Stand up for facts and support PolitiFact.
Now is your chance to go on the record as supporting trusted, factual information by joining PolitiFact’s Truth Squad. Contributions or gifts to PolitiFact, which is part of the 501(c)(3) nonprofit Poynter Institute, are tax deductible.
I would like to contribute
Targeting Wisconsin as one of the four most critical states in the 2020 presidential election, the Priorities USA Super PAC announced it plans to spend at least $300,000 per week on digital ads in the state.
"I paid into Medicare my whole life," says the farmer identified as "Bill A." "Trump wants to cut it just to pay for tax breaks to billionaires."
Adds Mona A.: "It is just the rich wanting to be richer, and the rest of us are just going to have to deal with it."
Priorities USA has dubbed its push the "Let’s Be Honest" campaign.
Let’s see if their claim on billionaire tax breaks is worthy of the slogan.
The "tax breaks" in the ad are referencing the Tax Cuts and Jobs Act, an overhaul of the tax code signed into law by Trump in December 2017, according to a supporting document provided by Priorities USA.
The Medicare "cut" refers to changes in Trump’s proposed budget.
We’ll examine those elements separately and then see if it’s reasonable to connect them.
The ad implies much — or all — of the tax cut referenced is going to billionaires.
The tax cut does provide tax breaks for billionaires. And lots of other people too.
The cuts are projected to total $1.8 trillion over the next decade, according to the Tax Foundation, a think tank that generally has a pro-business leaning.
In 2018, about 80% of taxpayers had a tax cut due to the new law, according to the Urban Institute-Brookings Institution Tax Policy Center, an independent group that models the effects of tax legislation.
The savings do skew toward high-income earners. The center said 21% of the total tax savings went to the highest-earning 1% of taxpayers in 2018, more than the total for the bottom 60%.
By 2025, that gap is projected to increase, with 25% of the tax savings going to the top 1%.
The increases are larger for higher-income earners on a percentage basis as well — not just in raw dollars. In 2025, the top 1% are expected to see after-tax income grow by 2.9%, compared to 1.4% or less for the bottom 80% of income earners.
That’s largely in line with estimates from other groups, such as the Tax Foundation.
We couldn’t find a breakdown of exactly how much of that money is going to billionaires. The Tax Policy Center stopped its analysis at 0.1% of highest income earners. That group includes about 140,000 tax returns, and by 2025 will receive about 11% of the total tax savings. (Annual income for that group is currently at least $6.9 million, according to the IRS.)
Meanwhile, Forbes reported there are 607 billionaires in the U.S. in 2019. That is less than half of the top 0.001% of income earners.
Suffice it to say, the vast majority of the money is not going to billionaires.
The Medicare cost reduction under Trump’s budget is expected to be roughly $600 billion over the next 10 years, when compared to current spending levels, according to the nonpartisan Congressional Budget Office.
The bipartisan Committee for a Responsible Federal Budget, largely agrees, putting the number at $575 billion.
There are some important caveats.
About 85% of the savings comes from reductions in what Medicare pays to providers, according to the Committee for a Responsible Federal Budget.
"Those cuts would primarily reduce what Medicare pays providers, and I would not expect them to have negative effects on Medicare beneficiaries," Matt Fiedler, an economics fellow at the left-leaning Brookings Institution, said in an email. "The budget’s Medicare proposals are also, in my view, largely sensible policy."
Medicare changes aren’t exactly an original idea, either — Trump is actually building on proposals from Democratic President Barack Obama. Obama’s last budget proposed trimming Medicare spending by a pretty similar amount: $420 billion over 10 years.
That brings us to the root of the issue — is it fair to connect proposed Medicare changes to tax cuts from two years ago?
In October 2017, PolitiFact National gave U.S. Sen. Chuck Schumer a Half True rating for claiming that Republicans were proposing "to pay for their giant tax cut to the rich by gutting Medicare and Medicaid."
We noted at the time that drawing a direct link between specific tax cuts and Medicare-Medicaid cuts was exaggerated since they were separate pieces of legislation.
The Priorities USA ad makes a different claim, starting with the fact it refers to just Medicare (not Medicare and Medicaid) and, instead of "the rich," it refers specifically to billionaires. In addition, we’re now dealing with the final version of the tax cuts and a firm budget proposal.
That said, the ad does connect the two pieces of legislation in the way Schumer did, which we noted is problematic.
Finally, Fiedler notes that — broadly speaking — cutting taxes does require other adjustments be made.
"Tax cuts aren’t a free lunch: lower tax revenue will lead to higher deficits, which will require either future tax increases or spending cuts," he said in an email. "Medicare is a substantial fraction of federal spending, so it’s certainly possible that Medicare would bear a portion of those future adjustments, but it’s impossible to say with any precision where those adjustments would ultimately fall."
The Priorities USA web ad said Trump is cutting Medicare to fund tax breaks for billionaires.
Any large-scale tax cuts reduces revenue and can require cuts elsewhere in the federal budget, where Medicare is a high-cost piece.
But the ad over-reaches in directly linking tax cuts signed into law almost two years ago and Medicare changes that are still in the works.
Referring to the tax cuts simply as "to billionaires" is a stretch as well. The cuts do disproportionately benefit the wealthy, but a very small portion of the money actually goes to billionaires.
We rate this claim Mostly False.
YouTube, Priorities USA, Bill & Mona, July 23, 2019
Priorities USA, PUSA Digital "Bill & Mona – Medicare" (:30) Backup, provided July 24, 2019
PolitiFact, Are Republicans paying for tax cuts with reductions in Medicare, Medicaid?, Oct. 4, 2017
Tax Policy Center, Distributional Analysis of the Conference Agreement for the Tax Cuts and Jobs Act, Dec. 18, 2017
Tax Foundation, The Distributional Impact of the Tax Cuts and Jobs Act over the Next Decade, June 2018
Congressional Budget Office, Proposals Affecting Medicare—CBO’s Estimate of the President’s Fiscal Year 2020 Budget, May 9, 2019
Committee for a Responsible Fedefeidral Budget, Does the President's Budget Slash Medicare by $845 Billion?, March 12, 2019
Email exchange with Matt Fiedler, fellow, Economic Studies Program, Brookings Institution, July 24, 2019
The Washington Post, Fact Checker, Is Trump cutting Medicare to give tax breaks to billionaires?, July 24, 2019
Interview and email exchange with Tricia Neuman, director, Program on Medicare Policy, Kaiser Family Foundation, July 24, 2019
IRS, Individual Income Tax Shares, Tax Year 2016, Winter 2019
Forbes, Billionaires: The richest people in the world, March 5, 2019
Read About Our Process
In a world of wild talk and fake news, help us stand up for the facts.