February 11, 2020

White House Budget Games

Proposed reductions in growth are welcome, but it’s still a deficit-ridden behemoth.

The White House released President Trump’s 2021 budget plan Monday — a $4.8 trillion behemoth that boosts defense, homeland security, and Veterans Affairs. Trump laid out a roadmap that includes $4.4 trillion in reductions to spending growth over the next decade that he claims will balance the budget by 2035. Remember: Whenever the media talks “cuts,” it’s almost always really reductions in scheduled growth.

Moreover, “Republicans and Democrats last year cut a spending deal that kicked appropriations decisions past the November election,” The Wall Street Journal editorial board notes, “so the White House budget for practical purposes is irrelevant this year. It provides a starting point for talks next year with a new Congress.”

The president’s plan reduces growth in foreign aid by 21%, the EPA by 26%, Housing and Urban Development by 15%, shrinks the budget and power of the Department of Education, and makes the Republicans’ 2017 tax cuts permanent. Certain entitlement programs like disability benefits and food stamps would also see reductions after the imposition of stricter work and eligibility rules.

The White House is laying out this strategy in an election year in hopes of demonstrating that Trump is serious about reining in federal spending. “It includes more deficit reduction — $4.6 trillion — than any president in history,” boasts acting Office of Management and Budget Director Russel Vought. The president campaigned in 2016 on the promise of reversing the trends of his predecessor, who presided over massive spending, including three years of $1 trillion-plus deficits. The national debt doubled, rising by $10 trillion during Barack Obama’s eight years.

Unfortunately, the truth is that Trump hasn’t done much better.

Deficits have steadily increased under Trump’s watch, reaching nearly $1 trillion in 2019. And while the 2021 budget seems to be going in the right direction in terms of curbing spending and reducing government bureaucracy, a $996 billion deficit is still projected for the coming fiscal year. As we said in rebutting Obama’s similar boasts about deficit reduction, it’s easy to reduce a deficit after you’ve blown it up so large.

It would be great to see Trump become more serious about cutting spending, since it appears that no one in the Swamp, and very few people outside it, seem to care. For decades, economists have predicted a financial reckoning over politicians’ inability to control spending. Social Security payments are starting to shrink, and the sheer size of the national debt is weighing on economic growth.

Trump’s plan is hardly bold in that it proposes to balance the budget in 15 years, which is to say never. Even assuming he’s reelected in 2020, that still means there will be at least two more presidents after Trump by the time we reach 2035. It’s ridiculous to think that they will hold his line on spending.

Another significant problem with Trump’s proposal is that it assumes 3% annual economic growth, a threshold we have met only once since George W. Bush’s administration. While the economy is moving at a strong pace now, and we have Trump’s pro-business policies to thank for it, we’re just not there yet.

All that said, the president must lead by example and this budget proposal is a step in the right direction. The time will soon come when significant changes need to be made to Social Security and Medicare, or those programs will become insolvent. Will Trump and Republicans be brave enough to make the tough calls needed to save these programs? History says no. Democrats have addicted Americans to Big Government through entitlements and promises of so-called “free” stuff. And many Republicans have gone along because they are under the mistaken assumption that this is the way to win votes.

Things can still change. Maybe once the country is staring down the barrel of fiscal disaster, we will be shocked enough to motivate our elected leaders to do the right thing. The trouble with this scenario is that people don’t like to make painful decisions, but the solutions only get more painful the longer we put it off.

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