Wednesday, March 1, 2017

Math 101: Trump's missing ten percent

The press is awash in kudos for Trump’s speech to Congress last night. He is being congratulated for being “presidential” and actually sticking to his prepared script. All that too shall pass. In one word, here’s why: Budget.

The speech was long on goals and short on details. Without the details you don’t know the devil. That’s particularly true of Trump’s stated budgetary goals.

Trump has promised a 10% increase in military funding. If he then tries to balance the budget, he has to get 10% from somewhere else. The problem is that the “somewhere else” is very limited. A lot of agencies which might be cut don’t amount to much in the larger picture, so the cuts have to be draconian.

For that reason and more John Cassidy (New Yorker) takes exception to the glowing reviews of Trump’s speech in Don’t be fooled, Donald Trump didn’t pivot.

… If there was anything fresh about what Trump said to Congress, it was largely stylistic. He didn’t pivot, he merely pirouetted, and then he dug into the same political ground he has already claimed.

… details of how he would bring about his ambitious goals were lacking. But rhetoric wasn’t. “Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports, and railways, gleaming across our very, very beautiful land,” he promised. He also pledged “massive tax relief for the middle class,” and much lower corporate taxes, too. He also said, “I am going to bring back millions of jobs,” and that he would work with Congress to create “a better health-care system for all Americans.”

Absent from Trump’s discussion of these issues was any proper explanation of how any of his proposals would be paid for. He did say his trillion-dollar infrastructure plan would be “financed through both public and private capital,” but he didn’t provide any details, and the words “budget deficit” didn’t once cross his lips.

Catherine Rampell (Washington Post) provides a tutorial on budgetary reality in ’America first’ really means ‘Americans last’ (reprinted in this morning’s Daily Star).

On Monday, the Trump administration told reporters that the president’s budget will boost annual defense spending by 10 percent, or about $54 billion. This is part of his commitment to “a historic increase in defense spending to rebuild the depleted military of the United States of America at a time we most need it,” as he said at the National Governors Association meeting.

Trump is nominally a fiscal conservative (with the help of some fuzzy math). So he also promised that his increase in defense spending would be offset by equivalent cuts to non-defense spending.

And who suffers as a result? Regular Americans, including millions who voted for Trump.

Take foreign aid as an example of one of the small pieces of the budget that Trump wants to cut.

That’s not how White House officials like to explain things, of course. They’ve provided little detail about the rest of the budget. But they have nonetheless emphasized that much of the offsets will come from “foreign aid,” with the implication that foreigners will mainly feel the pinch.

One might argue that foreign aid supports our moral and humanitarian values, as well as our own security interests. We allocate such assistance to help strengthen democracies, deter war and contain epidemics.

And if we do not invest other less democratic entities will fill the vacuum. See for example my post on Chinese aid in Africa.

Perhaps more relevant for this budgeting exercise, though, is the fact that “foreign aid” represents less than 1 percent of the federal budget, or about $36.5 billion planned for fiscal 2017. It also seems unlikely that Trump would completely zero out this paltry spending, given that some categories (such as the $3 billion we’ve committed to Israel) would cause him major political headaches.

So where else can Trump make up the 10%?

Not from Social Security and Medicare, according to Treasury Secretary Steven Mnuchin. That’s despite the fact that entitlements are by far the biggest components of non-defense spending, and have been gobbling up an ever-larger share of federal budgets.

Other, smaller programs will face the fiscal guillotine instead.

What’s left? Reportedly the Trump team plans to slash the budget of the Environmental Protection Agency, which was appropriated just $8 billion last year. Making it easier to pollute hardly seems to be in most Americans’ best interest. And again, the EPA budget represents a tiny sliver of federal spending.

By process of elimination, then, the biggest target must be our already frayed social safety net

That includes means-tested programs such as food stamps, Medicaid, housing assistance and lots of other programs relied on by tens of millions of Americans. In fact, the most recent census data found that about a fifth of Americans participate in at least one of the biggest federal means-tested poverty programs each month. Many of those beneficiaries also happen to be Republicans, believe it or not.

It’s difficult to argue that reducing Americans’ access to food, health care, housing and other necessities is putting their needs “first.”

Carving billions out of these programs to offset defense increases will be painful, and it’s just the beginning of the suffering to come.

After all, the defense spending spike isn’t the only cost for which Republicans will soon need offsets. Recall that an enormous tax cut is coming down the pike.

We don’t know yet exactly what that tax plan will look like. If it’s anything like Trump’s campaign promises, though, it will cost in the ballpark of $7 trillion over the next decade.

If Republicans plan to pay for any portion of those tax cuts — and these days, admittedly, that’s a big if — expect those cuts to be balanced on the backs of struggling families, too.

Perhaps all of this is not relevant to the missing 10%. After all, it was another GOPlin who claimed that “deficits don’t matter”.

No comments:

Post a Comment