Trump budget sets new priorities

  • 16 March 2017
  • NormanL
Trump budget sets new priorities

The President's proposed budget has hit the streets, and it represents a big shift in spending priorities, including the proposed elmination of 19 federal agencies, and big cuts to others that grew fat and happy under the Obama administration:

The 54-page “America First” document, focused primarily on fiscal 2018, would boost the Defense Department and related programs at Energy by $54 billion, and Homeland Security by $2.8 billion. It would offset such increases by cutting the State Department and the U.S. Agency for International Development by $10.1 billion (28 percent) and the Environmental Protection Agency by $2.6 billion (31 percent). The latter cut would eliminate approximately 3,200 positions, according to the document.

The agency-by-agency plans include eliminating dozens of grant programs at the Education and Commerce departments—many of them related to climate change. And Trump would eliminate the following agencies:

The African Development Foundation; the Appalachian Regional Commission; the Chemical Safety Board; the Corporation for National and Community Service; the Corporation for Public Broadcasting; the Delta Regional Authority; the Denali Commission; the Institute of Museum and Library Services; the Inter-American Foundation; the U.S. Trade and Development Agency; the Legal Services Corporation; the National Endowment for the Arts; the National Endowment for the Humanities; the Neighborhood Reinvestment Corporation; the Northern Border Regional Commission; the Overseas Private Investment Corporation; the United States Institute of Peace; the United States Interagency Council on Homelessness; and the Woodrow Wilson International Center for Scholars.

Many of those agencies have been on the target lists of conservative budget hawks for many years.

You can read the Office of Management and Budget outline of the budget proposal here.

Speaking about the budget, OMB director Mick Mulvaney said:

Knowing what you know about the President, you could imagine what that budget would look like before you even see it, which is that there will be more money on defense -- $54 billion.  We could talk about more of that in a second.  There’s more money for enforcing security at the border.  There’s more money for enforcing laws on the books just generally.  Then there’s more money for things like private and public school choice

Conversely, since the President wanted to do that without adding to the already-projected $488 billion deficit in fiscal year 2018, there were reductions elsewhere to offset dollar for dollar, all of those increases.  So we say, plus-up the defense topline number by $54 billion.  You will, in other parts of the budget, find a corresponding $54 billion’s worth of reductions.  So the President accomplishes his priorities without adding to the deficit.  That’s not to say the balance of the budget is balanced next year.  It doesn’t.  We’ve simply not added to the deficit in order to accomplish these policies.

As a result, you’ll see reductions exactly where you would expect it from a President who just ran on an "America First" campaign.  You’ll see reductions in the State Department.  We’ll talk more about that in a second.  You’ll see reductions in the EPA.  In fact, you'll see reductions in many agencies as he tries to shrink the role of government, drive efficiencies, go after waste, duplicative programs, those types of things.  If he said it on the campaign, it’s in the budget.

The key takeaway: priorities have changed (upsetting the left no end). But the budget does not balance, nor does it represent a decrease in federal spending. For those concerned about the burgeoning national debt, this is a problem, because what the budget ignores is entitlement spending -- the biggest part of the budget, and the largest driver -- by far -- of federal outlays:

To this point, we've only been talking about discretionary spending, which accounts for only about one-third of the federal budget. The rest covers mandatory spending on Medicare, Social Security, and other entitlements along with interest on the debt. If Willie Sutton robbed banks because that's where the money was, any plan to seriously reduce government spending and debt service and thus hack away at the administrative state must confront entitlements. Trump has been unambiguous in saying that he doesn't want to touch Social Security or Medicare/Medicaid, which are already the two biggest-ticket items in the federal budget and will only grow over the coming years due to the aging of the baby boom generation.

To date, all of the baby boom presidents—Bill Clinton, George W. Bush, Barack Obama—punted on serious entitlement reform, stoking instead generational warfare between relatively young and poor Millennials and relatively old and wealthy boomers. Trump, who may well be the last boomer president (here's hoping), shows every indication of putting his cohort's interests before those of his children and grandchildren. Although basic budgetary realities will sink old-age entitlements sometime around 2030 and inflict 25 percent or more cuts in benefits, the Democrats and Republicans writ large have refused to seriously address the iceberg on the horizon.

And here's the other thing about this budget: support it or oppose it, Congress is constitutionally responsible for setting federal spending. Presidents can propose whatever they wish -- it's the Congress that does the work.

Given the number of sacred cows gored in the President's proposal -- to public broadcasting, the EPA, the National Endowment for the Arts, and many more -- we should not only expect, but probably can already recite, the near-hysterical arguments that will be made to spare these items.

The simple fact of is Mr. Trump proposed to spend well more that $1 trillion in the next fiscal year. Government will not be made smaller -- it will simply shift priorities.