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The president’s budget reflects the priorities of big-money donors and Tea Party extremists, who insure that many members of Congress will only face intra-Republican competition during primaries in gerrymandered districts, not swing voters who took a chance on Trump in the general election. (Photo: Shannon Stapleton / Reuters)

President Trump’s Budget Kicks People When They’re Down

The president’s budget was released Tuesday and a House budget resolution will follow in June. Though the two plans will undoubtedly differ in certain areas—the president’s budget includes infrastructure and paid parental leave proposals that aren’t guaranteed to be taken up by the House—both will seek deep cuts to programs helping vulnerable citizens while calling for immense tax cuts for the wealthy.

The proposed budget and tax cuts come on the heels of the House effort to repeal the Affordable Care Act (ACA) and replace it with their American Health Care Act (AHCA), which the Center on Budget and Policy Priorities noted would be “the largest transfer in modern U.S. history from low- and moderate-income people to the very wealthy,” should it become law. The White House is banking on this repeal passing, assuming $250 billion in supposed savings in the president’s budget.

Voters who believed Trump’s assurances that he opposed cuts to Social Security, Medicare, and Medicaid may be surprised to learn that he wants to gut Medicaid (not just reversing the expansion embedded in the ACA, but essentially doubling the cuts in Medicaid called for in the House-passed AHCA), cut Social Security Disability Insurance, and hasten the exhaustion of the Medicare trust fund. Funding for Medicaid and the Children’s Health Insurance Program (CHIP) would be slashed by $616 billion over the 10-year budget window, as Medicaid would be transformed from a coverage guarantee for low-income families and nursing home residents who have exhausted their savings into block grants or similar programs constrained by per capita spending limits at a time when Baby Boomers are aging into their peak Alzheimer’s years. The Medicaid cuts would do nothing to restrain health cost inflation but would leave sick kids and frail seniors to fend for themselves.

The president calls for unspecified cuts to non-defense discretionary spending of two percent per year. In addition to this magic asterisk of unspecified cuts, the president’s budget singles out cuts to some particular programs and agencies, notably the Supplemental Nutrition Assistance Program (SNAP). The cuts to SNAP and other welfare programs add up to $272 billion. Besides being cruel, these cuts would completely neutralize any near-term job-creation effect that might occur due to the budget’s $200 billion increase in infrastructure spending. These cuts would also completely dwarf the $19 billion over 10 years budgeted for paid parental leave, pure window dressing which will get more attention than it deserves. Agencies seeing cuts of 20 percent or more include the departments of agriculture, labor, state, and, but-of-course, the Environmental Protection Agency, which would lose almost a third of its funding.

With these non-defense cuts, the White House claims to balance the budget by 2027, but only by assuming a 3 percent real growth rate in the economy from 2020 on. What makes their 3 percent growth assumptions even more galling is that they are supposedly driven by their forthcoming “tax reform,” yet they invoke another magic asterisk in assuming this “reform” will be revenue-neutral, making their estimated growth rate highly unlikely.

Budget and tax cuts are central tenets of modern Republicanism, but the former shouldn’t be viewed as simply a way for Republicans to achieve the latter. The GOP has largely abandoned any pretense of fiscal rectitude, and many mean-spirited cuts in the president’s budget, such as eliminating the Social Services Block Grant that funds popular programs like Meals on Wheels, don’t free up much money. Why do it, then? Is it a form of medieval bloodletting—if it hurts, it must be good for the body politic? As Mitt Romney’s leaked comment about the “47 percent” attests, a focus on stopping government “handouts” in the name of improving the moral fiber of poor people seems to make wealthy donors feel better about seeking handouts for themselves in the form of steeply regressive tax cuts. This explains why the president’s budget goes out of its way to pick on vulnerable groups such as disabled Americans, whether or not the cuts yield significant cost savings.

The president’s budget reflects the priorities of big-money donors and Tea Party extremists, who insure that many members of Congress will only face intra-Republican competition during primaries in gerrymandered districts, not swing voters who took a chance on Trump in the general election. Focus groups conducted since the election found that voters, if anything, expressed stronger-than-usual support for programs addressing the needs of low-income families, disabled workers, and other vulnerable Americans. Paul Ryan’s claim that the safety net has become a too-comfortable “hammock” may play well with certain audiences, but voters elected a president who promised jobs, not one planning deep cuts to popular programs.

In addition to currying favor with donors and ideologues, the president’s budget is an invitation for bloviation by Very Serious People who have spent years recycling the same line about the need to cut entitlements and stand up to seniors. In this view, rather than reneging on campaign promises, the president doesn’t go far enough by sparing Social Security retirement benefits and not going directly after Medicare. Don’t buy it. The Congressional Progressive Caucus Budget demonstrates that it’s possible to fund existing social insurance programs as well as new initiatives such as infrastructure spending in a fiscally responsible way. Self-styled budget hawks tend to ignore the fact that our only real budget problem is high and rising health costs—which ACA repeal only threatens to exacerbate. Restraining excess health cost growth in ways that leave the vast majority of Americans better off will take hard work, not facile cost-shifting.

Quicker savings can come from trimming wasteful and inequitable tax expenditures, such as the favorable treatment of investment earnings, which are typically omitted from pie charts wielded in budget debates that point the finger only at Social Security, Medicare, and Medicaid. These tax expenditures, which cost more than all domestic discretionary spending, are the real “entitlements” we should be worried about.


© 2021 Economic Policy Institute

Monique Morrissey

Monique Morrissey is a staff economist at the Economic Policy Institute, where she focuses on retirement security, executive compensation, the Federal Reserve, and financial markets.

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