The Republican party is facing a challenging situation with rising deficits and expiring tax cuts. Extending tax cuts would substantially increase the national debt. Together, there’s growing internal resistance to conventional spending cuts, particularly those affecting social programs, as the party aims to represent the working class.The proposed reductions to Medicaid, which provides healthcare for low-income individuals, have become a central point of contention.

The House of Representatives passed a version of Donald Trump’s One Big Beautiful Bill Act, which reflects older strategies by cutting revenue by nearly $4tn over 10 years. To offset this, the bill proposes spending cuts, including an $800bn reduction in Medicaid funding, according to the Congressional Budget office. Reports indicate that the Senate is considering even more considerable Medicaid cuts,as noted in The New York Times.

Several Republican members of Congress and conservative commentators, including Senator Josh Hawley, have voiced strong opposition to these cuts. Hawley has described the proposed cuts as “both morally wrong and politically suicidal,” as stated on his Senate website.

The core issue is the nation’s fiscal crisis, where increasing interest payments on deficits and debt are surpassing defense spending, further exacerbating the debt. Addressing this requires Congress to either significantly raise taxes, drastically cut spending, or adopt a balanced approach.

The traditional Republican strategy of cutting spending to finance larger tax cuts, which disproportionately benefits higher-income earners while increasing deficits, is considered both unethical and politically unsustainable. However, ignoring the need for fiscal discipline and pursuing unaffordable tax cuts is equally problematic. Allowing the country to become insolvent would negatively impact the working class.

Conservative populists should advocate for fiscal obligation while pushing for different priorities. Spending cuts should be directed towards deficit reduction, not tax cuts.Tax rates should increase for those least affected by spending cuts and most capable of affording it.

Medicaid should be considered for spending cuts. Its costs have increased more rapidly than Medicare and Social Security over the past 25 years. While other income security programs have seen reduced spending, Medicaid’s share of GDP has doubled, based on data from the Congressional Budget Office.

The essential issue lies in Medicaid’s matching-funds structure. States determine their coverage parameters and receive matching federal funds. This incentivizes states to over-allocate their budgets to Medicaid spending. A 2013 study in the New England Journal of Medicine found that Medicaid coverage “generated no important improvements in measured physical health outcomes in the first 2 years, but it did increase use of healthcare services.”

The “provider tax” exemplifies this issue. States increase medicaid provider fees and then implement taxes to recoup the higher payments. While seemingly pointless, this allows states to draw more federal funding. This practice does not enhance patient care.

Constraining this practice would likely affect benefits, as fewer resources would be available for healthcare. Though, opposing all reductions is not a principled stance. The question is whether such loopholes should exist solely to benefit constituents, implying that more spending is always superior.

“both morally wrong and politically suicidal.”

To genuinely represent workers’ interests, politicians should demand fiscal responsibility and shared burden. Modest Medicaid spending reductions, combined with slight tax increases for top earners, would be a suitable starting point. Both trump and Treasury secretary Scott Bessent have expressed openness to raising taxes on high earners, a position that a true populist would support.