Trump’s Budget Proposal Isn’t Perfect, but It’s a Start

Michael D. Tanner

Our annual budget theater has now begun: President Trump has
released his proposed FY 2018 budget, and Congress has pronounced
it “dead on arrival.” This yearly ritual has become such a part of
Washington life that presidential budgets should probably be
delivered to Capitol Hill in a crepe-draped carriage drawn by six
black horses. Still, even if Trump’s budget is not going to become
law, it offers an important opportunity to reshape the fiscal
landscape.

Let’s start by giving credit where credit is due: Trump’s
proposal would reduce the growth in federal spending by $3.6
trillion over ten years, resulting in a balanced budget by 2027.
Yes, this projection relies on unrealistic levels of economic
growth and cuts that are never going to happen, but it still makes
Donald Trump the only president even to aspire to balancing the
budget since Bill Clinton in 2001.

In many ways, Trump’s plan shows that, like presidents before
him, he has discovered he can’t actually balance the budget simply
by eliminating “waste, fraud, and abuse.” The only way to truly
reduce federal spending is to reduce federal spending. And
that means cutting programs that are popular, supported by powerful
special interests, or both. Hence the screams of pain and
outrage.

For all its flaws, the
president’s plan could prompt a sorely needed conversation about
fiscal reform.

Trump’s budget challenges the Washington notion that, once
enacted, every program — no matter how unnecessary, ill
conceived, or unsuccessful — is forever sacrosanct. Trump
would eliminate such sacred cows as the Corporation for Public
Broadcasting, the National Endowment for the Arts, and the Legal
Services Corporation. He would significantly slash funding for the
Departments of Commerce and Energy. And he would shift education
funds to charter schools and school-choice efforts.

It’s not just Democratic or liberal oxen that would be gored by
this budget, either. Trump would also cut agricultural subsidies
near and dear to the hearts of red-state congressmen, and
corporate-welfare programs such as the Overseas Private Investment
Corporation (OPIC).

Much of the early criticism of Trump’s proposal has been focused
on its cuts to what is euphemistically called the “social safety
net.” Those cuts have generally been described as “savage” or
“devastating.” But we should recall but that they are just a sliver
of a welfare system that extends to more than 100 programs and
costs nearly $1 trillion in both federal and state funds each
year.

In particular, Trump would reduce Medicaid spending by roughly
$610 billion over ten years (on top of some $800 billion in cuts
that were part of the Obamacare-replacement bill that recently
passed the House) and $193 billion in reductions to the food-stamp
program.

It is important to understand that the Medicaid cuts are
reductions from the projected baseline, not from current spending
levels. That means that, even if Trump’s budget were to become law,
Medicaid would still spend more in ten years than it does today,
albeit less than was previously planned. Moreover, most of the
projected reductions wouldn’t take place until after 2020, meaning
they are less than solid. Still, the Medicaid cuts would
undoubtedly force states to make some tough decisions about whom to
cover and how. This is especially true of those states that have
expanded Medicaid under Obamacare, though states would also be
given more flexibility to experiment with better and more efficient
ways to deliver program services under the House’s health-care
bill.

As for food stamps, the cuts would be real, but spending on the
program has expanded exponentially in recent years. It essentially
doubled under President George W. Bush, and doubled again under
President Obama. Trump’s budget would basically return the program
to roughly the level of funding it received in the first year of
the Obama administration, not a year generally known as the Great
American Famine. With the Great Recession now in the rear-view
mirror and unemployment once again approaching pre-recession
levels, it is not unreasonable to reduce spending on such
counter-cyclical welfare programs.

If the Trump administration is making a mistake here, it is in
treating welfare cuts as a budgetary matter rather than attempting
wholesale reforms of a system that has failed to help poor people
escape poverty or become self-sufficient. It is hard to see how
Trump’s cuts to Medicaid and SNAP, or what are likely to be
ineffectual work requirements, will substantially change the
dynamics of a dysfunctional welfare system.

Moreover, the cuts to social programs might not have to be as
deep if the budget didn’t include some unnecessary spending
increases, including a $19 billion program for paid family leave.
In addition, Trump is seeking some $200 billion in new
infrastructure spending. That’s better than his campaign promise of
$1 trillion or more, but it still amounts to a wasteful pretext for
yet more legislative pork. Trump would also hike defense spending
by a hefty 4.6 percent, without any clear justification beyond
“more is better.” Spending restraint needs to apply to programs
Republicans like as much as it does to programs they hate.

Perhaps the biggest problem with Trump’s budget is its continued
failure to deal with the biggest drivers of our long-term debt:
Social Security and Medicare. Without a willingness to reform these
two programs, which together account for 38 percent of federal
spending, it will be impossible to stem the future tide of red
ink.

Trump’s budget will inevitably provoke a great deal of sound and
fury, most of it signifying nothing. There is about as much chance
of Congress’s passing his proposal as there is of his deleting his
Twitter account. But, if it sets a new baseline of discussion in
which we finally commit to restraining the size, scope, and cost of
government, it will prove invaluable nevertheless.

Michael
Tanner
is a senior fellow at the Cato Institute and the author
of Going for Broke: Deficits, Debt, and the Entitlement
Crisis
.

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