Federal Power, Local Consequences: A 100-Day Policy Review, Part 2
Summary
President Trump’s return to office has brought sweeping change across nearly every corner of the federal government. In Part One of our 100-day policy review, we tracked how early executive actions reshaped key domestic areas like education, healthcare, and infrastructure—and how those shifts are playing out across Pennsylvania.
This week, we’re continuing that sweep. From arts funding to AI, tariffs to taxes, we’re breaking down what’s changed since January, what hasn’t, and what these federal priorities mean for state and local governments, institutions, and residents.
This list is formatted in order of our blog posts. You can find them here.
Arts & Culture
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In early 2025, the Trump administration announced plans to rescind over $1 billion in funding for arts and public media, including eliminating support for the Corporation for Public Broadcasting, NPR, and PBS. The rationale cited concerns over perceived “ideological bias” and a desire to refocus spending on “core federal responsibilities”.
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Pennsylvania’s cultural institutions, such as libraries, museums, and after-school arts programs, rely heavily on federal support. Organizations like PA Humanities, which supports civic engagement and youth programs, faced significant challenges when their general operating grant from the National Endowment for the Humanities (NEH) was abruptly terminated, representing 60% of their annual budget.
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Without federal backing, organizations are shifting toward private fundraising, corporate sponsorships, or state-level partnerships—none of which provide the same stability or reach. For Pennsylvania’s creative economy, the loss of predictable federal funding may shrink access to arts programming and reduce employment in the sector. Philadelphians may see fewer neighborhood-level arts programs, increased ticket prices, and reduced free public access to cultural spaces.
Pennsylvania officials, including Governor Josh Shapiro, have pledged to maintain commitments to diversity, equity, and inclusion in education despite federal pullbacks. However, advocates warn that the loss of federal oversight could deepen disparities for students in under-resourced communities. As political battles over curriculum and equity intensify at the state level, the stakes for local decision-making in education will only grow.
Tax
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In February, President Trump proposed eliminating federal income taxes for individuals earning under $150,000, scrapping taxes on Social Security benefits and gratuities, and instituting large-scale tax cuts for corporations. Commerce Secretary Howard Lutnick confirmed the administration’s goal to abolish income taxes for most Americans, suggesting that tariffs on imports could replace lost revenue.
While the state is actively working to strengthen the Medicaid system—including increasing 2024 reimbursements to Managed Care Organizations (MCOs) to stabilize provider networks and address inflationary cost pressures—these gains could be undermined by federal caps. The recent adjustments were specifically designed to:
Sustain provider participation by offsetting rising labor and operational costs.
Maintain critical access to behavioral health, maternal health, and primary care services.
Support rural hospitals and safety-net institutions facing financial fragility.
Encourage investment in community-based care and preventative models.
Knowledge Base:
Expansion: Medicaid expansion, a key provision of the Affordable Care Act (ACA), allows states to expand Medicaid coverage to low-income adults with incomes up to 138% of the federal poverty level, increasing access to healthcare for previously uninsured individuals.
Proposed federal changes would threaten these objectives by:
Jeopardizing home- and community-based services, particularly for seniors and individuals with disabilities.
Undermining rural hospital solvency, especially in areas already struggling to attract healthcare professionals.
Disrupting behavioral health and substance use treatment systems, many of which are dependent on Medicaid expansion.
Reducing provider participation, as capped rates may no longer cover basic service delivery costs.
Straining workforce pipelines, by creating financial instability for agencies that serve as clinical training sites.
During recent Pennsylvania Health and Human Services budget hearings, several Republican senators raised concerns about the state’s ability to maintain solvency for rural hospitals and healthcare providers. They emphasized the growing crisis in rural healthcare—pointing to provider shortages and ongoing hospital closures as urgent challenges. Their comments reflected deep concern about how proposed funding changes could further erode access to care in their districts, underscoring a bipartisan recognition of Medicaid’s critical role in sustaining rural health systems and ensuring quality care statewide.
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While the income tax cuts may benefit many Pennsylvania households in the short term, the long-term consequences are less clear. Reduced federal revenue could impact funding for healthcare, education, housing, and public safety programs that Pennsylvania depends on. Additionally, state tax systems—especially in cities like Philadelphia—could feel pressure to backfill cuts in federal support.
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The administration’s FY25 budget resolution advanced with reconciliation instructions for tax changes totaling more than $5 trillion over 10 years. The House has already introduced legislation to eliminate income taxes for lower earners and accelerate corporate rate reductions. Deficit projections have surged, and Senate negotiations remain ongoing.
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Pennsylvania policymakers are watching closely. Any reduction in federal funds will likely translate to tighter state budgets. Nonprofits, school districts, and healthcare providers may bear the brunt as formula-based grants and entitlement reimbursements shrink. State leaders may need to reevaluate their own tax structure to compensate for lost federal dollars, raising equity and capacity questions.
Artificial Intelligence
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Executive Order 14179, issued in January, directed federal agencies to remove what the administration called “ideological constraints” on AI development. The order frames AI as a strategic asset for national security and economic competitiveness—and specifically instructs agencies to roll back any guidance perceived as limiting innovation.
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Pennsylvania’s higher education institutions, AI startups, and advanced manufacturing sector have welcomed expanded research opportunities. However, the removal of ethical review guidelines raises concerns about accountability, equity, and workforce impact. Without clear protections, Black and brown communities—often already over-surveilled or underrepresented in datasets—may be most vulnerable to misuse or exclusion in AI systems.
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Agencies have begun rescinding previous AI frameworks, and the Department of Commerce has withdrawn guidance on algorithmic fairness. The administration has shifted AI grant programs to emphasize defense, surveillance, and private-sector deployment.
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Pennsylvania’s research community may benefit from an influx of funding but will need to navigate a less regulated landscape. Cities like Philadelphia may also face pressure to adopt AI tools—like facial recognition or predictive analytics—without sufficient guardrails. Local leaders and advocacy groups are beginning to call for municipal-level AI policy to protect civil liberties and ensure equitable implementation.
Tariffs
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The administration launched new national security investigations into critical supply chains—beginning with pharmaceuticals and computer chips—and signaled a return to protectionist trade policies. Trump has long argued that the U.S. must “reclaim its supply chains” from China, Mexico, and other trading partners.
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Pennsylvania’s manufacturing sector is already navigating global disruptions. Increased tariffs on imported materials, such as steel, aluminum, or semiconductors, could raise production costs and reduce international competitiveness. For agriculture and produce importers, tariffs on Mexican goods could lead to price spikes at grocery stores, especially in urban food deserts.
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The administration imposed a 21% tariff on Mexican tomatoes and raised tariffs on Chinese goods to 125% across multiple categories. Retaliatory measures from foreign governments have begun to materialize, raising concerns about sustained trade volatility.
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Manufacturers, distributors, and port operations in Philadelphia are reevaluating their procurement and export strategies.
DOGE
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Established in early 2025 and led by Elon Musk, the Department of Government Efficiency (DOGE) aimed to streamline federal operations, targeting a $2 trillion reduction in government spending. DOGE was granted extensive access to federal systems, including databases containing sensitive information, and was involved in overseeing grant approvals and personnel decisions across multiple agencies.
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Pennsylvania, with its significant federal workforce and numerous contractors, experienced widespread layoffs and program disruptions. The abrupt changes affected local economies, particularly in areas reliant on federal employment and services.
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Despite initial promises, DOGE’s cost-cutting measures have yielded limited savings. Reports indicate that federal spending has increased by $154 billion compared to the same period in 2024, with mandatory expenditures like Social Security and Medicare remaining untouched.
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Legal challenges against DOGE are mounting, focusing on its authority and the legality of its actions. The department’s future effectiveness and existence may hinge on the outcomes of these lawsuits and congressional scrutiny.
Medicare & Medicaid
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The Trump administration signaled intentions to reform Medicare and Medicaid by promoting privatization and implementing block grants. These changes aimed to reduce federal spending and increase state control over healthcare programs.
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Pennsylvania, with over 3 million Medicaid enrollees, faced potential funding reductions and increased administrative burdens. Healthcare providers expressed concerns about the sustainability of services, particularly for vulnerable populations.
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The administration has moved forward with plans to expand Medicare Advantage and implement Medicaid block grants. These initiatives have sparked debates about the potential impacts on coverage quality and accessibility.
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State officials and healthcare advocates are closely monitoring the reforms, assessing their implications for patient care and state budgets. Legal challenges and policy adjustments are anticipated as the programs evolve.
Education (Revisited)
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In March 2025, President Trump signed an executive order initiating the dismantling of the Department of Education, proposing the transfer of its functions to other federal agencies and increased state control over education policies.
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Pennsylvania, which receives substantial federal education funding, faced uncertainties regarding the continuation of programs like Title I and Pell Grants. Philadelphia’s public schools, already grappling with budget constraints, anticipated further challenges in maintaining educational services.
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The administration has advanced efforts to privatize federal student loans and impose restrictions on educational content, including bans on certain curricula deemed “anti-American.”
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The proposed changes have prompted legal actions and debates over federal versus state control of education. Stakeholders are advocating for clarity and stability to ensure the continuity of educational services and protections for students.
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