Trump’s Budget Proposal To Be Unveiled on Tuesday With Deep Cuts To Medicaid

Investors will be paying close attention this week to President Trump’s first major budget proposal that will be unveiled on Tuesday, according to the Washington Post, which reported about the story on Sunday and includes massive cuts to Medicaid and revisions to anti-poverty programs.

The Medicaid cuts are tied to the proposed Medicaid cuts in the revised American Health Care Act that narrowly passed in the House of Representatives last month before an official score was made by the Congressional Budget Office (CBO) but faces stiff opposition in the Senate where Republicans hold a slimmer lead and several Senate Republicans have already spoken out publicly about rejecting it and are designing their own Senate version replacement plan of Obamacare.

Based on the proposed Medicaid cuts from the American Health Care Act, there would be a reduction by $880 billion over the 2017-2026 period believed to be used to fund $883 billion for Trump’s tax cuts.

The CBO stated the $880 billion reduction would “stem primarily from lower enrollment throughout the period, culminating in 14 million fewer Medicaid enrollees by 2026, a reduction of about 17 percent relative to the number under current law. ”

Some of that reduction would impact people currently eligible for Medicaid benefits, and the rest would be among people the CBO projects would be made eligible as a result of state actions in the future under current law.

By 2026, Medicaid spending would decline approximately 25 percent less than what CBO projects under current law.

The Medicaid cuts in Trump’s proposed budget are conditional on the longshot that the revised American Health Care Act would be approved in the Senate which isn’t likely to occur in its current form.

According to CNN, a new CBO score of the revised American Health Care Act is due on Wednesday.

The Week Ahead

Economic data is light this week.

On Tuesday new home sales for April is due. Markit flash PMI will also come into focus on Tuesday for the U.S., Japan, and the Eurozone.

On Wednesday existing home sales for April is reported along with the FHFA Housing Index for March.

Initial and Continuing claims are due on Thursday.

On Friday the G7 meeting begins in Italy.

Durable goods for April is also reported along with the 2nd estimate of Q 1 GDP,  and Michigan Sentiment (May).

Written and Edited By:

Johnathan Schweitzer



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