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How Republicans could pay for Trump agenda and how it could hit your wallet

Trump promised to cut taxes and government spending but also fund lofty proposals like mass deportation

Ariana Baio
in New York
Thursday 23 January 2025 13:10 EST
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Donald Trump pitches abolishing Federal Emergency Management Agency in first TV interview

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President Donald Trump’s lofty agenda to tackle immigration, cut taxes across the board and reduce federal spending means Congress will need to find creative ways to fund his agenda while scaling back costs, and some of those ideas could cost American taxpayers.

Taxing people who use the gym at work, adding requirements to welfare beneficiaries and revoking tax deductions from students are just some of the ideas pitched in a 50-page list of ideas that the House Budget Committee circulated, according to Punchbowl News.

The ideas are part of a plan to supplement government spending to pay for Trump’s ideas such as removing taxes on tips and overtime which they estimate could cost roughly $856 billion or lowering the corporate tax rate to 15 percent which could cost $522 billion.

Trump has met with lawmakers on the Hill to discuss funding his agenda while also cutting federal spending
Trump has met with lawmakers on the Hill to discuss funding his agenda while also cutting federal spending (Getty Images)

The president’s desire to tackle immigration is also a point of contention given it will require billions more in spending to build immigration detention centers, the border wall, deploy more immigration agents and more.

Here are some of the ideas Republicans have suggested and how they could impact Americans.

Make certain work benefits and education expenses taxable

Students, a population that typically does not have large incomes, would pay more in taxes to attend higher education institutes should some of the ideas be enacted.

The suggestion would see typically tax-deductible education expenses like student loan interest, and scholarship and fellowship income, made taxable.

By making employer-provided meals, lodging, transportation benefits and work gyms taxable, Republicans estimate they could save $157 billion over 10 years. However, it would mean taxes for average working Americans who receive any of those perks will go up.

Remove tax credits for students and caretakers

Tax credits that typically benefit Americans with economic disadvantages like those caring for dependents, immigrants or students would be removed under some of the suggestions.

Trump after signing the $1.5 trillion tax overhaul plan in 2017 – he has often called for the tax plan to become permanent
Trump after signing the $1.5 trillion tax overhaul plan in 2017 – he has often called for the tax plan to become permanent (REUTERS)

Republicans estimate that by removing tax credits for child and dependent care expenses, they can save more than $50 billion.

They also suggest requiring both a child and parent to have a Social Security number in order to receive a child tax credit – a policy with similarities to Trump’s attempts to remove naturalization rights from children of immigrants.

Other ideas include removing the American Opportunity Tax Credit which benefits students in the first year of a four-year higher education degree.

Tariffs

Economists have warned that tariffs would most likely hurt U.S. consumers because companies will likely raise prices to supplement the increased tax.

Trump has suggested a 25 percent tariff on Mexico and Canada, the U.S.’s two largest trading partners and an additional 10 percent tariff on China. He’s also threatened to tariff European and Indian imports.

The list of ideas says a broad 10 percent tariff across all imports could save the U.S. $1.9 trillion over 10 years.

On the campaign trail, Trump bolstered the prospect of tariffs, claiming it was ‘the most beautiful word’
On the campaign trail, Trump bolstered the prospect of tariffs, claiming it was ‘the most beautiful word’ (Getty Images)

Reduce federal spending on welfare and add conditions for benefits

People who receive benefits from certain welfare programs could stop obtaining those benefits if the government adopts some of the suggestions that make them harder to access.

That includes requiring children with disabilities to meet a certain school attendance for Supplemental Security Income benefits, revoking SSI benefits from an individual who is the “subject of an arrest warrant”, adding work requirements for adult recipients of Temporary Assistance for Needy Families and work requirements for some Medicaid recipients.

Other suggestions include capping benefits and adding work requirements to the Supplemental Nutrition Assistance Program, formerly known as food stamps.

They estimate this would save the U.S. more than $650 billion over 10 years. But these policies specifically target millions of people who require more assistance.

Make cuts to Medicaid or Medicare

People who receive Medicaid or Medicare benefits could be forced to pay more for healthcare including prescription drugs.

Part of a longtime conservative goal to scale back the government programs for older adults and lower-income Americans, the list of ideas suggests a slew of health-related changes that could save the government billions.

It suggests discouraging price settings for certain prescription drugs that treat “rare patient populations” yet encouraging employer-sponsored health insurance to cover these.

Many conservatives have long dreamed of scaling back government programs like Medicaid and Medicare
Many conservatives have long dreamed of scaling back government programs like Medicaid and Medicare (Getty Images)

Impose fees and taxes on electric vehicle drivers

Those who opt to drive electric vehicles would no longer benefit from a tax credit or be exempt from paying a Highway Trust Fund Fee under the suggestions.

Repeal student loan forgiveness

As expected, Republicans suggest repealing President Joe Biden’s student loan forgiveness plan – aimed at helping people with crushing student debt – but also reforming federal grants like the Pell program.

They claim this will save the government more than $127 billion.

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