Make Hollywood Great Again? Donald Trump Wants Tax Subsidies for Movie Making

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0:17From the opinion pages of The Wall Street Journal, this is Potomac Watch. After Republican reforms in the One Big Beautiful Bill Act, data show food stamp enrollment down by about 13 percent, or nearly 6 million recipients. But Democrats are already pushing to undo the GOP's changes. Plus, President Trump calls for federal subsidies for Hollywood movie producers. Welcome, I'm Kyle Peterson with The Wall Street Journal. We're joined today by columnists Alicia Finley and Kim Strassel. The most recent numbers on the SNAP program, the Supplemental Nutrition Assistance Program, often called food stamps, show about 36.6 million recipients in May, which is down significantly from 42.2 million in May of 2025.

1:09Alicia, give us a sense of what changes to the program have produced this, and what's your read of the lessons that Republicans can take away? There were a few changes, and I would actually call them quite modest, that resulted in this reduction to finally we're back to the pre-pandemic levels of enrollment. We should have actually gotten back there several years ago. But there were various reasons why they didn't. And one reason why food stamps ballooned during the pandemic and then still didn't decline, even as unemployment declined, is because states didn't have an incentive to actually police their roles and pare back people who are ineligible or because of their incomes or for other reasons.

1:53And they applied and received waivers from the Biden administration to enforce the work requirements, which had been temporarily waived, by the way, during the pandemic emergency. So what the GOP bill last summer did was first, It toughened or strengthened the work requirements by extending them to parents with children over the age of 13, as well as adults ages 55 to 64, and veterans and homeless people. So that was one component of it. The second component was that it ended or banned these waivers that the Biden administration had provided to states to suspend the work requirements for these able-bodied people.

2:42And mind you, these do not apply to disabled people. It's only the able-bodied, otherwise healthy people. And so it's banned these waivers. As of the third quarter of last year, 15 states had applied the waivers to suspend the work requirements. Now, the third thing that the bill did was put states on the hook for a share of the benefits if they had improper error payment rates over 6%. 6 % was about the pre-pandemic average, but the improper payment rate actually ballooned again during the pandemic and was about 10.6 % as of last year. This kind of reform gave states an incentive to start policing their roles again, verifying eligibility and incomes so people who weren't eligible or aren't eligible do not receive the benefits.

3:40To underline that point about the improper payment rate or the error rates, Kim, the way the food stamp program has historically been structured, the benefits bill is paid by the federal government, is paid by Uncle Sam. And so to my mind, that doesn't give states that are managing the programs much of an incentive to really put energy and resources into running it well. You can see that in some of these error rates, roughly 20 states last year, improper payment rates over 10 percent. Alaska, something closer to 23 percent. And it's true that an error, an improper payment that does not necessarily mean fraud or even somebody who is getting benefits who is not eligible for them.

4:24Sometimes that can mean missing paperwork or paperwork, a form, an eligibility form that has information that was not filled out on it. And the information is supposed to be filled out. On the other hand, holy cow, if this were a private enterprise, you can imagine Democrats calling the CEOs up in front of Congress to rake them over the coals. What do you mean you don't have proper paperwork for 10 or 15 or 20 percent of the money that is going out the door? And I think Republicans are on a pretty solid ground if they want to make the case that taxpayers deserve real accountability. Companies aside, could you imagine the outcry if states were paying this bill and they were the ones that were just handing over money, hand over fist in improper payments?

5:12I mean, I don't think their voters and taxpayers would like that or tolerate it for very long. And they wouldn't either because they'd be robbing themselves of money that they could be using for other more productive purposes. But that's the whole point, is that because the feds traditionally pay 100 percent of the benefit costs of SNAP, it's free money. And there is no incentive for the states until this bill came along to actually police any of this or to try hard to reduce that improper payments number. One of the things that is interesting here is that this provision is soon going to start kicking in and really hurting states.

5:56And now you're having all the whaling. I mean, now the whaling is really beginning to the extent that there's a, you know, the farm bill was just delayed in the Senate because Democrats and even some Republicans are demanding that there should be a delay of this state accountability for improper SNAP payments. And the GOP's farm bill actually offered a one-year reprieve. Democrats want an even longer one. I mean, this would be a terrible idea. Just this shouldn't be a very hard call, especially because, you know, some of these states like to argue that, well, the only reason that they have these improper payments is it's administrative errors, et cetera.

6:40That's bogus. I mean, if it was just like a computer messing up, you would expect there to be both overpayments and underpayments. It just so happens that almost all of the mistakes, all of the administrative errors are giving people benefits who don't deserve the benefits, are overpaying them or giving them too much. This is finally putting states on the hook to take a little bit of a stake in this to put some skin in the game. So this idea of delaying it at all is a terrible one, but says a little bit, too, about how poorly the GOP is handling the politics here, how they're running scared of it.

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8:22Alicia, why do you think Republicans are so shy about talking about these questions? I mean, I understand the criticism that they are getting, that they are taking food assistance away from needy people. But the work requirement on able-bodied adults, to my mind, wouldn't that be something that they could go to voters and defend as common sense? If you're not working or looking for work, you ought to have some nudge to do that before receiving this kind of taxpayer assistance and benefit. And what are the lessons do you think from these changes to the food stamp program that the GOP can take to other entitlement programs as we get even further into a budget pinch and difficulty of Congress making ends meet and the debt that keeps going up?

9:12Right. So I think one of the problems is just a lack of understanding how the policies work. Unfortunately, the Republicans just don't actually understand that the work requirements only apply to able bodied people and don't actually even apply to parents with kids under the age of 13. So the media likes to trot out all these examples about someone who is disabled or has a single mom with a young toddler at home who's going to lose benefits. And these are complete misdirection. The work requirements will not apply to these people. What's more is that the federal government has more than a dozen food assistance programs.

9:55This includes universal free school lunches and breakfasts for all low-income kids, including, by the way, during the summer months. Many blue states now offer these free school lunches and breakfast to all kids, not even those who are low income. And by the way, many kids don't even eat these school lunches, by the way. So it goes to tremendous waste. But there are kids starving because of this rollback or these tough and work requirements. I think Republicans, again, just feel are a little on the defensive because they just don't understand what they did, unfortunately. You mentioned Medicaid and how could similar reforms be applied to Medicaid.

10:39One, I think the lesson here is states need to be held accountable. Arguably, actually, Medicaid holds the states more accountable than food stamps because they at least have to pay some share of the benefits or payments that go out. For instance, that is most states for the traditional Medicaid population that was covered before Obamacare, and we're talking like disabled people as well as pregnant women and such, about 50 to 70 percent of the cost for the Obamacare population. And these are the able bodied, healthy working age adults. They only have to pay 10 percent of the costs. And so the result is that states really have an incentive, one, to spend more on these Obamacare population because every dollar they spend, they get nine dollars from the federal government.

11:32And so they have an incentive to spend more on them than even the people who the program was initially intended to benefit, namely the disabled and these pregnant women with young kids. The second problem with this is that states don't have an incentive to police the rules, verify eligibility, or for that matter, ensure that payments to providers are actually not excessive. I mean, we've seen in Minnesota and other states, basically the states are just handing out money without actually verifying or doing any due diligence about who these clinical providers are, whether it be providers for housing assistance that now Medicaid covers in many states or food assistance or these autism behavioral APA, which is applied behavioral therapy for autism kids.

12:26states are just handing out money to these providers. A big reason is because they don't have to foot most of the bill. So I think the lesson here is that we need to hold states more accountable, give them more skin in the game. And you'd probably see the cost decline dramatically in the Medicaid program. Hang tight. We'll be right back after one more break. Congress has talked about permitting reform for decades. Now it's time to actually do it and secure our affordable energy future. Pass permitting reform now. Paid for by the American Petroleum Institute. Don't forget, you can reach the latest episode of Potomac Watch anytime.

13:07Just ask your smart speaker. Play the Opinion Potomac Watch podcast. From the Opinion pages of The Wall Street Journal, this is Potomac Watch. Let's turn to President Trump's call this week for industrial policy for Hollywood. Kim, this is the subject of your column on Friday under the headline, Make Mark Ruffalo Great Again. And to lay some of the groundwork, President Trump apparently had a nice meeting with Hollywood legend John Voight. And one result of that was a true social post. President Trump said, John and many others in the industry are suggesting we do federal tax incentives in order to make our movie and television production business great again.

13:52He went on to say that what we watch on the silver screen should be made in what was once the movie and motion picture capital of the world, unquote. Kim, what do you make of this idea? It's a terrible idea. And by the way, that headline, just want to make clear, was entirely tongue in cheek. I don't necessarily want to make the actor who plays the Incredible Hulk greater than he already is. But look, why is this discussion coming about? The share of films that are shot outside the United States has been increasing. And that is partly because of some industry-wide changes, you know, the growth of streaming, lower cost productions, etc.

14:41Filmmakers no longer need huge production companies or necessarily A-list stars to get some attention. Movie ticket sales have also been falling, and that makes it more challenging for studios to make money. And there's a lot of countries outside the United States that offer very generous incentives or better environments to try to lure production companies there. And, you know, those have been successful in some ways. So, you know, the U.S. motion picture and video industry has lost about 106 ,000 jobs just over the last four years, a huge chunk of them from the California Los Angeles area. The California delegation in particular, Democrats have been on a big tear to get a federal tax incentive to try to lower production to basically jump into this race to the subsidy bottom with other jurisdictions and lure production back to the state.

15:41Gavin Newsom actually put forward a proposal last year that would cost federal taxpayers about$7.5 billion annually. That now seems to be something similar to that, that the president is jumping on board as well. It's an absolutely terrible idea. It's a federal subsidy for Tinseltown. It completely ignores the real problems here, which, for instance, in California are enormously high costs. And Screen Actor Guild and Writer Guild strikes that happen constantly. And just generally a crummy business environment for, you know, shooting a movie. Who wants to shoot a movie in California when you can shoot one in New Zealand?

16:26Like, it's not hard science, right? This is this is an easy call. The answer should be to make California more broadly adopt some reforms that quit making everybody leave its state, not just production and studio executives, etc. But instead, we're having a conversation about the federal tax payer rushing essentially to California's bad management rescue. Yet there's something revealing here, Alicia, I think, about the impeccable logic of industrial policy. And this is just mirrored. An industry will come to Washington, D.C. and say we're having problems. Some of those might be related to simply changing times, changing consumer preferences, changing technology.

17:12Some of them might be related to self-inflicted problems in the industry or in the states that the industry is operating in, bad policies in places like California. But the ask at the White House is, can you help me? Can the federal government somehow help me? And often these days, it seems to be the result is some kind of tariff policy, the steel industry, for example. But it's hard to figure out how tariff could help Hollywood. And so here we have a Hollywood legend coming into the White House. And the result is President Trump calling for industrial policy for Hollywood. There are so many industries that the Trump administration has tried to make interventions on behalf of in the economy.

17:56Why not Tinseltown? Trump at one point had raised or floated the idea of placing a tariff on foreign movies. And I'm not even sure how that would work. And I think he was advised that it wouldn't work. And so he's now come around to this idea that has, as Kim explained, has been backed by California Governor Gavin Newsom, as well as his impeachment nemesis, Adam Schiff and others. And I would include that, by the way, the paradigm mounts guidance CEO, David Ellison, went to Washington to lobby for a film production tax incentive. And he's kind of tried to do his own conservative makeover. But I would point out I would not call David Ellison a conservative, even if he's tried to steer maybe CBS in a more moderate direction.

18:47He donated to use a Biden donor. And so you've got a lot of pressure from the industry to do something about these quote-unquote job losses. As Kim has really well explained, the job losses are caused by many self-inflicted wounds, in part California policies. You've also, as you point out, there's increased competition, particularly from lower cost budget prediction. I mean, I have a friend who's actually shooting a film this weekend and it's extremely low cost and it just doesn't need many. It doesn't need many crew members or a big set. You can do that nowadays. And so streamers can pick it up.

19:29Streamers can pick up these lower cost productions cheap and that's putting pressure on the big studios. And that's also probably encouraging some consolidation in the industry. But none of these problems are going to be solved by another subsidy. I mean, we've seen that in terms of the chip making, right? In 2022, where Congress threw about$50 billion worth of quote-unquote subsidies, loan guarantees, grants at the chip making industry to make more chips in America. In fact, jobs have continued to bleed in the U.S., chipmaking jobs since then, in part because other countries have thrown their own subsidies at the industry, but also because just technological changes, companies are becoming more efficient and such.

20:16So it actually hasn't revived necessarily chipmaking in the U.S. And so I don't think these Hollywood subsidies are going to make any difference. To some extent, maybe they'll allow more big cost productions to be filmed in the U.S. But I don't know why we should be doing any favors for this particular industry. I think it's a horrible precedent. And especially it's just politically mind boggling, given that most of these celebrities and producers are Democratic donors. Kim, this is a bad idea for all the aforementioned reasons, but sometimes that doesn't stop the politicians in Washington. And one question as we look at the midterms and the likely Democrat access in the House, maybe increasingly, it seems, opportunity for Democrats to take the Senate.

21:06One question has been, what are Democrats going to try to do in Congress if they regain that power? And an obvious answer is investigate everything. Send so many subpoenas, you can't keep track of them anymore. But on the legislative front, what do you make of this as a potential for them to see an opportunity to cut some kind of a deal with President Trump? And on that point, let's listen to a clip of California's Republican gubernatorial candidate, Steve Hilton, on Fox News this week endorsing the idea. I can say I strongly agree with the president and Adam Schiff. And the reason for that, Bill, is I know a lot of people watching may not be huge fans of Hollywood when we think of the big celebrities and some of their views.

21:51But actually, imagine if you go to the movies and you stay through the end credits, all those names, you've got the names of the stars at the top. But then you've got hundreds and hundreds of names that scroll. Those are the jobs we're talking about. electricians and drivers and set builders and carpenters and the hair and makeup artists and the drivers. There's so many jobs, blue collar, working class jobs associated with the entertainment industry. They're all going to other states and especially other countries because they've got better incentives. Kim, what do you make of that? I mean, is there a prospect potentially if Democrats retake Congress of some kind of deal making between them and President Trump?

22:31And maybe this would be one element of it. If there is a future rapprochement between Democrats and Donald Trump in one area where everyone can decide that they're going to get along, it's going to be the one thing that Democrats exist to do, which unfortunately Republicans exist increasingly exist to do, which is spend money together. Right. And and this is what they understand. It's remarkable to sit and watch Gavin Newsom, who has made a full time profession out of trolling Donald Trump, you know, coming out to praise him and this idea. Adam Schiff, who helped lead both of the prior two impeachments against Donald Trump, coming out to say, you know, this is a great idea.

23:12Let's all work together and, you know, bring the magic back to movie town America. This is the thing to always remember about Donald Trump. I'm so amazed that Democrats didn't twig to this earlier, like when he was in his first office is the man loves to make deals, right? And what's the area where you can maybe get him to make some deals, just more deficit spending. I understand what motivates the president to make this proposal. I mean, part of it is that he actually likes Hollywood and likes TV stuff. I mean, he's had cameo appearances and movies and he's had his own TV show, et cetera. So he's kind of just enamored of that whole world.

23:57It's very in keeping with Donald Trump. He very deeply feels that it's some sort of, you know, a shame that America isn't leading the world in moviemaking, that, you know, Hollywood should be number one. And, you know, this is part of the whole make America great again thing. But the worry here is that this is precedent setting in that when Democrats come in, yes, they're going to just investigate the heck out of them, but they're going to be looking for places where maybe they can lure Republicans in to do some policy they want. Some of that will be by bashing on Republicans for those kind of entitlement reforms, seeing if they can't pressure them to water it down, roll some of it back.

24:41But some of it is just going to be like, hey, here's one thing where we can all get along and it's to spend more money. And we saw that Republicans did it when Joe Biden was the president. Alicia was just talking about that dreadful Chips Act that was obviously passed with some Republican support, that whole bipartisan infrastructure bill where they just shoveled tens of billions of dollars out the door. This is going to be the area, going to be the central focus for Democrats. And I view this as a model of what may be to come. Thank you, Kim and Alicia. Thank you all for listening. You can email us at pwpodcast at wsj.com.

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