Commentary

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

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.