Severe cuts to social assistance programs recently signed into law by President Trump will upend life for lower-income families — and could even put people out of their homes.
Belinda is a senior citizen living in Bernalillo County, New Mexico. In 2004, she qualified for a home loan with a monthly payment of $130 based on her yearly income. She has lived in an economically distressed area of the county for over 10 years, which has historically had the highest foreclosure rates in the state due to employment instability.
In 2019, the mortgage lender sold Belinda’s loan to another mortgage company. The transfer caused Belinda’s auto-payments to pause. Due to Belinda’s limited literacy, she was unaware of the transfer, which put her loan into default and her home at risk of foreclosure.
With the help of NCRC member United South Broadway Corporation (USBC), a housing counseling nonprofit, Belinda was just barely able to keep her home. She was earning just enough to qualify for her lender’s loss mitigation program, thanks to her Supplemental Nutrition Assistance Program (SNAP) benefits.
“If Belinda did not have the income boost from SNAP benefits, she would have lost her longtime home,” said Debbie Norman, program manager at USBC. “She would have most likely ended up homeless.”
The benefits that saved Belinda are now being yanked away from tens of millions of people. With the One Big Beautiful Bill (OBBB) signed into law, more than 30 million households will face staggering cuts to their SNAP and Medicaid benefits. Disposable incomes will drop and those who are in a similar situation to Belinda won’t be as fortunate.
Supporters of the OBBB characterize it as a monumental piece of legislation that provides economic relief to low- to moderate-income (LMI) families. However, the research and data paint a different story that is all too familiar to America: one of economic harm being done to the poor and working class while big corporations and the wealthy continue to maximize their financial gains at everyone else’s expense.
A Redistribution of Wealth and Income to the Rich
The OBBB is the largest one-time upward redistribution of income in US history, as economist Josh Bivens put it. The law gives $117 billion to the richest 1% of households, according to the Institute on Taxation and Economic Policy (ITEP) estimates, while offering just $77 billion to the bottom 60% of households. This means that the roughly three million richest Americans will receive almost double the tax cuts as those given to the 200 million least-wealthy Americans – which makes up 64% of the entire population of the country.
These regressive tax cuts will deepen income inequality. According to the White House, certain tax provisions, such as allowing for no taxes on tips or overtime pay, higher standard deductions, the $40,000 SALT (state and local taxes) deduction and the Child Tax Credit extension, will increase take-home pay by more than $10,000 per year for low- and moderate-income families.
However, ITEP reports that the bottom 60% of households will only see an average net tax cut of $2,160 annually. These net tax cuts will likely be offset by cuts to Medicaid and SNAP along with further complications from higher costs of goods from tariffs.
The bill could cost the bottom 10% of households more than $2,500 in annual disposable income, according to the Yale Budget Lab’s estimate of the combined impact of the tariffs and Medicaid/SNAP cuts. Those households will experience an approximately 6.4% drop in their disposable incomes.
For low- to moderate-income households, $2,500 is not insignificant. It’s the difference between financial stability and financial insecurity. $2,500 could cover monthly rent and utilities, groceries, childcare, unexpected medical expenses or other basic needs that become more costly each year.
The loss of $2,500 for the average low- to moderate-income household could also mean families are more likely to accumulate debt through the use of predatory loans to help bridge the financial gap – a risk that is even greater as a defunded Consumer Financial Protection Bureau (CFPB) now struggles to protect vulnerable consumers.
The Effects of Medicaid and SNAP Cuts on Vulnerable Communities
The One Big Beautiful Bill is estimated to slash almost $1 trillion from Medicaid and $230 billion from SNAP over the next decade. On the ground, this will result in up to 15 million people losing their health coverage and 22.3 million people losing some or all of their food assistance benefits due to stringent work requirements.
Supporters of the bill argue that adding work requirements will increase employment, even though the majority of clients on Medicaid (64%) and SNAP (75%) already work, with the rest being unable to work due to a qualifying disability or caregiving responsibilities.
On a larger economic scale, the cuts will deplete state and local governments of necessary tax revenues by $12 billion, according to the Commonwealth Fund. State and local governments may have to offset some of these losses by cutting other public services and assistance programs that LMI households benefit from related to housing, transportation, infrastructure and education.
The Commonwealth Fund also estimates that the cuts could result in a loss of 1.22 million jobs nationwide, which is equivalent to a 0.8 percentage point increase in unemployment — contrary to the goal of the work requirements.
The Medicaid and SNAP cuts will hit some states harder than others. NCRC member New Jersey Citizen Action (NJCA), a grassroots coalition fighting for racial and economic justice, reported that many of the residents they advocate for will be impacted by the cuts.
“We’re staring down the barrel of a dramatic rise in the uninsured [with] up to 350,000 residents expected to lose [their] FamilyCare/Medicaid and more than 450,000 on Affordable Care Act marketplace plans see[ing] their premiums increase by 110 percent,” said Laura Waddell, NJCA’s healthcare program director. “That’s around 800,000 people at risk of losing coverage or seeing their health care costs spike dramatically.”
Furthermore, rural communities will face an unprecedented number of hospital closures due to the Medicaid cuts. The OBBB is estimated to reduce $50 billion in federal Medicaid funding for rural hospitals, putting 304 hospitals at risk and potentially leading to 15,000 additional deaths annually. The legislation strips life-saving resources from many of the very people President Trump and his allies pledged to protect.
NCRC members like the United South Broadway Corporation and New Jersey Citizen Action will continue to show up for clients like Belinda. However, this systemic rupture in our tax code and social safety net will likely increase client intake and overwhelm grassroots nonprofits even further. More low- and moderate-income Americans will now face the real possibility of poverty, eviction, illness and hunger.
Manan Shah is a Governmental Affairs Associate with NCRC’s Policy & Government Affairs team.
Photo credit: Forest Plum via Upsplash.
Thank you for this . I knew that Trumps orders and laws were disproportionately affecting the poorest of citizens but lacked the knowledge of exactly how many.