This interview originally aired on "In the Moment" on SDPB Radio.
On July 4, President Donald Trump signed the One Big Beautiful Bill into law.
The budget package reshapes federal policy and implements the president's domestic agenda. Our Dakota Political Junkies dive into what that means for South Dakota, particularly the cuts to Medicaid.
Lisa Hager, Ph.D., is an associate professor of political science at South Dakota State University. David Wiltse, Ph.D., is a professor of political science at SDSU.
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The following transcript was auto-generated and edited for clarity.
Lori Walsh:
What context do we need to understand before we really start talking about what's in it?
Lisa Hager:
I would say just the fact that there are a variety of different items in this particular bill, which of course then makes it an omnibus piece of legislation. And then how this is President Trump's domestic agenda, at least as of right now, which is really focused on trying to deliver on his campaign promises relating to cutting government spending.
Lori Walsh:
So Dave Wiltse, promises made, but some promises broken because the president also said he would not be cutting Medicaid, or many Republicans said they wouldn't and yet they are now.
David Wiltse:
Well, that's the legislative process. Obviously, when you're campaigning and when you're campaigning as someone who's not terribly policy-specific or -savvy, like President Trump is most of the time, legislative realities are going to hit you once you start negotiating with people in Congress.
So it's not at all surprising that some of these things like Medicaid, Medicare, and the like are going to be dialed back a little bit in terms of the promises. But getting back to this whole omnibus thing, we've made this shift, and Lisa can probably tell you more about this than I, as a Congressional scholar, but since the '90s, early 2000s, we've seen a change towards a lot of these really big bills.
But we're getting to a point where you have to spend so much political capital to get something through Congress that you are going to stuff every possible thing that you can in the legislation. And that's exactly what they tried to do here. And some of it got dialed back once it ran into issues with the Senate parliamentarian because of rules on appropriation and whether you can be subject or not to a filibuster, but that's the reality of it. It's a negotiation process and the president, in the end, probably got a lot more than he wanted than that we didn't want out of it.
Lori Walsh:
Yeah. Lisa, what do we need to understand about reconciliation as a process? Is it worth understanding how it works because it's going to be a thing that we'll be revisiting a lot in the future?
Are we going to be looking back and going, "Remember that one time when they did this big thing through the reconciliation process?" Because this is the first time I've heard of it, and that probably either means I wasn't paying attention to that aspect, or it means it got a lot more attention than it has in the past.
Lisa Hager:
I think it just speaks to this larger trend where we're seeing a variety of things happening that we're maybe not used to. And some of this does go back to what Dave was talking about, where we do try to have these larger pieces of legislation where we're packing a lot into them or where we're trying to use different processes in order to accomplish certain political goals. So we see this a lot, too, when we're looking at other budget-oriented legislation, where we see a lot of things trying to go in them. And then throughout the course of the policy policymaking process, moving from the two chambers, you start to see things coming out along the way.
Also, getting to what Dave was talking about, just the policymaking process in general where you may think that you're going to be able to get something, but then at the end of the day you don't necessarily end up getting that accomplished because you have all these members of Congress having a say at the end of the day.
Lori Walsh:
Yeah. All right, so let's talk a little bit about what's in it and how what's in it will impact South Dakotans.
Dr. Wiltse, where do you want to begin with something that is in this bill that will have an impact on many South Dakotans?
David Wiltse:
The first thing I would mention here is rural health care. One of the realities of rural health care in this country is our rural areas are much more dependent upon Medicaid than urban and suburban areas. So the cuts that we're going to be seeing by trimming back eligibility requirements, ramping up work requirements and the like, they're going to disproportionately hit rural areas, and South Dakota will be no exception to this.
The CBO, which gives a score on the budget ramifications of any given piece of legislation, estimated that about $150 billion will be cut from rural areas over the next 10 years because of these rural and eligibility changes.
Now, one of the things that happened in the Senate, which ramped up the costs of the Senate bill, was a $50 billion offset was negotiated, spearheaded largely by Senator Murkowski of Alaska. But that's only going to partly cover it. So in the end, what this is going to mean is a lot of people in rural areas are going to find themselves out of coverage, two, three years down the line. This is going to have a spillover effect on our rural hospitals because they are very dependent on Medicaid patients, and if they lose those patients, they'll be losing that funding. So we already have a crisis in South Dakota and other rural areas in our health care delivery and this is just going to exacerbate it.
Lori Walsh:
Yeah. Help me understand, Dr. Hager, why rural areas are more dependent upon Medicaid. Dave touched on a little bit there, but what else can you spin out just so people understand why is that happening? What is the nature of rural America that's connecting with that?
Lisa Hager:
So as far as Medicaid patients, typically you're going to be finding those folks who are low-income on Medicaid, but also those people who have become disabled in some shape or form.
And so I think then the question becomes what sorts of work opportunities are available in some of these areas if they are those who are deemed able to work under this new piece of legislation? And if they're not, are they then just ultimately losing care? And then are they trying to seek care at these rural facilities without health insurance, which just drives up the cost for these different providers to provide health care to these individuals. And then also just the fact that that drives up costs for everyone. So I think sometimes the impact of what that actually looks like remains to be seen, but typically when we see folks losing care, they're not always able to secure health insurance elsewhere. So it just ends up being more costly for these providers to provide them the care when they are actually seeking it.
Lori Walsh:
I see.
David Wiltse:
And let's be very clear on this. We're talking about people who for the most part are working, the working poor, and in rural areas, South Dakota and other places in the Midwest, you've got a lot of folks who are dependent upon Medicaid in some way, shape, or form, who are employed. They might not be fully employed. They could be partially employed. They could lose eligibility because of that or for any other number of reasons through these rule changes.
So this is not just something that's going to affect those who are out of work and those who are on the dole, so to speak.
Lori Walsh:
Yeah. All right. Okay. So rural health care, we'll be watching the implications of that. We know that voters approved a measure here in South Dakota to allow state lawmakers to impose their own work requirements, but we have a pretty high labor force participation already. We just learned that from Joe Santos and earlier this week.
So I guess I'm just trying to get my mind around the concept that people on Medicaid are not working, but yet we know the numbers in South Dakota that suggest we have very high employment and relatively high labor participation. Who does that leave? How do we measure the outcomes of this in rural South Dakota, is really my big question? Help me understand this.
David Wiltse:
We can look at any number of measures there. There's also a number of surveys, whether it be the General Social Survey, the Census Bureau, Bureau of Labor Statistics. We got all these government agencies and others gathering statistics on the proportion of people that are covered and these sorts of things. It is hard to measure sometimes, and especially in this case, we don't know exactly how these rules are going to be implemented. We don't know what the downstream effects are going to be.
And in this particular case, everything that I've read suggests that most of these rule changes are going to have effects downstream about a year and a half, two years at their earliest. So Republicans will be able to get through their midterm election in '26 and not have to deal with a lot of the fallout for this.
This will be something that future Congresses and future presidents are going to have to reckon with.
Lori Walsh:
All right. So Lisa, this gets to this idea that the Democrats say this legislation is immoral and they sound an alarm, then they're accused of really over dramatizing something. And then to Dave's point, for us to understand the, unless you're living it, unless you have lived experience, for us to understand what happens at the macro level, we have to wait months and maybe even years to see the impact of the policy.
Lisa Hager:
Correct.
Lori Walsh:
Okay.
Lisa Hager:
And I think this gets back to what Dave was talking about earlier where there are folks who are on Medicaid who are working in some capacity. And so I think it does make us have to wait and see what essentially happens there because I think the intent is if we get some of these folks who aren't currently working, or maybe are working but they could be working more because they're able-bodied, then that will get them off of Medicaid and then they will be possibly eligible, depending on their situation, for either Medicaid or health insurance through their employer.
Lori Walsh:
Right.
Lisa Hager:
But I think that's missing the mark in terms of what types of employment opportunities may be available for some folks in rural areas and possibly given some of their personal situations. Maybe they are working some, but they're also providing and caring for their children.
Lori Walsh:
Right.
Lisa Hager:
So I think some of this stuff, it remains to be seen what that looks like. So for Republicans, I think they can very easily talk about what their intentions are, that we're either forcing people to be working to qualify and this is what those requirements are, versus hopefully we'll transition them into being eligible for employer health insurance. But again, we don't know what that actually looks like. So when Democrats are sounding the alarm, Republicans can come back with their intention and making it play out in a few years is something that, or more like a couple years, a year and a half. That's where they both can be right.
Lori Walsh:
Right.
Lisa Hager:
But it helps the Republicans more than the Democrats at the moment.
Lori Walsh:
Yeah.
David Wiltse:
And we should think of this from the perspective of your average middle-aged, working-class voter. Some of the changes here are going to be affecting their coverage, if they're working and on some kind of Medicaid benefit. It's going to be affecting the CHIP programs across the states and the way that states are funding health insurance for children. It's also going to be affecting their parents' generation. So we just have to wait and see on all this. But in the end, everybody that pays attention to this in the public health realm is really concerned about the number of people who are going to be losing coverage.
Lori Walsh:
Yeah. All right. Rural health care, we're really watching the impact of that. Are there other areas that you see that we should mention that are really worth paying attention to? Lisa, let's start with you on that one.
Lisa Hager:
Yeah, I think the biggest thing is for me so far, looking at just who seems to be better off versus worse off with all of this. And so there's this discussion of primarily corporate America and those high-income earners being better off. And then of course those who are worse off is low-income Americans. And I think again, it boils down to will what the Republicans intend to have happen be beneficial? Will providing tax breaks to corporate America actually mean that there is this trickle-down effect where then they're able to create more jobs and some of these plans that they have in place will work as intended? I think, again, it's a wait-and-see.
Lori Walsh:
Well, shouldn't we know some of that because of the Reagan era? Shouldn't we have an understanding of whether this works?
David Wiltse:
Or the Bush tax cuts?
Lori Walsh:
Exactly.
Lisa Hager:
Right.
Lori Walsh:
Yeah.
David Wiltse:
Or Trump's tax cuts in 2017? We should.
Lori Walsh:
Let me ask it this way, what do we already know about the effectiveness of what I would call trickle-down economics? Because I'm a child of the '80s, and that's all you heard when you were growing up in the '80s was Reaganomics.
David Wiltse:
I think Joe [Santos] could answer this far better than neither of us, but for the most part, that whole mythology of trickle-down economics has never really panned out. We have gone through a couple periods now where we've lowered tax rates for folks across the board sometimes and we don't really see this surge of economic activity. We've also seen this in other countries around the world where they have tried using the same basic philosophy and theory that it's going to unleash economic activity, have a nicer environment for doing business, and overall revenues will go up, and it hasn't.
England went through a terrible crisis with this, and that's one of the reasons why Liz Truss only lasted for 45 days or whatever her prime ministry was. We do have some experience with this, and so far we haven't really seen the kind of growth that's been promised.
Lori Walsh:
I want to talk about the deficit as well because the Congressional Budget Office has said this will increase the deficit by 3.4 trillion in 10 years, or something like that. And the deficit again is that bathtub that's already overflowing as Joe Santos that uses the analogy. The bathtub is overflowing, and the faucet's still running.
That, if I've heard one thing from state political leaders about their concern, it's that they've been worried about how much the federal government is spending, and they need those cuts to happen, and that our state budget is tight and tight times are ahead, and yet here we are with another increase to the deficit to the tune of more than $3 trillion.
Lisa, how will that impact South Dakotans? Because certainly our political leaders have been sounding the alarm over our federal spending since I've been here.
Lisa Hager:
Right, so the federal deficit, they've had that clock running for a long time, that shows how much it's increasing by. I think the biggest issue with increasing the deficit and having these various cuts in place is that it just continues to make it where state and local leaders have to make some really tough choices regarding things.
And when it comes to the average South Dakotan, this is what's going to continue to raise interest rates and make it hard for folks to buy cars and to buy homes and whatnot. And so I think this is where we start to see your average voter really starting to feel the effects of this legislation.
Lori Walsh:
Yeah. Dave, what would you add to that?
David Wiltse:
Well, we've gone through my entire lifetime with this idea that Republicans are these deficit hawks, and trying to control the debt, and these sorts of things. And this has always been the party that's been most vociferous about this, yet administration after administration, nothing gets done.
It really is one of these things that unfortunately is just a talking point. And when it comes down to brass tacks, when the actual appropriations are made, nothing has really happened. Nothing's really changed except everyone, almost everyone, in the Congress now is just accepting that high deficits and the ever-growing debt is just a reality. And virtually every politician that has campaigned on bringing down the deficits has failed to deliver, with the possible exception of Bill Clinton, who working with the Republican Congress back in the mid 1990s actually managed to dial things down a little bit for a couple years, and then it just started growing again.
So this is just one of these perennial things. It's a talking point. It makes for good political speeches and appeals, but in the end, nothing really has changed.
Lori Walsh:
Yeah. Is it fair to say that the federal government's priorities have changed and we can see the evidence of that in this bill?
David Wiltse:
In some respects, yes. One of the big areas where spending is just surged is the Department of Homeland Security. People who have been paying attention to what's going on at DHS these last few months would know that they have been spending far more money than they have been appropriated in the last fiscal year, to the point where Secretary Noem was really going to be facing some tough questions from folks within Congress on this.
But this bit of legislation put a huge cash infusion, some one-time infusions to backfill a lot of this spending. And the appropriation for DHS over the next 10 years has just ballooned. So a lot of money being pumped into an area that, again, was one of Trump's big promises, and in that respect, it's a promise fulfilled.
Lori Walsh:
Yeah. Lisa, this is a silly question, but I'm going to ask it anyway. If you had a group of incoming freshmen and you sat them down and you said, "What are the essential functions of government?" Would they largely agree on what the essential government's functions of government are? Or would you see a partisanship where at the end of the class you could probably put some on the left and some on the right? Does our understanding of what government is for depend on our political leanings?
Lisa Hager:
I think it definitely does in today's society, given how politically polarized our two parties are. So just like Dave was talking about, this lowering the deficit, being a deficit hawk, that's something that's been a Republican talking point for a good long while. Memories are short, whether that's on purpose or accidentally, but they often tout what is essentially trickle-down economics with us knowing that that really didn't work as well as we had hoped.
So while we have Republicans really trying to cut some spending in certain areas, especially in those areas that relate to social safety nets, on the other hand, Democrats say, "But it's still important for government to take care of people." So I think that's one dividing line that I would see if I had that conversation with students. What is the role of government in caring for people? Do they engage in any of those kinds of things or is that something that's left up to others, whether that's nonprofits for those who are indigent or whether that's employers should provide health insurance, so on and so forth?
Lori Walsh:
Right. Yeah. All right. Any final thoughts about this bill and what we're watching for, or have we covered it? What do you think, parting shots, Dave?
David Wiltse:
I would say, in many respects, the details of this don't really matter. When it comes down to the politicking, when it comes down to the midterm campaign or the next presidential campaign, the way the parties are going to be able to really appeal to their core constituencies, the identity groups that make up their constituencies, the basis of their party, that's what's going to matter. And both parties have a lot to campaign on here, and it's really going to come down to how effectively they can really engage their base and really stir up those emotions that come with identity and get them out in the election, both in the midterm and in 2028.
