Trump's 'skinny budget' brings much-needed belt tightening
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President Trump’s “Skinny Budget” proposal outlined high-level fiscal goals for federal departments and agencies. The total discretionary budget request of $1.0654 trillion for fiscal year 2018 is a $14.8 billion net reduction from 2016’s enacted total and a reduction of $2.7 billion from this year’s enacted fiscal year 2017 total.

With a national debt of nearly $20 trillion, this proposal should jumpstart an important discussion regarding federal government spending priorities. Hardworking taxpayers must decide between needs and wants in their personal budgeting. They rightfully expect their representatives in Washington, D.C., to conduct a similar analysis when determining how to spend their tax dollars.

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A more limited role of the federal government must be a major consideration. State and local governments — or the private sector — could far more cost-efficiently deliver many services. The guiding light should be the 10th Amendment to our United States Constitution: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

 

Much criticism of this needed evaluation of spending priorities is underway. However, as Robert Robb recently pointed out in The Arizona Republic: “Since ‘Sesame Street’ departed public for commercial television, Big Bird can no longer be the rallying symbol for those wanting to keep the federal government involved in everything under the sun.”

Moving to priority-based budgeting, a bipartisan success story in numerous states across America, will be essential for Congress and the Trump administration in order to fix years of overspending and rebalance our nation’s fiscal priorities. Budgeting based on outcomes can more easily identify the activities most important to citizens, as well as help policymakers make difficult trade-offs.

The current “baseline” budgeting process contains another serious flaw. By building automatic spending increases into future predicted budgets, even a spending increase can become misrepresented to the public as a spending cut. The potential political backlash allows underperforming or non-essential programs to escape review.

For instance, a 1 percent actual funding increase for a $1 million program with a 4 percent annual projected baseline increase would be counted as a 3 percent cut under baseline budgeting. Only with baseline budgeting could this $10,000 increase be described as a $30,000 reduction.   

Setting aside how the plan approaches national defense spending, President Trump’s inaugural budget also represents a big first step in reining in government overreach and budgetary blowout. It forces belt tightening of multiple departments, with the steepest percentage point reductions coming from areas most marred by inefficiency, excess and cronyism.  

Environmental Protection Agency (EPA) funding faces the largest percentage cut, at 31 percent (a $2.6 billion reduction) while Health and Human Services (HHS) faces the largest nominal cut, at $12.6 billion (or a 16 percent reduction). Environmental regulations alone cost the economy more than $300 billion annually, according to the Competitive Enterprise Institute.

Further:

  • The State Department and related diplomatic missions are cut by $10.9 billion (or 29 percent).

  • The Departments of Agriculture and Labor would both see a 21 percent cut (or $4.7 and $2.5 billion respectively).

  • The Department of Education faces a $9.2 billion (or 14 percent) overall reduction.  However, the proposal includes a $1.4 billion increase in funding for public charter schools and private school investment, enhancing school choice and other education programs with proven track records of high performance.

 

Unfortunately, beyond potential healthcare reforms currently in the political pipeline, the plan fails to meaningfully address the massive growth in entitlements. Entitlement spending absorbs more than half of every federal dollar spent. So-called “mandatory” spending is the chief architect of our growing national debt, nearly half-trillion dollar budget deficit, and true long-term structural deficit estimated $105 trillion.

This blueprint of sizeable discretionary cuts may return to fiscal conservatives some of the hope they have lost after eight years of profligate policies, and help move the ball towards discussions of more in-depth cuts and reforms to programs currently deemed too politically difficult.

Jonathan Williams is the Chief Economist and Vice President of the Center for State Fiscal Reform at the American Legislative Exchange Council (ALEC). Joel Griffith and Elliot Young contributed to this piece.


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