This message is brought to you by Nuveen.
How would you invest if you knew the future was watching?
At Nuveen. This isn't a theoretical question.
It's a perspective that comes from navigating 125 years of market cycles.
Using foresight to innovate and adapt to the changing needs of investors.
And remaining steadfast in the pursuit of lasting performance.
Nuveen. Invest like the future is watching.
Visit nuveen .com .future to learn more.
Investing involves risk.
Principal loss is possible.
Cutting government assistance programs like Medicaid has always been treacherous territory for American politicians.
The health insurance program for low -income residents is used by millions of people.
But as a budget battle brews in Congress some Republicans are thinking about putting it on the chopping block.
The problem, as former White House adviser Steve Bannon put it, A lot of MAGA is on Medicaid.
This is Swamp Notes, the weekly podcast from the FT News briefing where we talk about all of the things happening in US politics.
I'm Kasia Bresalian and this week we're asking, will Medicaid cuts threaten Trump's hold on Republicans?
Here to discuss with me is James Politi.
He's the FT's Washington Bureau chief.
Hey James. Hey Kasia.
And we've also got Guy Chazan who covers the US for the FT and has recently been looking into America's love -hate relationship with Medicaid.
Hey, Guy. Hi. So Guy, break it down for maybe some of our international listeners.
What exactly is Medicaid and just how important is it?
It's a government health insurance program for people on low incomes and it serves one in five Americans.
It really is a massive program that takes up a large part of the federal budget And it's become increasingly important, especially in recent years, after President Obama implemented the famous ACA Affordable Care Act, which was nicknamed Obamacare, and that massively expanded the reach of Medicaid.
So since then, there's been a big uptick in the number of people covered by it.
So it really has become, in recent years, a very important federal transfer, federal entitlement for people on low incomes.
And James, why is the conversation around cutting Medicaid happening right now?
Well, the conversation is happening now because President Trump is in the White House, he has full control of Congress through the Republican majorities in the House and the Senate.
And his big legislative goal for the year is to pass what he calls a big, beautiful bill that will extend the Trump tax cuts that he passed in 2017.
He has to find a way to pay for those tax cuts and Republicans on the Hill are looking for spending reductions wherever they can.
And Medicaid, among the big spending items on the federal budget is one of the prime targets.
And the Energy and Commerce Committee has been directed on Capitol Hill to cut $880 billion.
And so there's actually a target that Republicans in the House have set, even though the specifics of how exactly they're going to get there haven't been nailed down yet.
And it's not a binding commitment.
Right, so the concern is, is it actually possible to get to $880 billion without cutting Medicaid?
And now, I guess I'm wondering, what's the timeframe that Republicans have in order to pull this off?
This negotiation has to get done by the end of the year, because if the tax cuts are not extended by the end of the year, then they expire, which means that actually the income tax rates for all Americans and for business will go up again, they'll revert back to where they were before Trump's 2017 tax cuts.
And so the White House and Republicans on the Hill want to get it, the first stages of it passed in the spring or the summer, but the actual deadline is really the end of the year.
All right, now Guy, the numbers on how many people use welfare programs, even just beyond Medicaid that you were talking about, they're really extraordinary.
I mean, I'm just looking at something that you've written recently.
It says here that more than half of U .S. counties get at least a quarter of their income from government transfers.
Yes. A lot of people are really relying on these transfer programs, and many of them also voted for Donald Trump.
Now, you were recently in the state of Louisiana, talking to people about that disconnect.
What did they tell you?
Well, for example, when I was in Bogalusa, this town in Louisiana.
I spoke to a woman called Bethany.
She didn't give her surname, but basically, she's about to give birth to her third baby.
And Medicaid will cover the whole cost of delivery.
And basically, I said to her, well, how do you feel about this, the fact that the Republicans Americans might be cutting this program.
And she was really sort of flabbergasted by that.
You know, she said, I didn't know this was going to happen.
I voted for Trump, but he never talked about doing this.
We can't afford this ourselves right now.
We can't afford to pay for this treatment.
But I think, you know, it was an interesting tension because she's a Trump voter, as many people are in Louisiana.
And I think they weren't really aware when the election happened that this was coming down the road, that they could be cuts.
I mean, obviously, we have to be careful here, because the programs haven't been cut yet.
We don't know what's going to happen.
But it does look like certain Republicans governments in Congress are determined to use this opportunity to curtail the program, whether they'll succeed is another matter.
But that's going to be a rude awakening for a lot of people in Bogalusa in Louisiana, for people like Bethany, who may lose a lot of her health insurance as a result of this.
WHEMBLEY So Bethany said that Trump didn't really talk about cutting Medicaid while on the campaign trail.
What has he said, you know, along with Republican leadership, about the issue since?
Well, I think it's very complicated.
I mean, basically, Trump has always said during the campaign, that for him, programs like Medicaid are sacrosanct.
He said, you know, we love and cherish Medicaid and also Social Security.
And people that I spoke to on the ground there sort of said, well, we take him at his word. And indeed, other Republicans, for example, Mike Johnson, the Speaker of the House who is actually from Louisiana as well, where I was, he has said that they're not going to cut the program.
They're going to target things like waste and abuse and fraud.
But other parts of Trump's coalition take a different view.
You have people in the Freedom Caucus, for example, in Congress, who are very hawkish on fiscal matters.
And you also have Elon Musk who is wielding his chainsaw and saying that there has to be a massive campaign to eliminate fraud in entitlement programs. I mean, he talked of $500 to $700 billion worth of fraud, which many budget specialists have questioned.
Yeah, well, James, talk a little bit more about that.
How do you see these two factions that guy's talking about here?
You know, on the one hand, the fiscal hawks, but also billionaires like Elon Musk, and then other lawmakers who are also concerned about spending for Medicaid?
How do these two factions affect Donald Trump?
Well, it's very interesting because Trump and increasingly Republicans have been casting themselves as the party of the working people that MAGA, its identity is on the economic front is of populist policies that are more directed towards helping working people than in the traditional Republican platform of simply tax cuts for the rich, fiscal conservatism, pro -business, pro -corporate regulation.
Trump has sort of changed the equation to a certain extent, and he made a lot of gains with lower income voters across the spectrum, really, in the 2024 election.
but this is a big test of whether the White House and Republicans in Congress are in a certain sense gonna hold true to their sort of new mantra of populist economics, being on the side of the working people, being on the side of more low income individuals.
And they risk a backlash if ordinary Americans who are struggling are suddenly deprived of health insurance And that's why the Democrats are trying to jump in on this because they're trying to say, well, look, you know, this whole business of where the party of the working people isn't actually true.
They're cutting your health care insurance.
How could they be on your side?
Well, you know, what's interesting to me is both of you kind of bring up these two factions when ostensibly, I think the narrative around the Trump administration up until this point has been very much that Trump kind of has a pretty complete control over the Republican Party.
You're not seeing a lot of pushback, but is that not as ironclad as it seems?
What do you guys think?
Well, at the moment, it's very hard to see any pushback on Capitol Hill.
It's very hard to see anyone come out and say, I disagree with President Trump, I don't want to do this.
His focus actually has not been on Congress so far.
He's been taking executive action left and right.
All the actions that we've seen have come really from the White House, and he hasn't prioritized the congressional negotiations.
Once we get into the sort of heat of the tussle on Capitol Hill, I think we'll expect Trump and White House officials to turn the screws and try to get this legislation passed.
The tax cuts are really, really important for Trump.
Guy, what do you think?
What could actually make this debate over Medicaid cuts existential for Donald Trump?
Well, as James said, a lot of his victory in November was down to the fact that he tapped new sources of support for the Republican Party, poor Hispanic voters, poor African -Americans.
A lot of these people voted for him because he promised to bring prices down from day one.
That was part of his appeal.
He castigated Joe Biden for the inflation wave under his presidency, and he said he was going to counteract that.
Now, there's little evidence that that has actually happened.
But I think a lot of working class people voted Republican this time.
That's my impression anyway, because of his promises to tackle the cost of living crisis.
Now, if the Republicans cut Medicaid, then that really cuts across those sort of promises.
And there could be a backlash.
I think we've seen something similar before.
Democratic legislators I was talking to brought up the 2018 midterms when the republicans really wanted to abolish Obamacare, the Affordable Care Act, and they didn't succeed.
And there was a big backlash against that and that really helped the Democrats in the midterms then.
And they're hoping they can repeat the trick this time.
If there's another attempt to sort of slash Medicaid, that could really backfire for the Republicans in the midterms in 2026.
So James, in the end, then, where do we stand on the budget fight?
Well, I think it's, you know, it's kind of game on at the moment.
I think that the battle lines are being drawn.
The Republicans in the Senate and the House are trying to all get on the same page.
And then they will have to proceed to clear the first hurdles.
The Republicans are trying to pass this legislation through a process called reconciliation, which means that it can sort of fast -track measures that are related to the budget with a simple majority in the Senate.
But for that, they will need extraordinary unity.
And on the House side, the Republican margin is incredibly slim.
They only have a few votes to spare.
And actually, there are a few special elections coming up that they're worried about.
So the first sort of mission for the Republicans is to get everybody on board and it's not, it's not easy.
All right. We'll have to check back in with you when it comes to ahead.
I want to thank our guests, Guy Chazan covers U .S. politics and society for The FT. Thanks Guy.
Thank you. And James Felitti, he's our Washington bureau chief.
Thanks James. Thanks, Kasia.
Check next week for more U .S. political analysis from the Financial Times.
Forever change the way you sleep with the softest 100 % organic cotton bedding from Bull & Branch. You'll fall asleep faster, wrapped in the most luxurious comfort.
You'll never sleep hot again with blankets, duvets and sheets that feel breathable to sleep in.
You'll experience pure comfort on night one, and feel your bedding get softer with every wash.
Take 20 % off your first order during Bowling Branch's annual spring event at bowlingbranch .com with code BUTTERY.
Limited time only, exclusions apply, see site for details.
Hey this is Paige from GigglySquad and this episode is brought to you by Nordstrom.
Nordstrom is here to help you dress in a way that feels totally you with the best spring styles.
From boho dresses and matching sets, to must -have bags and sneakers, discover thousands of items from lots of your favorite brands like Mango, Reformation, Veronica Beard, and Farm Rio.
It's easy too, with free shipping and returns, in store order pickup, and more.
Shop today in stores and at nordstrom .com.
