Congressional Budget and Tax Update
The proposed federal budget and its potential implications are currently a focal point in Washington. Ongoing discussions in Congress center on the future of the Tax Cuts and Jobs Act (TCJA), which is set to expire next year unless Congress acts to extend it. Republican lawmakers are considering whether to make its provisions permanent or to develop a revised version through the reconciliation process.
Current indications suggest differing approaches between the legislative chambers. The House of Representatives appears to favor a more fiscally conservative extension of the TCJA. Conversely, the Senate is reportedly considering treating the existing law as a baseline, potentially leading to the permanent enactment of its provisions and avoiding future expirations that could trigger tax increases.
It is worth noting that a small group of congressional members is presently formulating the legislative details. Despite the limited transparency at this stage, it is reasonable to expect that key elements of the TCJA, such as lower income tax rates and the higher estate and gift tax exemption, are likely to remain in place. The future of the state and local tax (SALT) deduction, however, remains uncertain.
Another significant aspect of the budget discussions involves potential adjustments to Medicaid. While proposals for cuts to the program have surfaced, a substantial reduction is challenging. With 78 million recipients nationwide, compared to 72 million Social Security beneficiaries, Medicaid serves a considerable portion of the electorate. Consequently, significant cuts would likely face strong opposition.
However, Medicaid is currently experiencing another challenge: a considerable delay in supplemental payments to hospitals. This slowdown is likely attributable to government staffing reductions and heightened scrutiny to prevent fraud. The resulting financial strain is compelling hospitals to implement cost-cutting measures, including staff reductions and decreased procurement of medical supplies.
These operational changes within hospitals could have broad implications for healthcare access, potentially leading to longer waiting times for medical procedures and, in more severe cases, increased mortality. Should the payment delays persist, hospitals may be compelled to limit services for Medicaid patients, except in emergency situations where treatment is legally mandated. Such a scenario could generate significant public dissatisfaction. Therefore, it is likely that the delays in Medicaid payments will eventually be resolved.
Please reach out to your Wealth Manager with questions.your wealth plan and Social Security.
Weekly Commentary
Wealth Planning Commentary – May 5, 2025
Mallon FitzPatrick
Congressional Budget and Tax Update
The proposed federal budget and its potential implications are currently a focal point in Washington. Ongoing discussions in Congress center on the future of the Tax Cuts and Jobs Act (TCJA), which is set to expire next year unless Congress acts to extend it. Republican lawmakers are considering whether to make its provisions permanent or to develop a revised version through the reconciliation process.
Current indications suggest differing approaches between the legislative chambers. The House of Representatives appears to favor a more fiscally conservative extension of the TCJA. Conversely, the Senate is reportedly considering treating the existing law as a baseline, potentially leading to the permanent enactment of its provisions and avoiding future expirations that could trigger tax increases.
It is worth noting that a small group of congressional members is presently formulating the legislative details. Despite the limited transparency at this stage, it is reasonable to expect that key elements of the TCJA, such as lower income tax rates and the higher estate and gift tax exemption, are likely to remain in place. The future of the state and local tax (SALT) deduction, however, remains uncertain.
Another significant aspect of the budget discussions involves potential adjustments to Medicaid. While proposals for cuts to the program have surfaced, a substantial reduction is challenging. With 78 million recipients nationwide, compared to 72 million Social Security beneficiaries, Medicaid serves a considerable portion of the electorate. Consequently, significant cuts would likely face strong opposition.
However, Medicaid is currently experiencing another challenge: a considerable delay in supplemental payments to hospitals. This slowdown is likely attributable to government staffing reductions and heightened scrutiny to prevent fraud. The resulting financial strain is compelling hospitals to implement cost-cutting measures, including staff reductions and decreased procurement of medical supplies.
These operational changes within hospitals could have broad implications for healthcare access, potentially leading to longer waiting times for medical procedures and, in more severe cases, increased mortality. Should the payment delays persist, hospitals may be compelled to limit services for Medicaid patients, except in emergency situations where treatment is legally mandated. Such a scenario could generate significant public dissatisfaction. Therefore, it is likely that the delays in Medicaid payments will eventually be resolved.
Please reach out to your Wealth Manager with questions.your wealth plan and Social Security.
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