Trump’s mega tax and spending law will have small economic impact, forecasters say – USA Today

Report on the Economic and Sustainable Development Implications of New U.S. Tax and Spending Legislation

Introduction

A comprehensive tax and spending law, recently signed into effect, is projected to have a varied and contentious impact on the United States economy and its alignment with the United Nations Sustainable Development Goals (SDGs). While proponents assert the legislation will stimulate significant economic growth, independent analysis suggests a more modest, short-term effect that wanes over time, coupled with substantial setbacks for key social and environmental objectives.

Legislative Components and Economic Forecasts

The legislation primarily extends the 2017 tax cuts and introduces new tax relief measures while implementing significant spending reductions to social programs and eliminating subsidies for green energy. Economic forecasts regarding its impact are divergent.

• Administration’s View: The bill will foster robust economic growth, leading to increased tax revenue that will offset the cuts and potentially reduce the national deficit.
• Independent Analysis: Economists from institutions like Moody’s Analytics and Oxford Economics project a marginal, temporary boost to GDP in the immediate term (e.g., an estimated 0.4% lift in 2026), with the effects diminishing or becoming negligible over the subsequent decade. The Congressional Budget Office (CBO) projects the bill will add $3.4 trillion to the national debt.

Impact Assessment on Sustainable Development Goals (SDGs)

The legislation’s provisions have direct and significant implications for several SDGs, particularly those related to poverty, health, inequality, and climate action.

SDG 1 (No Poverty), SDG 2 (Zero Hunger), and SDG 3 (Good Health and Well-being)

The law’s most substantial negative impacts are concentrated on social safety net programs, directly undermining progress on fundamental SDGs.

• Medicaid and Affordable Care Act Cuts: Reductions in funding and new work requirements are projected to leave over 12 million people without health insurance, a direct contradiction to the aims of SDG 3 (Good Health and Well-being).
• SNAP Reductions: Cuts to the Supplemental Nutrition Assistance Program (SNAP), formerly food stamps, threaten food security for vulnerable populations, setting back progress on SDG 2 (Zero Hunger).
• Income Impact on Poorest Households: The CBO and the Center for Economic and Policy Research estimate that these policies will reduce after-tax income for the poorest decile of households by $1 trillion over the next decade, exacerbating poverty and working against SDG 1 (No Poverty).

SDG 10 (Reduced Inequalities)

The legislative framework is structured in a way that is likely to widen economic disparities.

1. The expiration of individual tax breaks in 2028, contrasted with permanent corporate tax cuts, favors capital over labor in the long term.
2. The severe impact of social spending cuts on the lowest-income households, while higher-income groups benefit from tax relief, directly contributes to increased inequality, challenging the core principle of SDG 10.

SDG 8 (Decent Work and Economic Growth) and SDG 11 (Sustainable Cities and Communities)

While the bill aims to stimulate growth, the nature of this growth and its community-level impacts raise concerns.

• Job Creation: A temporary economic lift may generate an estimated 190,000 jobs in 2026, contributing to SDG 8. However, some economists argue that reducing dependency on government programs could strengthen the labor market long-term.
• Local Economic Toll: Reductions in Medicaid and SNAP benefits are predicted to have a negative ripple effect on local economies. This could lead to staffing cuts or closures at hospitals and grocery stores, undermining the economic resilience and sustainability of communities as outlined in SDG 11.

SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action)

The legislation takes a significant step backward from national climate and energy goals.

• Elimination of Green Subsidies: The law scraps dozens of green energy subsidies established by the Inflation Reduction Act.
• Projected Impact: Cuts to these subsidies are projected to accelerate, rising from $10 billion in the next year to $94 billion by 2032. This action directly hinders the transition to renewable energy sources, impeding progress toward SDG 7 and undermining national commitments related to SDG 13.

Conclusion

The new tax and spending legislation presents a significant conflict with the agenda for Sustainable Development. While proponents focus on potential contributions to SDG 8 through economic growth, credible analysis indicates these gains may be minimal and temporary. Conversely, the law is projected to cause substantial and lasting damage to progress on SDG 1 (No Poverty), SDG 2 (Zero Hunger), SDG 3 (Good Health and Well-being), and SDG 10 (Reduced Inequalities) by dismantling key social safety nets. Furthermore, by eliminating critical green energy incentives, the legislation actively works against SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action), jeopardizing environmental sustainability for short-term, and disputed, economic objectives.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 1: No Poverty
• SDG 2: Zero Hunger
• SDG 3: Good Health and Well-being
• SDG 7: Affordable and Clean Energy
• SDG 8: Decent Work and Economic Growth
• SDG 10: Reduced Inequalities
• SDG 13: Climate Action

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 1: No Poverty

   • Target 1.3: Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable.
     
     The article discusses significant cuts to social safety net programs. It states, “reductions to Medicaid and SNAP benefits, formerly called food stamps… are projected to reduce after-tax income for the poorest one-tenth of households.” This directly relates to the implementation and strength of social protection systems.

2. SDG 2: Zero Hunger

   • Target 2.1: By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round.
     
     The legislation includes “deep spending reductions to programs such as… food stamps.” The article further notes the impact of cuts to “SNAP benefits, formerly called food stamps,” which is a key program for ensuring food access for the poor.

3. SDG 3: Good Health and Well-being

   • Target 3.8: Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all.
     
     The article explicitly mentions that the new policies “will leave more than 12 million people without health insurance” due to reductions in Medicaid and the Affordable Care Act. This is a direct counter-action to achieving universal health coverage.

4. SDG 7: Affordable and Clean Energy

   • Target 7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology… and promote investment in energy infrastructure and clean energy technology.
     
     The article states the legislation “scraps dozens of green energy subsidies created by President Joe Biden’s Inflation Reduction Act.” It also quantifies the cuts, which are “poised to accelerate… rising from $10 billion next year to $94 billion by 2032.” This shows a reduction in investment in clean energy.

5. SDG 8: Decent Work and Economic Growth

   • Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries.
     
     The entire article is centered on the bill’s effect on economic growth. It cites various projections, such as how the legislation will “lift economic growth by a moderate 0.4% in 2026” and that by 2030, “the nation’s gross domestic product will be just 0.1% larger.”
   • Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.
     
     The article connects economic growth to job creation, noting that a projected increase in growth “should generate an additional 190,000 jobs.”

6. SDG 10: Reduced Inequalities

   • Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.
     
     The article analyzes a major fiscal policy and its unequal impact. It highlights that reductions to social safety nets “are projected to reduce after-tax income for the poorest one-tenth of households by $1 trillion over the next decade,” while also providing new tax perks for others, thus affecting income equality.

7. SDG 13: Climate Action

   • Target 13.a: Implement the commitment undertaken by developed-country parties to the United Nations Framework Convention on Climate Change to a goal of mobilizing jointly $100 billion annually by 2020 from all sources to address the needs of developing countries in the context of meaningful mitigation actions and transparency on implementation and fully operationalize the Green Climate Fund through its capitalization as soon as possible.
     
     While the target focuses on international commitments, the domestic action of scrapping “dozens of green energy subsidies” and cutting funding for them directly undermines the national capacity and intent to contribute to global climate mitigation efforts.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Indicators for Economic Growth (SDG 8)

   • Annual growth rate of real GDP: The article provides multiple forecasts for GDP growth, such as “lift economic growth by a moderate 0.4% in 2026” and a prediction that by 2030, “the nation’s gross domestic product will be just 0.1% larger.”
   • Job creation numbers: The article explicitly states the bill is projected to “generate an additional 190,000 jobs.”

2. Indicators for Social Protection and Inequality (SDG 1, 3, 10)

   • Proportion of population covered by social protection floors/systems: The article implies a negative change in this indicator by stating the policies “will leave more than 12 million people without health insurance.”
   • Impact on household income: A specific metric is given: “reduce after-tax income for the poorest one-tenth of households by $1 trillion over the next decade.”

3. Indicators for Clean Energy and Climate Action (SDG 7, 13)

   • Financial flows towards clean energy: The article provides a clear negative indicator by quantifying the “cuts to the Inflation Reduction Act’s green energy subsidies, rising from $10 billion next year to $94 billion by 2032.”

4. Table of SDGs, Targets, and Indicators

Source: usatoday.com