before 1983, Social Security benefits were not taxed.)
The “no taxes on tips” is also temporary and is limited to $25,000 a year in cash (noncash tips like gift baskets are still taxable). The types of jobs that would be covered still must be determined. Workers also will still need to pay payroll taxes (for Social Security and Medicare, totaling 7.65 percent) on tips.
Finally, the temporary “no tax on overtime” is capped at $12,500 (or $25,000 for a joint return).
“We’re cutting $1.7 trillion in this bill. And you're not going to feel any of it, and your Medicaid is left alone; it's left the same.”
-- Trump, remarks at the White House, June 26
“The largest spending cut — $1.7 trillion and yet you won't even notice it, just waste, fraud and abuse — in American history.”
-- Trump, remarks at July Fourth celebration, July 4
False. Trump displays magical thinking. How can he enact the biggest spending cut in history and no one feel it? And, contrary to his claim that “Medicaid is left alone,” the nonpartisan Congressional Budget Office estimated that new work requirements and other changes in the health care program for the poor will cause 7.8 million people to lose their coverage. CBO added that changes in the Affordable Care Act and a cutoff of aid to undocumented immigrants will mean a total of 11.8 million people will lose their health coverage under the law.
As for this being the biggest spending cut in history, that’s false. A glance at the historical budget tables shows that after the end of World War II, federal spending was cut from 41 percent of gross domestic product in 1945 to 24.2 percent in 1946 — and then to 14.4 percent of GDP in 1947. Trump’s cuts will take place over ten years and will amount to about one half of one percent of projected GDP. (The law also contained big boosts in spending on immigration enforcement that further reduce the cut in spending.)
“We really were very, very cognizant of three things: Social Security, we're going to take care of it beautifully; Medicare; and Medicaid. And we are going to save it whereas the Democrats are going to — you won't have it, they will destroy Medicare and Medicaid, and they have to because their numbers don't work …. But now we'll be in charge, so we're going to have no problem with Medicaid or Medicare or Social Security.”
-- Trump, remarks in Ochopee, Florida, July 1
False. We’ve addressed Trump’s claims about Medicaid, but his tax deduction for Social Security will weaken the program’s finances, though not as much as the complete elimination of Social security taxes. Social Security benefits began to be taxed when the program was facing insolvency in the early 1980s — and that moment is approaching again in the next decade.
“Whether you're military or anybody else, this is the most single, most popular bill ever signed.”
-- Trump, remarks at July Fourth celebration, July 4
False. Poll after poll show most Americans dislike the law. An Economist/YouGov poll conducted July 4-7 found that 53 percent of Americans strongly or somewhat oppose the law, while just 35 percent support it. (We could not find a breakdown for military support.)
The bill will “increase take home pay for the normal family of four, by at least $13,000.”
-- Trump, remarks in Ochopee, Florida, July 1
False. Trump cited the White House Council of Economic Advisers, but that was for the House version (which had a range of between $7,800 to $13,300, so “at least” would have been $7,800). By the time Trump spoke, the CEA had reduced its estimate to between $7,600 and $10,900 because of changes made by the Senate.
But caveat emptor — the CEA, Trump’s in-house economists, used growth assumptions that were much higher than independent modelers, some of whom said the bill would negatively impact growth. The Committee for a Responsible Federal Budget said the CEA used “fantasy growth assumptions” that were 2.5 times as large as the next highest estimate and more than 50 times as high as the average of outside models.
And now for the Democrats
“This bill will kick about 16 million Americans off of health care.”
-- standard Democratic talking point, used by Sens. Mark R. Warner (Virginia), Chris Murphy (Connecticut) and others
Exaggerated. The CBO’s estimate of the House bill was that 10.9 million would lose insurance from changes to Medicaid and the ACA. Democrats are including about 5 million people who would lose health insurance because of the impact of a related health care policy (enhanced ACA premium tax credits) that are due to expire at the end of the year. Republicans chose not to extend the credits, but that’s how it was designed by Democrats during the Biden administration.
“51,000 Americans will die each year so that the top 1% can get a $1 trillion tax break. This bill is a death sentence.”
-- Sen. Bernie Sanders (D-Vermont), in an X post, July 3
Exaggerated. Sanders is referring to an estimate made of the House bill by the University of Pennsylvania’s Leonard Davis Institute of Health Economics and the Yale School of Public Health’s Center for Infectious Disease Modeling and Analysis. Eric T. Roberts, a UPenn professor who co-authored the report, confirmed that nearly 9,000 deaths would be from the expiration of the ACA premium credits. He said the forecast has not yet been updated for the law as passed but he did not think the forecast would change much. The estimates largely are based on past research on the impact of people being disenrolled from Medicaid. Rachel M. Werner, another co-author and executive director of Penn LDI, said she was “pretty confident that we are at the low end of the right ballpark.”
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