Why Trump’s Spending Plan Won’t Really Balance the Budget
Policy + Politics

Why Trump’s Spending Plan Won’t Really Balance the Budget

iStockphoto/The Fiscal Times

In a nod to budget hawks, the budget that the Trump administration is expected to release Tuesday will show federal outlays matching revenues by the end of the 10-year budget window, eliminating the federal deficit. But that will bring little joy to people serious about balancing the federal budget, because it relies on the assumption that massive tax cuts and regulatory rollbacks will boost the country’s economic growth rate to 3 percent or higher.

Economists are all but unanimous in their assessment that this is not a realistic scenario under Trump’s or any other president’s budget proposal.

Related: How Trump’s Budget Battle Could Lead to a Government Shutdown

Some of those economists work at the Congressional Budget Office, which is unlikely to go along with the administration’s economic growth projections. If, as expected, CBO refuses to accept a 3 percent projected growth rate, its analysis of the Trump budget proposal will show not a balanced budget, as the administration claims, but one that will actually greatly increase both the deficit and the national debt.

The CBO isn’t the only thing standing between Trump and his ability to claim that he is offering a path to balancing the budget. The other is Congress.

As more details leak out about the budget that the administration will propose Tuesday, it is increasingly clear that the punishing cuts to social services that were widely expected are actually even larger than predicted. The cuts are expected to total $1.7 trillion over 10 years. This includes Medicaid, a program Trump previously promised not to touch, and the Supplemental Nutrition Assistance Program (often referred to as food stamps), the nutrition assistance program for low-income Americans.

Even in a Republican-controlled Congress, the degree of cutting that Trump is proposing will be a difficult sell politically -- especially because opponents will point out that the cuts are in large part making room for large tax cuts tilted overwhelmingly toward the wealthy and a boost in military spending.

The proposal, according to The Washington Post, is in line with the House-passed American Health Care Plan in its treatment of Medicaid, meaning that over ten years it would cut $800 billion in funding to the program that serves low-income adults, children and seniors. In part, that reflects acquiescence to the House demand that Medicaid expansion rolled out under the Affordable Care Act be eliminated.

Related: Eight Gimmicks to Watch Out for When Trump Unveils His Budget

Under that plan, according to the Congressional Budget Office, 10 million fewer Americans would have health insurance through Medicaid after 10 years.

The Supplemental Nutrition Assistance Program will be cut by more than 25 percent over 10 years. The program serves 44 million people in 2016, down from a high of 47 million in 2013 though still elevated above pre-recession levels. The average benefit per person is $125.50 per month.

The administration’s budget would eliminate $193 billion in spending on the program over a decade, primarily by making the benefit harder to access. The budget proposal tightens the restrictions on who is eligible in the first place, and allows states to place work requirements on recipients.

The revelation of new spending cuts comes just days after other leaks showed the administration planning smaller-scale raids on the social safety net. The budget will call for eliminating the $2 billion social services block grant, $3 billion to help low income Americans heat their homes in winter, and 20 percent of the funding for programs that treat people with mental health and addiction problems.

Related: The Heartless Tradeoffs in the Trump Budget

Presidential budgets are generally seen as “aspirational” documents, and are reflexively declared dead-on-arrival by members of Congress, who delight in reminding the occupant of the White House, regardless of party, that they are the ones who control the purse strings.

However, the Trump administration budget may be a better guide to what future budget legislation will look like, if only because the president appears to have thoroughly bought into the House GOP’s health reform plan and its agenda of reducing or eliminating large elements of the social safety net.