When Senator Thom Tillis Goes AWOL On Welfare Cuts, It’s All Over Except The Shouting
We had never even included GOP Senator Thom Tillis on our Wall of Shame list of sketchy RINOs of the likes of Susan Collins and Lisa Murkowski. Yet here he comes bounding to the Senate floor with a saboteur’s IED (improvised explosive device) aimed at the one decent savings provision of the OBBBA abomination.
We are referring to the $800 billion of 10-year savings in Medicaid owing to its requirement that able bodied recipients need to work 80 hours per month in order to get free stuff from Uncle Sam. Of course, we’d sell hell yes to tossing off the rolls any non-disabled adult who can’t manage to work 20 hours per week.
The OBBBA also requires that the states stop enlarging the scam by which they purportedly “tax” medical providers, but then slip the same loot back to them in the form of higher reimbursement payments compliments of Uncle Sam.
For crying out loud, at the present time states raise upwards of $45 billion per year from so-called “provider taxes”, which providers, in turn, get the $45 billion back as reimbursements for their “cost” of service. While there have been various Federal efforts to block such scams, the current 6% cap on provider taxes as a share of patient revenues tells you all you need to know. State fiscal authorities have been on a path toward round-tripping their entire share of Medicaid costs to Washington, but the modest further cap on these ploys contained in the OBBBA is apparently more than Senator Tillis can live with.
Of course, his explanation has nothing whatsoever to do with policy considerations or legitimate design issues when it comes to the proverbial dilemmas of Federal/state cost sharing grants-in-aid. No, Senator Thom just says the GOP can’t afford to loose any Medicaid voters!
“Tillis said this is going to be like ObamaCare. He said just like ObamaCare led to huge losses for Democrats in 2010 and 2012, he said this could be the same thing for us because hundreds of thousands of people in his state, millions around the nation are going to be kicked off of Medicaid — working people, who are Trump voters,” the source told The Hill.
Tillis warned “it could cost us majorities in both houses” of Congress, the source added.
Holy Moly, back in the day we thought the Medicaid rolls were already bloated at 20 million recipients in 1980, representing about 8.8% of the US population. So the Reagan budget proposed to rollback the Federal matching payment by 4.5 percentage points by 1984, which would have cut baseline spending of $20.5 billion per year by 7.5%.
Needless to say, the two GOP Senators from North Carolina, the legendary Jesse Helms, and also the stalwart John East, had no problem embracing this modest level of curtailment.
Likewise, on the eve of the sweeping ObamaCare expansion, the Medicaid rolls as of 2008 had already increased to 50 million, representing 16.4% of the population. Yet the GOP Senator from North Carolina at the time, Richard Burr, had not trouble casting a loud “nay” vote on final passage.
Of course, with the Obama expansion the Medicaid rolls were off to the races, reaching 70.2 million and 21.7% of the US population by 2016. Still, when Donald Trump’s noisy campaign pledge to repeal ObamaCare including the Medicaid expansion came up for a vote in the Senate both GOP Senators from North Carolina supported the repeal. In fact, one of the most vociferous supporters of deep-sixing ObamaCare was, well, the then junior Senator from North Carolina, Thom Tillis.
“We made a promise to the American people to repeal & replace Obamacare with solutions that will help control the cost of premiums.” – Senator Thom Tillis, July 28, 2017
The rest is history. Rather than repeal ObamaCare the Donald signed—and bragged about—the massive expansion of Medicaid embedded in the $2 trillion CARES act of March 2020. By the time the dust had settled on Donald Trump’s sweeping expansion of free stuff during the final year of his first term, the Medicaid rolls had hit 90 million and 27% of the US population in 2022.
Since then, there has been a slight reduction t0 8o million, as some of the pandemic era coverages expired. Yet what we now have is a Medicaid safety net, which was long focused almost exclusively on the dependent poor population receiving family assistance or SSI for the blind, disabled and elderly poor, covering fully 24% of the entire US population. That’s nearly 3X the coverage rate that most GOP legislators had been willing to rollback in 1981.
As a result, just since the turn of the century constant dollar Medicaid spending has soared from $358 billion (2024 $) to $914 billion or by 2.55 X. But as the table also makes clear, the major cause of that spending explosion has been the doubling of the recipient rolls from 40 million to 80 million, while the rise in constant dollar spending per recipient has been a more modest +28% per the last column below.
Total Federal/State Medicaid Spending and Recipients, 2000–2024
In short, we think the GOP’s inability to move even modest Medicaid cuts through the legislative sausage grinder is a very big deal. It literally means that any serious attention to the nation’s soaring public debt is likely over and done—at least through 2028; and after that point the debt/bond yield/interest expense doom loop may be too powerful for any democratic government to stop.
After all, the CBO says the OBBBA might reduce the current 80 million Medicaid roll by 11 million or so, meaning that the program would still cover 21% of the US population or nearly 2.5X more than the 1980 level and 50% more than the pre-ObamaCare coverage ratio.
Yet and yet. You now have the once and former ardent ACA opponent, Senator Thom Tillis, screaming “no mas”.
That is to say, 45 years on from the abortive Reagan assault on the Welfare State, the GOP as a functioning majority has given up the ghost. Indeed, if you can’t even rollback the runaway growth of Medicaid, with the vote of the GOP Senator from Red State North Carolina, it’s all over except the shouting.
And we do mean the GOP has flat out surrendered in the battle against the Welfare State. Here is the 10-year baseline cost of the major Welfare State programs, and what the GOP is willing to cut: Namely, small nicks from Medicaid and Food Stamps, which amount to just 2% of baseline spending for these programs. All the rest—Social Security, Medicare, ObamaCare, SSI, family assistance and school lunches and veterans benefits—have been given a hall pass by the Donald and the GOP leadership.
2026-2035 Baseline Spending for Major Welfare State Programs and Proposed GOP Cuts:
Social Security: $21.3 trillion.
Medicare:$16.4 trillion.
Medicaid/ObamaCare: $10.1 trillion.
Food Stamps: $1.1 trillion.
Supplemental Security Income(SSI): $0.8 trillion.
School lunches and family assistance: $0.8 trillion.
Veterans comp and pensions: $3.2 trillion.
Total Major Welfare State Programs: $53.7 trillion.
GOP Medicaid cut: ($0.8 trillion).
GOP Food Stamps cut: ($0.3 trillion).
Total GOP Welfare cuts: ($1.1 trillion).
GOP Welfare Cuts As % of 10-Year Baseline:-2.1%.
So these GOP two percenters are surely dreaming somewhere off in fiscal la la land. When you further set aside $9.2 trillion for defense and $9.0 trillion for interest expense over the next decade you have $72 billion of baseline spending out of the $88 trillion 10-year total (FY 2026 to 2035) or 81% . That is to say, the GOP is struggling to consolidate its ranks to pass $1.1 trillion of cuts in a small corner of the Welfare State, which “cuts” amount to exactly 1.25% of total baseline spending.
Then again, the GOP is also the party of no tax increases. Not ever. Not never.
As as consequence, you are talking about a firm embrace of a long-term fiscal equation that as of 2024 amounted to a 16.9% of GDP revenue take and a 23% and rising outlay share of GDP. And the latter rising outlay share is baked into the cake in the future due to surging retirement rolls, which will rise from 70 million to 100 million over the next several decades; and also swelling interest expense that is slated to triple as a share of GDP by mid-century.
Structural Deficit Has Been Widening Since 2000: Revenue Versus Outlay % of GDP
The swelling interest expense part of the equation needs no elaboration. That is, if the so-called conservative party refuses to pursue sweeping curtailments of the Welfare State and Warfare State and is adamant about NO TAX INCREASES, then the Federal budget will roll into the future on automatic pilot like some kind of Fiscal Doomsday Machine.
That is to say, if Washington does nothing except leave current tax, spending, and structural deficit policies in place (i.e. baseline policy), the publicly-held debt will grow by $102 trillion over the next three decades, reaching a staggering 154% of what would be $85 trillion of GDP by 2054.
Needless to say, with a baseline projection of $102 trillion of new debt riding on the back of CBO’s veritable Rosy Scenario economic forecast (no recession for 34 years), you would think that the GOP Senate might be forming a fiscal bucket brigade to begin bailing out the sinking budgetary ship.
Not the Trumpified GOP, however. Indeed, the King of Debt himself, Donald Trump, is organizing a MAGA PAC to run the fiscally stalwart Rep Tom Massie out of his seat in 2026, even as Thom Tillis and other weak-kneed Senate Republicans are invited to name their price for a vote in favor of the very OBBBA abomination which will drive the nation even deeper into debt.
Even with the egregious budget gimmick of terminating new tax cuts and bennies in the 2028 election year to make the cost look $1-2 trillion lower on the standard 10-year window—both the House and Senate versions of OBBBA would add massively to the public debt. That’s because they fully embrace the $22 trillion of deficits already built into the baseline for the next decade.
Of course, the head-in-the-sand GOP leadership and White House economic policy pimps say not to sweat the extra debt because on paper it is only $3 trillion in the House and $4.2 trillion in the Senate over 10 years, and, besides, much of that can be purportedly absorbed through enhanced “growth.”
Actually, what drives revenue growth is nominal GDP and the CBO baseline assumes an average of+3.7% growth per annum for the entire 30-year period through 2054. Given that nominal GDP growth averaged exactly 3.9% during the 20 years ending in Q1 2020—a period in which the Fed’s printing presses were running red-hot—we doubt there would be much additional nominal GDP growth tonic from essentially extending existing tax law (i.e. the expiring 2017 Trump tax cuts) through the next three decades of massively rising debt burdens.
In any event, on a 30-year basis, the OBBBA as written would result in $117 trillion of added public debt, which would rise to an additional +$133 trillion when you price out OBBBA without the accounting gimmicks. Still, how anyone thinks that quintupling the publicly-held debt from today’s $29 trillion, to $162 trillion over the next three decades, is a plausible route to the Golden Age of Prosperity is pretty hard to figure.
Even then, the truth is surely far worse. Just remove one brick from the edifice of Rosy Scenario—perpetually low interest rates—-and the fiscal dragons truly come surging from the Federal budget’s vasty deep. That is, if you assume the weighted average UST yields will clock in at today’s 4.25% rather than 3.5% over the next three decades, the added debt with the permanent extension of the OBBBA would amount to $156 trillion.
That’s right. Faced with a veritable Fiscal Doomsday Machine as embodied in the current CBO baseline, the Trumpified GOP has essentially embraced a budgetary path to a $185 trillion public debt by mid-century, representing a crushing 218% of GDP.
In a word, the GOP has surrendered to fiscal calamity lock, stock and barrel. And Red State Senator Thom Tillis has now made it official.
