Cost of GOP tax plan could exceed $2 trillion
Trump releases budget that slashes government programs
The Trump administration on Tuesday unveiled a budget seeking $1.5 trillion in nondefense discretionary cuts and $1.4 trillion in Medicaid cuts over the course of a decade, while adding nearly half a trillion dollars to defense spending.
The plan, titled "A New Foundation for American Greatness," would dramatically reshape federal spending, cutting anti-poverty and safety net programs, but leaving Medicare and the retirement portion of Social Security untouched.
Congress is expected to reject many of the proposals as it takes up the budget in the coming weeks and months. It is being released, unusually, with President Trump out of town on his first foreign trip in office.
Relying on a mix of growth projections that most economists say are extremely optimistic and an assumption that a tax reform plan will manage to slash tax rates while remaining revenue-neutral, the budget lays out a path to balance the budget within a decade and lower the debt burden to 60 percent of gross domestic product.
From a budgetary baseline based on the 2011 "sequestration" deal between the GOP House and former President Obama, the Trump budget piles on defense dollars while further cutting nondefense.
By 2027, defense spending would increase $42 billion over sequestration levels, while nondefense would be cut by $260 billion. In that year, nondefense outlays would amount to just 1.4 percent of GDP. The proportion of defense to nondefense discretionary spending would be higher than in the previous 40 years.
Sequestration, when it was ushered in, was meant to use draconian cuts to both defense and nondefense discretionary spending as a cudgel to force Congress to compromise on budget cuts.
In 2018, Trump's budget would shift $54 billion from nondefense discretionary spending to defense by enacting major cuts to government agencies.
The budget would cut 31.4 percent from the Environmental Protection Agency, 29.1 percent from the State Department, 20.5 percent from the Department of Agriculture and 10.7 percent from the National Science Foundation. It would make Pell grants available year-round, but raise monthly student loan payments.
A sizable portion of the cuts to domestic spending would be made to Medicaid. The budget assumes full passage of the House-passed version of the American Health Care Act (AHCA) to repeal and replace ObamaCare, which cuts $839 billion from Medicaid and pulls funding from Planned Parenthood.
In addition, the budget would make another $610 billion in cuts to Medicaid over 10 years by transitioning the program from a traditional entitlement to either a block grant program or a per-capita program that puts a ceiling on federal Medicaid funding to states. It would also allow states to impose work requirements for certain Medicaid beneficiaries to reduce costs.
Besides the cuts to Medicaid, the budget finds $274 billion in savings over 10 years from spending cuts to anti-poverty programs. These would include $193 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP), $21 billion from Temporary Assistance for Needy Families (TANF).
It also scales back Disability Insurance offered through Social Security, a step critics say breaks Trump's campaign promise to leave Social Security untouched.
"We are no longer going to measure compassion by the number of programs or number of people on those programs," Office of Management and Budget (OMB) Director Mick Mulvaney told reporters on Monday.
"If you're on food stamps and you're able-bodied, we need you to go back to work."
The same is true, he added, for people who get disability benefits but should not receive them.
The budget office assumes that the economy will hit 3 percent growth in five years and sustain that growth through 2028.
The Congressional Budget Office, in comparison, estimates the nation will see 1.9 percent growth on average for the next 10 years.
Already, budget leaders in Congress are pushing back on the budget.
"The President's budget is a suggestion," Senate Budget Committee Chairman Sen. Mike Enzi (R-Wyo.) wrote in a statement. "We will take a close look at his budget, but Congress is mandated by the Constitution with key spending responsibilities and will ultimately decide what the nation's fiscal priorities will be."
Sen. John Cornyn (R-Texas), the number two Republican, said the budget would be "Dead on arrival,' but clarified on Twitter that "All POTUS budgets are."
Senate Minority Leader Charles Schumer (D-N.Y.) said the plan took a "meat cleaver" to the middle class "by gutting the programs that help them the most, including many that help create jobs and power the economy: transportation is cut, education is cut, programs that promote scientific and medical research are cut, programs that protect clean air and clean water are cut."
Anti-poverty advocates reacted to the cuts with horror, arguing they would increase inequality while doing nothing to reduce the deficit.
"The Trump budget would make inequality and poverty significantly worse, while allowing deficits, when honestly measured, to soar," said Bob Greenstein, president of the left-leaning Center on Budget and Policy Priorities.
But Mulvaney argued the budget would reform programs while putting people to work.
"We believe in the social safety net. We absolutely do," Mulvaney said.
A well-administered safety net, he continued, could boost economic activity by mitigating risk for would-be entrepreneurs.
The budget allocates $2.6 billion for improved border security, including $1.6 billion for Trump's physical wall on the Mexican border, though the OMB did not say what percentage of a full wall would be covered by that expense.
Estimates of the cost for a wall on the border have generally run between $10 billion and $20 billion.
The budget plan proposes a $19 billion expenditure for paid family leave, an issue first daughter Ivanka Trump has championed.
Nathaniel Weixel contributed.