The Congressional Republican Budget Plan Will Hurt Americans’ Wallets

Congressional Republicans are drafting text and marking up budget reconciliation legislation to extend expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA) in a plan that would disproportionately benefit the wealthy. If passed, this reconciliation bill would increase the cost of living for everyday Americans while the Trump administration’s unprecedented tariff policies raise the price of groceries, clothes, and more.

Specifically, to offset some of the costs of this tax giveaway, congressional Republicans are proposing program and funding cuts that would drive up household costs like energy, reduce Americans’ health care access and affordability, and raise the cost of groceries—all while lowering Americans’ wages.

1. Raising the cost of housing and transportation

Congressional tax proposals are expected to permanently increase the federal government budget deficit, which would increase inflation and borrowing costs while also lowering wages, harming households across the economy. For Americans seeking a mortgage, this increase in the deficit could raise household borrowing costs, resulting in the median home loan increasing by an estimated $600 to $1,240 per year. Higher government debt would also lead to lower wages for American households. An April 2025 Congressional Budget Office analysis of the tax plan found that it would cause lower long-run economic activity, leaving Americans poorer on average. The resulting lower future real wages would more than fully cancel out any financial gain from tax cuts to American households on average.

Additionally, the proposed budget plan would increase the cost of household utility bills, further adding to the housing affordability issues that burden more than 42 million households. Congressional Republicans are targeting cuts to clean energy tax credits and funding for federal energy programs originally implemented under the Inflation Reduction Act through the reconciliation process. A full repeal of the technology-neutral tax credits meant to spur the fast and affordable development of renewable energy projects is expected to increase annual household electricity costs nationwide by an average of $113 in 2026—including by more than $200 in some states. Consumer-facing tax credits help Americans save money, with the energy-efficient home improvement credit resulting in an average of $130 in annual savings for the 2.3 million families that used it in 2023. Moreover, homeownership costs are expected to rise this year due to Trump’s tariffs, with estimated increases of 11 percent, or $106, for home insurance premiums and $10,900 for average homebuilding costs.

Transportation costs are also set to increase, particularly for car owners. Most Americans rely on driving to get to work or have a car available for personal use, yet higher consumer borrowing costs from the deficit-financed plan could increase interest on a typical car loan by $60 per year. In addition, under a scenario where all clean energy tax credits are repealed and the Trump administration weakens emissions regulations such as clean vehicle standards, gasoline prices could jump up to 37 cents per gallon in 2035.

2. Increasing health care costs and reducing access

Proposed spending cuts would also make health care coverage more expensive and less accessible for millions of Americans. Specifically, the current reconciliation package being considered by Congress would likely enact the deepest Medicaid cuts in the program’s history. For those covered by Medicaid, the imposition of work reporting requirements could reduce access to health insurance, drastically increasing out-of-pocket costs as people become uninsured due to red tape. Cuts to federal matching funding below the current 90 percent for the Medicaid expansion population could force at least 12 states to eliminate their expansion, causing additional coverage losses.

Congressional Republicans are also considering letting the Affordable Care Act’s (ACA) enhanced premium tax credits expire. As a result, about 20 million people would see steep marketplace premium increases in 2026, leading to nearly 4 million more people becoming uninsured by 2027.

If Medicaid expansions are rolled back and enhanced premium tax credits expire, ACA marketplace premiums will increase by thousands of dollars each year. For example, a middle-class family of four with an annual income of $129,000 in Charlotte, North Carolina, could see their annual marketplace premium costs increase by nearly $9,500. Importantly, coverage losses would also cost tens of thousands of lives across the country each year.

3. Driving up food costs

Cuts to food assistance could make it even more expensive for Americans to feed their families. Supplemental Nutrition Assistance Program (SNAP) benefits help more than 42 million people put food on their tables every month. Restricting access to this already limited assistance by cutting benefits directly, shifting benefit costs to states short on cash, or implementing burdensome and complex paperwork requirements would result in these families paying more during each trip to the grocery store—or even going hungry just to make ends meet. Depending on how these cuts are enacted, Center for American Progress analysis indicates that among the 42 million families on SNAP, an average household could lose more than $1,200 per year in benefits to assist with food and groceries.*

Notably, these cost increases would be in addition to the damaging effects of the Trump administration’s tariffs and subsequent retaliation from foreign governments. The tariff policies announced—as of April 15—would raise food prices by nearly 3 percent, which, alongside increased costs for clothing and other consumer goods, would generate an estimated loss equivalent to $4,900 per year for the typical U.S. household.

Conclusion

The average American will see their long-term real incomes decline as a result of the congressional Republicans’ reconciliation plan, while likely also experiencing higher energy bills, inflation, and interest rates. This is all occurring against the backdrop of the Trump administration’s tariffs and upheaval of America’s trading systems, which will increase the cost of consumer items such as electronics, apparel, and imported groceries. With Americans worried about the cost of living, the congressional Republicans’ actions will only drive costs higher.

The authors would like to thank Emily Gee, Bobby Kogan, Shannon Baker-Branstetter, Sean Casey, Ryan Mulholland, Kyle Ross, Natasha Murphy, Andrea Ducas, Lily Roberts, Alia Hidayat, Steve Bonitatibus, and Kierra Jones of the Center for American Progress for their contributions to this column.

* Authors’ note: This estimate was derived from applying an across-the-board reduction of 30 percent in federal spending on SNAP to the average monthly household benefit of $351.84 in January 2025, which was multiplied by 12 to estimate an annual total. The 30 percent across-the-board reduction is an illustrative assumption applied in distributional modeling of the proposed budget plan by Yale Budget Lab that is consistent with the text of the budget resolution passed by the House of Representatives. This text included instructions for the House Committee on Agriculture, which oversees SNAP, to propose spending cuts of at least $230 billion and a general additional $500 billion in unspecified cuts. Both were assumed to be implemented over a nine-year period, and a fraction of the latter unspecified cuts were also assumed to be applied to spending cuts by the Committee on Agriculture.