After the president’s budget was released on Monday, House Budget Committee Chairman John Yarmuth (D-KY) called it “A Budget for a Declining America.” Unfortunately, that might be an understatement.
The Trump administration’s Fiscal Year 2020 budget proposal is a compilation of the worst ideas to come out of the Republican Party over the last decade. It would dismantle public investments that lay the foundation for economic growth, resulting in less innovation. It would shred the social safety net, resulting in more poverty. It would rip away access to affordable health care, resulting in more disease. It would cut taxes for the rich, resulting in more income inequality. It would bloat the defense budget, resulting in more wasteful spending. And all this would add up to a higher national debt than the policies in President Obama’s final budget proposal.
The most harmful aspect of Trump’s fiscal blueprint is its scheme for gutting investments in public goods that are core responsibilities of government. The administration proposes to reduce the share of gross domestic product devoted to non-defense (domestic) discretionary spending – the category of the budget that is annually appropriated by Congress and includes most federal spending on infrastructure, education, and scientific research – by more than half over the next decade. The result is deep cuts to all three of these important investments that provide the foundation for long-term economic growth.
The budget claims to commit an “additional $200 billion” to infrastructure development over the next decade, yet the Department of Transportation and other departments responsible for infrastructure investment would see their FY 2020 budgets cut by roughly 20% from FY 2019 levels. The Department of Education is hit as well, with a 10% cut below 2019 levels. Although some education programs may be in need of reform, such a sizable net spending cut will likely leave the U.S. with a less-educated workforce and lower economic growth over time.
The Trump administration also seeks to double down on its anti-science agenda with deep cuts to scientific research and development. Although the administration did not provide all the details necessary for a deep analysis, the documents released Monday suggest potential cuts to total science funding of over 15% relative to 2019 levels. The cuts are particularly aggressive in the energy sector, where Trump proposes to cut the budget for Department of Energy’s Office of Science by 17%, the Office of Energy Efficiency and Renewable Energy by 86%, and entirely eliminate DoE’s Advanced Research Projects Agency-Energy that provides the research foundation for the market to develop transformative energy solutions.
In addition to those cuts, the administration proposes to hamstring the Environmental Protection Agency by slashing its budget 30% next year, making it easier for polluters to contaminate our air and water. These cuts include a two-thirds reduction in funding for EPA’s science and energy programs. The administration’s proposed cuts to the EPA and DoE would unilaterally disarm America in the fight against global climate change, likely increasing the costs of worsening natural disasters down the line. The National Institutes of Health would also face an 11% cut, which would constrain the development of treatments and cures that could help people in the millions, reduce future health care costs by billions, and increase economic output by trillions over time.
Throughout the next decade, the administration also proposes deep and growing cuts to the social safety net, including Temporary Assistance for Needy Families, aka TANF or welfare (13%); Medicaid and the Affordable Care Act (20%); the Supplemental Nutrition Assistance Program, aka SNAP or Food Stamps (over 30%); and more. Such draconian cuts to these important programs would rob Americans of their access to affordable health care, increase poverty, and jeopardize economic security for our most vulnerable citizens.
Ironically, one of the few redeeming qualities of Trump’s budget is the one for which he’s taking the most heat from many Democrats and the media: changes to Medicare. On its surface, the Trump budget appears to include $845 billion of cuts to Medicare spending. But this figure is misleading: roughly $270 billion of these cuts are not cuts at all – rather, the Trump administration proposes to take programs that have little to do with Medicare and moved them off Medicare’s books into the Department of Health and Human Service’s general budget.
Moreover, several of the real cuts to Medicare are much-needed reforms to payment structures similar to earlier proposals from the Obama administration. Taken together, Trump’s proposed reforms are actually more likely to reduce out-of-pocket costs for Medicare beneficiaries rather than increase them. If left-wing Democrats can’t tolerate even these modest changes, they should abandon their hopes for a single-payer health care system, which would require adopting similar policies on a far greater scale to make it economically viable.
So what does Trump propose to do with all these massive budgetary savings? The first is to double down on the GOP’s 2017 tax cuts, which the administration would make permanent. The budget folds the resulting revenue losses into the administration’s baseline scenario instead of counting them as proposed policy changes. This budgetary trickery makes the 10-year cost of the administration’s proposed tax cuts appear almost a trillion dollars less than they truly are relative to current law.
Trump also calls for inexplicably large increases in defense spending. Between 2017 and 2019, lawmakers increased annual Pentagon spending by 14% ($74 billion). The administration now wants to increase spending in 2020 by an additional 8% over 2019 levels. Absent a plausible strategic rationale, such a dramatic escalation is a recipe for wasteful spending. Even worse, the administration wants to circumvent caps on defense spending by laundering the money through the Overseas Contingency Operations Account (OCO). OCO was originally meant to fund the wars in Iraq and Afghanistan, but in recent years it’s become a slush fund for unrelated defense spending that could not fit under bipartisan spending caps agreed to in 2011. Trump now proposes to more than double the size of OCO in just one year, further reducing the share of OCO spending being used for its original intent.
But perhaps the most outlandish aspect of the Trump budget is the audacious economic growth rates it assumes. The White House projects GDP to be more than 13% higher at the end of the next decade than does the non-partisan Congressional Budget Office in its baseline scenario. By comparison, President Obama’s final budget projected an end-of-the-decade GDP that was only 3% higher than CBO’s baseline estimate.
Here’s the kicker: despite its comical economic assumptions and severe spending cuts, Trump’s budget would still result in a bigger national debt than would have resulted from President Obama’s final budget proposal. When the Obama administration published its FY 2017 budget, the Office of Management and Budget projected that debt held by the public would equal 75.3% of GDP in 2026 (the final year covered by that budget). Under the Trump administration’s latest budget proposal, OMB projects a debt-to-GDP ratio of 77.7% in the same year.
Thankfully, this budget, like most of Trump’s legislative proposals, is going nowhere anytime soon. But voters and the media should keep it in mind the next time Republicans disingenuously try to weaponize deficits against sensible progressive priorities. Once again, the Trump administration has just provided further evidence that while one political party may be able to claim a record of fiscal responsibility, the GOP certainly cannot.