The Ledger

For decades, Washington ran a two-step. Step one: cut taxes. Step two — years later, when deficits grew — declare that we can't afford our programs, and cut those too.

Reagan cut taxes in the eighties; the squeeze came for housing, education, and job training. The deficits of that era helped push Clinton to sign welfare reform in the nineties. After the Bush tax cuts, a debt-ceiling standoff produced the sequester — automatic cuts to everything from Head Start to housing vouchers, signed by Obama. Both parties have danced this dance.

The tax cuts flow mostly to the rich. The spending cuts come out of programs everyone else uses. And the two steps are always presented as unrelated.

Last year, the two-step became a one-step. The One Big Beautiful Bill gave the top one percent roughly a trillion dollars in tax cuts — and cut roughly a trillion from Medicaid. Same bill. No waiting. No pretending.

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The Reagan-era squeeze. Budget Director David Stockman's 1981 cuts hit food stamps, education, job training, and unemployment insurance alongside the tax cuts — and the squeeze deepened through the decade as deficits grew. HUD's budget authority fell from $32.2 billion in 1981 to $6.9 billion in 1989 — a 78% reduction, a figure documented by the libertarian Cato Institute. New public housing authorizations fell from ~55,000 units in 1979 to zero in 1984. The homelessness crisis that emerged in the 1980s is widely linked to these cuts. (Cato Institute; Urban Institute; WRAP)

Clinton and welfare reform. In 1996, amid the deficit politics of the era and after two vetoes, President Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act — "ending welfare as we know it." It abolished AFDC (a 61-year-old entitlement), replaced it with TANF block grants, and imposed time limits and work requirements. It passed with strong Republican and substantial Democratic support. A Democratic president cutting a program for the poor — the squeeze has never belonged to one party.

The sequester. In 2011, House Republicans refused to raise the debt ceiling — with debt driven substantially by the Bush tax cuts, two wars, and the Great Recession — without matching spending cuts. The resulting Budget Control Act created a "supercommittee" to find $1.2 trillion in savings, enforced by automatic across-the-board cuts ("sequestration") if it failed. It failed. The sequester hit in March 2013: Head Start slots eliminated (~57,000 children), housing vouchers cut (~70,000), research grants slashed, along with defense. President Obama signed the BCA, and his negotiating team proposed the sequester trigger design — assuming it was too painful to ever take effect. (CBPP; Bipartisan Policy Center)

The one-step: OBBBA. The One Big Beautiful Bill Act (July 2025) reduced federal tax revenue by $4.5 trillion over ten years while cutting $1.4 trillion in spending. The parallel the script draws comes from the Center for American Progress's analysis of official JCT and CBO data: the tax cuts flowing to the top 1 percent of earners total approximately $1 trillion over the decade — roughly equal to the Medicaid cuts (~$911 billion per KFF/CBO; ~$1 trillion per CAP). CBO estimates the health provisions will leave 10 million more Americans uninsured by 2034. The top 1 percent gain more than $50,000 per year on average; Americans earning under $15,000 see taxes rise. (CAP: "$1 Trillion in Medicaid Cuts — $1 Trillion in Tax Giveaways"; FactCheck.org; Bipartisan Policy Center; CRFB)

The "starve the beast" strategy. The two-step has a name, coined by conservatives themselves: "starve the beast" — the theory that cutting taxes first would force spending cuts later by creating deficits. Economist Bruce Bartlett, a Reagan policy adviser, has documented the strategy's history and its failure: in practice, tax cuts didn't restrain spending; they just grew deficits. The OBBBA's same-bill structure abandoned the sequencing entirely. (Bartlett, "Starve the Beast: Origins and Development of a Budgetary Metaphor")

The counterpoint. Defenders of the OBBBA structure argue that pairing tax cuts with spending reductions is more fiscally honest than the old two-step — at least the trade is visible and voted on together. Cato characterizes the Medicaid changes as slowing spending growth (from $1.025T to $864B annually by 2035) rather than absolute cuts, and emphasizes work requirements as welfare reform rather than benefit cuts. The CBO's bottom line either way: 10 million more uninsured, and $3.4 trillion added to deficits — the spending cuts offset less than a third of the tax cuts. (Cato; Penn Wharton)

Related Civic Minute segments: One Direction (Tax History), The Napkin (Tax History), Same Dollar Different Tax (Tax History). Related PM scripts: Medicaid and the Big Beautiful Bill, The 50-Year Experiment.