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The current U.S. federal agenda has unleashed significant rollbacks of social safety net protections. The “One Big Beautiful Bill Act” (OBBBA or H.R. 1), signed into law on July 4, 2025, by U.S. President Donald Trump, enshrined sweeping cuts to Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and other low-income support programs—shifting costs and burdens onto states and beneficiaries, imposing work-oriented eligibility hurdles, and raising the risk that millions will lose access to basic healthcare, food aid, and assistance. These changes reflect a structural narrowing of the social protection safety net in America, prioritizing tax cuts and defense and border spending over resources for the most vulnerable. They also signal to citizens what their government is and is not willing to do for them.
Social protection programs—particularly noncontributory social transfers such as food assistance, cash transfers, and unemployment benefits—are a central pillar of the U.S. welfare state, as they are in many countries. These programs provide not only a protective function against poverty, but also a promotive one, enabling investments in health, education, and upward mobility.
The impacts of such programs extend beyond material well-being. As our recent article in the Annual Review of Resource Economics underscores, social protection programs directly shape vertical relationships between citizens and their governments as well as horizontal ones between citizens themselves. Reductions in federal social protection, then, have implications not only for economic security but also for governance, social cohesion, and even democratic stability. Moreover, because states are the frontline implementers of many federally funded programs, federal retrenchment cascades downward, forcing states like California into difficult fiscal, political, and administrative trade-offs.
Reductions in federal social protection . . . have implications not only for economic security but also for governance, social cohesion, and even democratic stability.
In the wake of H.R. 1, the recent extended government shutdown, and the potential for similar future disruptions in government services, it is worth considering social protection from national, state, and local perspectives, including the implications for California and other states tasked with implementing such programming.
Social and Political Implications of Reducing Investment in Social Protection
Reductions in social protection reverberate far beyond household finances. Our research points to four major pathways by which reductions in social protection will generate social and political consequences: through their effects on institutional trust, civic participation, intergroup relations, and stability.
Erosion of the Social Contract
Social transfers are a visible expression of government capacity and legitimacy in both poor and rich nations. They signal that political leaders and institutions can meet citizens’ basic needs, fostering trust in the state and compliance with the rule of law. In the United States, the Trump administration’s ongoing efforts to roll back social protection programs risk eroding that trust. As benefits are reduced and eligibility tightened, citizens may begin to question whether their government can uphold its side of the social contract. This weakening of institutional trust—already fragile among those who feel anxious about their relative economic and social position—poses broader risks for effective and accountable governance.
Political Engagement and Participation
A robust body of research demonstrates that state-sponsored transfer programs—especially those that build civic skills or increase contact with public institutions, such as by requiring beneficiaries to obtain formal identification (for example, a driver’s license that also facilitates voter registration)—can strengthen democratic participation. Across diverse contexts (including Europe, Latin America, and the United States), studies find that receiving government benefits increases voter turnout and political engagement, especially among vulnerable or marginalized populations. Conversely, welfare retrenchments have been shown to dampen civic participation by weakening both people’s financial security and their belief that they can make a difference in politics. As the United States now moves to scale back social protections, these findings underscore the risk that such cuts will not only deepen inequality, but also weaken the foundations of democratic inclusion.
Receiving government benefits increases voter turnout and political engagement, especially among vulnerable or marginalized populations.
Polarization and Resentment Between Groups
Social transfers influence not only how people relate to the state but also how they relate to each other. By reducing inequality and reinforcing a baseline of shared security, government benefits can contribute to stronger social cohesion. When benefits are cut back, however, communities often see rising distrust and division. Research shows that when support is viewed as poorly targeted or out of reach for those who need it most, jealousy and resentment can take root quickly. Feelings of relative deprivation powerfully shape perceptions of fairness: Those who believe they are being left behind tend to become more politically alienated, less trusting of government, and more resentful.
Yet social transfers can also yield the opposite dynamic—encouraging acceptance of racial and ethnic diversity; more supportive attitudes toward immigrants; improved relationships with friends, family, and colleagues; and greater trust in fellow community members. In the United States today, reductions in social protection risk intensifying grievances along ethnic and racial lines as communities compete over shrinking resources—undermining the very foundations of social cohesion that a strong safety net is designed to uphold.
Increased Risk of Social Instability
Where transfers mitigate grievances, cuts can fuel unrest. International evidence in Africa, Asia, and the Americas indicates that poorly designed or abruptly withdrawn transfers can increase crime, insecurity, and even violence. The same possibility holds for the United States: Reductions could heighten instability in already fragile localities—particularly those struggling with inequality and unemployment.
Implications for State Governments
Because federal social protection programs like Medicaid, SNAP, and Temporary Assistance for Needy Families (TANF) are often administered at the state level, reductions place states like California at the center of adjustment. The consequences play out along three main axes: fiscal, administrative, and political.
Fiscal Pressures
Federal retrenchment effectively shifts costs downward. States must choose between three options: filling gaps using their own revenues, rationing benefits through stricter eligibility criteria, or reducing services outright. Both wealthy and poor states will face serious constraints. In theory, wealthier states with progressive tax bases may seem better positioned to backfill federal reductions. In practice, however, many of these states—including California—serve large beneficiary populations, already devote substantial resources to program administration, and are faced with limitations on their ability to leverage provider taxes. This leaves even high-fiscal-capacity states with little room to maneuver. The California Medical Association has described Medicaid cuts from H.R. 1 as “a direct attack on California’s health care system” with potentially “catastrophic” consequences.
For poorer states that are heavily reliant on federal aid, like Louisiana and Mississippi, the situation is even more acute. States that rely heavily on federal transfers often lack the fiscal capacity to replace lost funding, making deeper cuts almost unavoidable. The result is a widening gap in social protection across states, with state-level fiscal capacity rather than national standards largely determining access.
Administrative Strain and Policy Design Trade-Offs
Reductions complicate program administration. States must redesign eligibility and targeting systems, retrain caseworkers, and manage the fallout of narrower safety nets. Design choices such as adding work requirements, shortening benefit durations, or tightening documentation rules often increase administrative burdens for both officials and recipients and may disproportionately lower the participation of the most needy. Research indicates that such features affect not only material outcomes but also political attitudes: Intrusive conditionalities can erode trust in government, while accessible designs like those that facilitate information-sharing and citizen feedback can strengthen it. As a result, the imperative for states to rapidly and effectively adjust to federal retrenchment heightens the risk that residents will attribute service deterioration to state government performance—and that potential beneficiaries will blame their states for cuts originating in Washington.
The imperative for states to rapidly and effectively adjust to federal retrenchment heightens the risk that residents will attribute service deterioration to state government performance—and that potential beneficiaries will blame their states for cuts originating in Washington.
Political Accountability and Attribution
An enduring challenge in social policy is attribution: Do citizens credit federal or state actors for programs? Evidence shows that beneficiaries often credit the entity most visible in program administration. For example, one study found that social safety net programs led to increased trust toward local politicians who helped administer the program, but not toward national politicians, who adopted and financed the program. When federal funding is cut, but states remain the face of delivery, state governments risk being blamed for reductions they did not originate. This misattribution can erode support for state leaders, complicating accountability relationships.
Conversely, states may seize the moment to reshape programs in line with their ideological commitments. For leaders favoring small-government conservatism, H.R. 1’s federal retrenchment offers political cover to pursue leaner and more conditional welfare regimes—tightening eligibility rules, expanding work and behavioral requirements, increasing administrative burdens, or channeling scarce resources toward ideologically preferred initiatives. In this way, federal cuts become a rationale for restructuring the safety net even as overall service provision declines. The era since the adoption of TANF in 1996 illustrates how such dynamics unfold: Federal retrenchment enabled states to redirect funds toward partisan priorities, erect administrative barriers, and significantly narrow access to assistance. H.R. 1 is poised to replicate these patterns on a far larger scale, particularly in Medicaid and other foundational federal safety-net programs.
Broader Implications
The retrenchment of federal social protection programs in the United States carries consequences far beyond immediate material losses. Cuts to welfare threaten to erode institutional trust, intensify polarization, and destabilize communities. They also risk deepening geographic inequality. Because states vary dramatically in their fiscal capacity—and because wealthier states, though constrained, retain more room to partially backfill federal cuts—the contraction in services will be far sharper in poorer, aid-dependent states. Benefit cuts also open the door for states to reshape safety-net programs according to their ideological commitments. The result is a national safety net that fragments along state lines, with residents’ access to essential services increasingly shaped by state-level resources and ideological priorities rather than uniform federal standards.
Because states vary dramatically in their fiscal capacity . . . the contraction in services will be far sharper in poorer, aid-dependent states.
For state governments, these reductions create a double bind. They are tasked with administering leaner, more administratively complex programs, while potentially shouldering political blame for decisions made in Washington. This dynamic undermines the cooperative federalism that has long underpinned the U.S. welfare state.
The reverberations of federal social protection cuts extend across multiple levels of governance. For citizens, they weaken the social contract, erode trust in institutions, and heighten social tensions. For states, they generate fiscal strain, administrative burden, and political vulnerability. Because social transfers shape both vertical relationships between citizens and the state and horizontal ties within communities, their retrenchment threatens not only economic security but also the very fabric of democracy and social cohesion. Without these safeguards, ongoing reductions risk deepening inequality and institutional fragility—both within and across states.
