‘Any reduction in federal Medicaid spending would leave states with tough choices’: Musk's taking the chainsaw to federal budget has experts sounding the alarm

What does $1 trillion in cuts really mean?

What’s pinching the chain in Musk’s cuts is President Donald Trump’s recent round of tariffs.

The broad-sweeping tariffs, which have been temporarily placed on pause, have driven a wedge between his administration and the Tesla billionaire. Since Inauguration Day, DOGE has spearheaded layoffs across all departments of the federal government, leading to concerns that Musk is moving too fast and endangering services counted on by millions of Americans.

DOGE, and its cuts, have yet to be approved by Congress. But Musk and his team argue that federal spending has ballooned irresponsibly, claiming wasteful expenditures can easily absorb these cuts without hurting Americans' daily lives. Recent events, however, suggest the reality might be more complicated.

Cuts made by DOGE are impacting older adults particularly hard. Social Security offices, a vital resource for retirees managing their benefits, have seen significant staffing cuts, causing online systems to buckle and physical locations to become overwhelmed. Older Americans — many unfamiliar with digital platforms — now face hurdles to support. Retirees have flooded social media and news outlets venting their frustrations, suggesting Musk’s self-described “revolution” feels more like abandonment.

The cuts have also injected unpredictability into the stock market. Experts suggest Wall Street, already in turmoil over tariffs, might be underestimating the impact of the DOGE cuts, which could reduce consumer confidence.

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What if Medicare and Medicaid are on the chopping block?

Beyond these immediate impacts lies a deeper concern: Experts warn the math behind Musk’s $1 trillion cuts doesn't add up without significantly scaling back Medicare and Medicaid. They represent nearly a quarter of the federal budget.

If cuts are made to Medicare and Medicaid, millions could find their health coverage compromised or significantly reduced.

Currently, Medicare serves approximately 67 million Americans. Medicaid provides essential healthcare to roughly 72 million low-income individuals, including children, older adults in nursing homes and disabled Americans. Any substantial reduction in these programs would inevitably ripple across communities, straining hospitals and leaving countless families struggling to afford basic medical care.

Health policy experts have sounded the alarm for those reasons. According to a recent Kaiser Family Foundation report, cutting even a small percentage of Medicare or Medicaid could lead to thousands of healthcare facility closures, disproportionately affecting rural and underserved urban areas.

“Any reduction in federal Medicaid spending would leave states with tough choices about how to offset reductions through tax increases or cuts to other programs, like education,” Kaiser Family Foundation analysts concluded in a recent Medicaid brief studying the impacts of proposed Medicaid cuts. “If states are not able to offset the loss of federal funds with new taxes or reductions in other state spending, states would have to make cuts to their Medicaid programs.”

Public reaction

Public skepticism (and incredulity) underscore a fundamental tension between Musk’s economic vision and the gritty realities facing everyday Americans.

Economists widely acknowledge the need for fiscal responsibility and targeted spending cuts. However, Musk’s trillion-dollar gamble highlights crucial trade-offs between government size and service quality, forcing hard conversations about national priorities. As debates rage and details emerge, citizens must remain informed and engaged, understanding exactly what's at stake.