Of Course Trump’s New Budget Proposal Is “Dead On Arrival”

But it’s still worth examining for insight into the President’s priorities, and which promises he’s trying to keep, and which he’s willing to break

This isn’t a “Trump thing”. White House budget proposals are almost always “dead on arrival”, because as we’ve pointed out many times, the Constitution tasks Congress, not the President, with the job of making a budget. The President’s budget proposal can be looked at as more of a wish list. (Here’s a link to the entire Trump proposal, just in case you’re a real masochist). Still, it needs to be taken seriously, since the President will have to sign whatever budget Congress comes up with in order for it to go into effect, and for the government to keep running.

The item that’s getting the most attention in Trump’s proposal is $8.6-billion for “the wall”, because at very least it means Trump didn’t learn his lesson from the last shutdown (which he seems to have bounced back from nicely in popularity polls), and could augur another showdown and shutdown this fall.

But there are a lot of other things worth looking at. Here are just a couple that caught our eye:

Health care: Trump kind of keeps his oft-repeated promise to “protect” and “save” Medicare, by not proposing any structural changes to the public insurance plan for seniors. At the same time, his budget includes deep cuts to the program. $845-billion to be exact. How’s that possible? Partly by negotiating prescription drug prices with pharmaceutical companies, which is something Democrats also have been promoting for years. But also by reducing payments to doctors and hospitals, which will probably force some not to accept Medicare patients in the future, even though they do now. In which case it’d be a sneaky trick on Trump’s part to reduce costs by reducing the level of care, while making it look like he isn’t touching the overall program.

As to his pledge to “protect” and “save” Medicaid as well? Not so much. He proposes piling on a lot of new requirements to qualify for that public health program for people who don’t have much money. Most notably, a work requirement. No job, no Medicaid. Vox’s Sarah Kliff pointed us to a story in The Nation about the state of Arkansas, which has already put a work requirement in place, and how difficult it is for people working there to keep proving they actually have a job. And if they are genuinely sick, how hard it is to hang on to a job, and yet they may not qualify for disability. To the point at which some are giving up and losing their insurance. Which of course is part of the point: people losing their insurance because of confusion or labyrinthine rules are part of where the cost savings come from.

Just for reference, here’s a clip we found of Trump at a Pennsylvania rally during the 2016 Presidential campaign, in which he accuses Hillary Clinton of being the one who wants to “knock the hell” out of Medicare and Medicaid, and “I’m going to save them, OK?” (Click on the photo to watch):

Oh, and of course some of Trump’s proposed health care savings comes from repealing Obamacare and replacing it with one of the failed Republican proposals from 2 years ago, all of which restored the ability of insurance companies to reject people due to pre-existing conditions. (Of course, this will never become part of the actual budget as long as Democrats have control of the House.)

Military spending: The biggest increases will come in this area, from $716-billion this year to $750-billion next. That’s a bump of 5%, when virtually everything else is getting cut in the double digits. (Including food stamps, which he wants to cut nearly 30% or $200-billion.) Which is interesting to us because one might think with Trump promoting disengagement in the Mideast, and continually griping about the NATO alliance, it might seem the military under Trump would be ripe for cuts. Especially since Trump also talks a lot about fixing wasteful military spending that costs Americans billions. But no. That’s not in there.

At the same time, Trump does underscore his “America First” policy when it comes to the State Department, which he proposes cutting by 24%. The second sharpest cut for any Cabinet Department Which at first glance seems to make no sense: if he’s beefing up defense, wouldn’t State’s role be more crucial? Guess not. Especially if your defense spending is centered around nuclear missiles and Space Force (not to mention border control), which Trump often mentions as priorities. Also, the cuts at State include U.S. overseas aid, which Trump is often very much against.

An important side note: both Democratic House Speaker Nancy Pelosi and Republican Senate Majority Leader Mitch McConnell are apparently so concerned Trump is eroding NATO, and hinting he no longer really that interested in supporting the U.S.’ strongest allies, on the same day that Trump released his budget, they invited NATO Chief Jens Stoltenberg to address a joint session of Congress. Although they’re saying it’s to commemorate the 70th anniversary of the treaty organization, it still is not really a normal thing for Congress to do. And multiple news organizations report Trump isn’t letting up: he’s kicking around an idea to make allies not just pay what they owe, but more, especially if they’ve got U.S. forces stationed in their country. “Cost plus 50%” is what he’s calling it, and it would require international beneficiaries of U.S. support to pay not just the cost of maintaining U.S. troops in their country, but 50% more. (Which sounds like how a contractor building a house for somebody operates.) And of course, should the nations that have the biggest concentrations of U.S. troops like Germany, Japan, and South Korea balk, that’d make Russia and China very very happy.

And there’s a further political component to the military piece as well: Democrats thus far haven’t opposed big increases in military spending Trump has pitched in his previous budgets. Instead, they worked to get some of the things they wanted in exchange for going along with those hikes. But that was before Democrats controlled the House. This year, expect some vigorous opposition from Democrats to Trump’s numbers. At the same time, Trump may actually want that. He may thing that issue will be a big winner for him heading into an election year

In addition to State, Trump proposes deep cuts to most Cabinet Departments but the Pentagon, targeting the biggest cut at the agency he seems to despise the most: the E.P.A., more than 30%.While cuts of that size almost never go through, it definitely underscores Trump’s commitment to even more dramatic deregulation. To which we again say: When President Nixon started the EPA, it wasn’t because he was a tree-hugging conservationist. It was because corporate America was behaving very, very badly. Heck, rivers were catching on fire. There’s no reason to believe they’ll behave any better this time around.

All this against the backdrop of giving lip service to the dangers of huge budget deficits, but in practice not really caring that much about them. Even with all the cuts and deregulation proposed, the country will go deeper and deeper into debt. Yes, Trump’s plan predicts a balanced budget in 15 years. But in the meantime, even using rosy economic growth figures, Trump’s own numbers forecast trillion dollar plus annual budget deficits for the next several years, persisting through most of his Presidency, even if he is re-elected. (And it could be more: the Trump Administration has continually underestimated the budget deficit). So a balanced budget in 2034 will be a promise for another President to keep.

In putting together their budget plan, Trump’s folks, led by acting budget director Russ Vought, who defends Trump’s (and his) choices in a piece he chose to publish on the Fox News website. That includes assuming an annual economic growth rate of 3%, which is within the realm of possibility, but definitely on the optimistic vs. conservative side. (Usually, when people make budgets they tend to opt for conservative estimates, in order to limit downside surprises, and maximize potential upside surprises, which are always good politically.)

Some economists and thinkers on the Left (particularly some aligned with Bernie Sanders), have embraced what’s called “Modern Monetary Theory”. At the risk of oversimplifying, it pushes against the conventional wisdom that deficit spending is bad and will always eventually catch up to you. With this in mind, large amounts of money can be spent on large projects just by creating it and spending it. In fact, it argues budget deficits are essential to the success of the private sector. It’s controversial, though.

But we don’t believe Republicans are thinking that way when they support ballooning deficits, at least in the short term. They just think their excesses now will become somebody else’s problem (probably some Democrat), and anyway will pave the way for them to cut social safety net programs like Medicare, Medicaid, and Social Security because there will be “no choice” but to do that.

That Republicans have gone from strict “budget hawks” to free spenders, is not because of some change in group-think on economic philosophy, but because they know they can run with this at least as long as the economy is expanding, with the only downside risk being getting something they also want.

And maybe in 2020, Trump will get re-elected , along with a return to Republican majorities in both the House and Senate, and they can start cutting more programs then. Or maybe he’ll get re-elected, without his party winning back the House, but even then deleterious effects of these budget-busting policies still won’t be felt at any magnitude until he’s out of office. Or maybe he won’t be re-elected, and it’ll be left to a Democratic President to contain the fallout, while trying to find funding for his/her own priorities, which will then be used to run against Democrats. While everything may not play out that smoothly, to Republicans right now, it very much looks like a win-win-win.