Budget 2: Overviews of Trump/House Budgets

Trump’s Budget and the House (or Ryan) Budget have only minor differences. In terms of defense spending both budgets add money that has to be taken away from other parts of the budget. These budgets generally break down into Mandatory Spending, Defense Spending, Defense Discretionary Spending, and Non-Defense Discretionary Spending (NDD).

Mandatory spending includes Medicare and Social Security. Trump’s budget does not make cuts to these programs as he promised in his campaign. The House budget does make cuts to mandatory spending.

Both budgets increase military spending by quite a lot. And, as we saw in my article Budget 1, both budgets cut non-defense discretionary spending by cutting programs as listed in my post. Trump’s budget makes more cuts in NDD spending than the House budget makes.

Both of these budgets relied on repealing and replacing the ACA and putting the dollars saved back in the budget. This loss will have a rather large effect on the budget, especially if it must be deficit neutral. Trump’s budget does not rely on being deficit neutral but this condition is something the House budget is supposed to comply with.

Amounts vary between the two budgets but the types of cuts and additions are very similar. There should not be much disagreement between the WH and the House, but there are a few areas of contention.

I am hoping that the cuts in mandatory spending will go away because that is one area of disagreement. Will we go with the NDD cuts generated by Trump or by Ryan or will the opposition save many of these agencies and programs? Will the number of cuts, if any, be closer to the Ryan cuts or to the Trump cuts? How will either budget find a way to be deficit neutral without the repeal and replacement of the ACA? The fact that the health care plan still stands puts a big hole in these budget plans and that makes it harder to produce a balanced budget in 2027, which both budgets claim that they can accomplish.

The “wall” is included in Trump’s budget under defense and national security spending. It is not included in the House budget, but that probably will not fly. Although, if Florida is devastated in similar ways to Houston the entire budget may have to be reworked by both the WH and the House.

Moderate Republicans, well, relatively moderate Republicans, probably will like both of these budgets but the Freedom Caucus is unlikely to like either. They would cut everything except possibly defense spending.

Both of these budgets rely on  growth rates for GDP which economists say are too optimistic. This means that they are unlikely to be deficit neutral or to produce a balanced budget in ten years.

It would have been nice if the Dems had produced a “model” budget so that people could compare the two parties, but perhaps that is just not done when your party is out of power. I suppose we could consider the current budget (2017) to be a Democrat budget. We have made it through years without a new budget before and we could do it again. I really don’t want America’s budget to be reconfigured according to the Republican ideology, but time is not on my side.

President Trump’s 2018 Budget from an article published on May 24, 2017

*3.6 trillion in deficit reduction

*1.5 trillion from unspecified discretionary cuts

*2.8 trillion cuts to mandatory items (not Medicare or SS)

*   1 trillion from repeal of ACA

*300 billion in interest savings

*reduce debt from 77% of GDP or 14.8 trillion today to 60% or 18.6 trillion by 2027 (OMB)

*budget balanced by 2027 from deficit of 3.1% of GDP or 603 billion in 2017

*budget projected spending shrinks from 21.2% of GDP or 4.1 trillion today to 18.4% of GDP or 5.7 trillion by 2027 (OMB)

(CBO objects – this is overly optimistic – debt would likely remain stable and deficits remain 2% of GDP)

Proposals in Trump’s Budget

*3.6 trillion net spending reduction and reforms

*4.5 trillion less in spending

*   1 trillion less in revenue

*697 billion to promote new initiatives

-defense discretionary spending

-veteran’s health program

-paid family leave

-infrastructure investment

*200 billion placeholder infrastructure grants to state and local governments (hopes to leverage 1 trillion of total public/private investment)

*Reduce non-defense discretionary spending (NDD) by 10% (- 555 billion) reduced by 54 billion in 2018 and do this 10 times over ten years (cuts programs listed in my article Budget 1

*Apply “2 penny plan” (2 pennies in cuts for every 1 penny spent) to future NDD spending

*850 billion future unspecified cuts

*Reform Healthcare (- 903 billion)

*Restructure Safety Net Program (-272 billion

*reduce SNAP by 193 billion

*reduce Temporary Assistance to Needy Families (TANF) (welfare) grants by 10%

*eliminate Social Security Block Grants – 38 billion saved

*40 billion saved by requiring Social Security Number for Child Tax Credit or EITC

*eliminating supplemental benefits for federal employees retired before age 62

*increase number of salary years used to calculate retirement benefits

*increase federal employee retirement contribution

*Other savings

*farm subsidies

*enacting financial regulation reform

*Restructuring Consumer Finance Protection Bureau

*Postal reform

*Higher Pension Benefit Guaranty Corporation premiums and other

*Comprehensive Tax Reform see articles on Trump’s tax plan (no amount given

*Economic growth and War Draw-down saves 2.7 trillion

*All assuming a (very rosy) 3% GDP growth per year by 2020

 

Sources

https://www.nytimes.com/interactive/2017/05/23/us/politics/document-Donald-Trump-2018-Budget.html?mcubz=0

http://www.crfb.org/papers/president-trumps-full-fy-2018-budget

 

 

House Budget “Building a Better America”, Chairman Diane Black’s Summary

*Balance Budget – balance within 10 years by:

*cutting spending

*reforming government

*grow the economy

*projects a $9 billion surplus in 2027 with 6.5 trillion in deficit reduction

*2018 Overall Budget

*$1,132 trillion in discretionary spending

* $621.5 trillion in defense discretionary spending

* $511 billion non-defense discretionary spending

*Promote Job Creation

*tax reform” (reconciliation instructions?)

*lower rates

*simplify code

*incentivize employers to hire and grow (major reform of regulations that hold back job creation and innovation

*Secure National Defense

*funding to secure the border and protect the homeland

*increase account at Department of Veteran’s Affairs

*Strengthening Health Care

*AHCA – American Health Care Act (did not pass)

*saves and strengthens Medicare with a premium support system that gives seniors more control (?)

*Reforms Medicaid by giving states the power to tailor Medicaid programs (block grants, vouchers?)

*Cutting spending and reforming government which will cut $203 billion through savings and reform (reconciliation instructions) (?)

*Reduce government-wide improper payments (?) by $700 billion

*Calls on 11 committees to cut $203 billion altogether over 10 years (NDD as per Budget 1)

*Assumes optimistic economic growth rate

* WH assumed 3% growth

*House budget assumes 2.6% growth

*”economists say that both of these growth rates are optimistic”

*Slashed safety net programs – imposes work requirements for Temporary Assistance for Needy Families (welfare) and SNAP (food stamps)

*Proposes deficit neutral tax changes – Trump’s budget does not do this

*House GOP budget cuts Medicare and Social Security (“likely to receive pushback from Republicans wary of cutting into popular entitlement programs”)

NPR Article says this about House Budget

*Cuts $54 trillion over 10 years

*$4 trillion in cuts to mandatory spending (Medicaid, Medicare)

*Ramps up defense spending

*”budgets are more statements of priority than exact plans

*”Budget could allow Republicans to pass tax overhaul by reconciliation” (only 51 votes instead of 60)

*Ramp up defense spending by $929 billion

*Cut NDD spending by 1.3 trillion (WH and House similar in this regard)

Sources

https://budget.house.gov/budgets/fiscal-year-2016-budget/summary-key-facts/

http://www.npr.org/2017/07/19/537959833/heres-whats-in-the-house-republican-budget-and-why-it-matters

http://www.politico.com/story/2017/05/14/republicans-cuts-programs-food-stamps-welfare-veterans-238314

https://www.cnbc.com/2017/07/18/house-budget-committee-proposes-boosting-defense-spending-reshaping-welfare-programs.html

https://www.theatlantic.com/politics/archive/2017/07/house-gop-budget-plan-puts-medicare-and-social-security-on-the-line/533991/

 

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