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Hoagland: President’s Proposed Budget a Question of Fairness

Tuesday, May 23, 2017

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Washington, D.C.– President Trump’s budget blueprint for Fiscal Year 2018 seeks to balance the budget over the next 10 years and includes increased defense spending and deep cuts to social programs.

It does not touch the two largest federal programs—Medicare and the non-disability portion of Social Security—and proposes major tax reform that could reduce taxes on upper income families. Consequently, about one-third of all federal spending primarily benefiting low- and middle-income recipients would bear the burden of achieving a balanced budget.

“This is a question of fairness in setting fiscal policy,” G. William Hoagland, senior vice president at the Bipartisan Policy Center, said.

The proposed reductions focus on programs such as Temporary Assistance to Needy Families, food stamps, child nutrition programs, and the Earned Income Tax Credit. The budget also proposes additional cuts to Medicaid, over $600 billion in addition to the more than $800 billion included in the American Health Care Act passed by the House of Representatives last month.

“Many of these programs need reform, and the goal of reducing public debt is laudable, but there is a level of unfairness in the president’s budget proposal that would be devastating to low-income families and states struggling to provide critical public services,” Hoagland said. “Some programs if not completely eliminated such as the Community Development Block Grant could face as much as a 40 percent reduction at the end of 10 years.”

In addition, programs in science, technology, and education that would face cuts are considered essential to maintaining healthy future economic growth.

Many of these programs need reform, and the goal of reducing public debt is laudable, but there is a level of unfairness in the president’s budget proposal.

“These are the programs that we need to increase economic growth in the future,” Hoagland said. “This budget recognizes the need to reduce debt and deficits to create long-term growth, but the ability to achieve those goals will be problematic if critical public investments are reduced from their already low level of support.”

A key factor that leads to a balanced budget in the president’s proposal is an estimate of around 3 percent GDP growth by 2027, which is stronger than independent analysts project. The Congressional Budget Office projects a growth rate of 1.9 percent by the same year.

A president’s initial budget is generally viewed as a blueprint that informs Congress of the administration’s priorities rather than legislation that will be enacted exactly as proposed. Some of the key proposals in Trump’s budget include:

  • Defense Spending Boost: $54 billion in additional defense spending in 2018, bringing defense spending closer to historic levels and providing additional funds for additional military personnel and equipment investment
  • Welfare Reform: $274 billion in cuts over 10 years from welfare programs including the Supplemental Nutrition Assistance Program (food stamps), Temporary Assistance for Needy Families, and others
  • Tax Reform: A tax system overhaul for both personal and corporate rates, reducing the number of tax brackets to 10 percent, 25 percent, and 35 percent, and reducing the corporate rate to 15 percent

These proposals are expected to face strong resistance, especially among Democrats and even many Republicans who support many of the programs facing reductions. Complicating the picture is the need to address the debt limit, which according to BPC projections policymakers will need to raise by October or November to avoid a default on the federal government’s obligations.

“This is just the opening bid in what will be a very contentious debate over the next several months on the budget and other competing priorities,” Hoagland said.

“We will face the music as the new fiscal year approaches when Congress and the administration will have to produce a budget to fund the government. To avoid a train wreck of massive proportions we need to find a bipartisan solution,” he said.

William Hoagland is available for comment.

Watch Facebook Live at 2 p.m. today for a discussion on the president’s budget.