The Good, the Bad, and the Terrible of Trump's Budget Proposal

The bottom line is that the good, the bad, and the terrible in this budget is going nowhere, and we are still heading to our debt wall crushed by years of unwillingness to cut spending and, more importantly, reform entitlements.

President Trump's budget proposal came out Tuesday. It's called a "New Foundation for American Greatness."

Boy, I wish.

There are a few good things in this budget: I agree with Office of Management and Budget Director Mick Mulvaney when he explained during a press conference some of the rationale for his budget cuts to targeted programs. He said, "This is, I think, the first time in a long time that an administration has written a budget through the eyes of the people who are actually paying the taxes."

He's right. He added that we have been defining compassion the wrong way. Compassion isn't simply measured by counting how many programs for low-income earners we subsidize and how much we spend on these programs. Compassion is taking effective measures to help low-income families while keeping in mind that taxpayers are paying for these programs too.

In addition, compassion should take under consideration that not every dollar spent on an anti-poverty program is actually alleviating poverty or being productive.

It's with that in mind that this budget proposes $1.7 trillion in cuts, including $274 billion to means-tested programs like food stamps and Medicaid. Democrats are screaming bloody murder and announcing that "children will die because of Trump's budget."


But shouldn't we reform Medicaid when many studies have found that beneficiaries don't experience better health outcomes than uninsured people? Shouldn't able-bodied adults without children be required to work to collect food stamps? Do we really think as a nation it is okay that the food stamp rolls are bigger than they were before the Great Depression and 8 years after the end of the recession? (I recommend reading Cato's Chris Edwards and Dan Mitchell on this.)

Often ignored by those decrying the cuts is that there's nothing compassionate about high budget deficits and debts due to our continued overspending under both Republicans and Democrats. These will have to be paid tomorrow by today's younger people in the form of higher taxes, a slower economy, and higher unemployment rates. We are $20 trillion in debt, and it is ludicrous to think that now isn't the time for cutting spending.

With that in mind, I suggest that people read the document put out by the White House that details and explains the reasons for all of the cuts or terminations. It shows that all of the targeted programs are inefficient and often counterproductive, and should either be dealt with at the state level, terminated, or trimmed down.

As expected, newspapers are full of quotes of people going berserk over the cuts. In spite of what you will hear, there are cuts in the budget that go beyond programs benefiting lower-income Americans. It cuts federal pensions, ends the funding for National Public Radio, the Endowment for the Arts, the crony Overseas Private Investment Corporation, and more.

Moreover, these cuts, as big as they may seem, only represent a small portion of the $49 trillion the federal government will spend, and many of the programs that are cut will continue to see their spending grow during the next 10 years.

The federal government, overall, will continue to grow. Total spending in fiscal 2018 will be $4.1 trillion, and it will grow to $5.7 trillion in 2027. That's almost $1.7 trillion in spending growth over 10 years. That's still a lot of money, 65 percent of which will be going to four programs: Interests on the debt ($5.2 trillion over 10 years), Social Security ($13.4 trillion over 10 years), Medicare ($8.6 trillion over 10 years) and Medicaid ($4.8 trillion over 10 years).

All of these programs continue to grow considerably over the 10-year budget window — even Medicaid, which only sees a slower spending growth than previously projected.

Niceties aside, this budget is going nowhere, and it's the administration's fault.

First, I am doubtful that Trump himself will got to the mat to fight for this budget. Yet without his leadership, the probability of these cuts being implemented, even partially, is a big fat zero.

Second, Republicans are big spenders and they shy away from most of the cuts proposed in the budget, so they won't be much help. But also, why on earth would anyone think it is a good idea to focus most of the cuts on lower-income Americans while leaving untouched programs like Social Security and Medicare?

I get that the president has promised to leave these insolvent and unfair programs untouched, but it doesn't make it right. Social Security redistributes money from relatively poor and young workers to the relatively old and rich people, from minorities to white people, and from single people to married people. It's bad policy and it is even worse politics.

The administration claims that this budget balances the budget in 10 years. On paper maybe, but in the real world, even without the obstructionism of Congress, the budget won't balance.

First, it engages in awful accounting and rosy assumptions (it omits the trillion dollars of tax cuts promised by the president and their impact on the revenue but assumes large economic growth windfall from the cuts). Many of us made fun of the ridiculous economic growth projections under President Barack Obama. We should make fun of them even more under Trump, because those writing the budget should know better.

But this budget is also a big fat spending machine.

It would grow defense spending significantly, blow the defense spending caps, revive the abuse of the Overseas Contingency Operations fund ($77 billion in fiscal 2018 alone), and does very little to eliminate waste, fraud and malinvestment in the Defense Department. It also caves to the Left by proposing a six-week paid family leave program (making employees more expensive is hardly the way to make America great again). On top of that, it adds money to immigration enforcement, homeland security and a border wall, as well as infrastructure.

All this spending happens, as Maya MacGuineas notes in the New York Times, "without specific offsets and 'protecting' Social Security and Medicare, a reassuring political promise that removes over one-third of the budget from consideration." Basically, the budget proposal doesn't cut enough if it wants to spend that much money.

The bottom line is that the good, the bad, and the terrible in this budget is going nowhere, and we are still heading to our debt wall crushed by years of unwillingness to cut spending and, more importantly, reform entitlements. We are still stuck with a Republican Party that wants to cut taxes without reforming Social Security and Medicare. We are stuck with a Democratic Party that wants to grow Social Security, Medicare, Medicaid and everything else while only raising taxes on the rich.