The Trump Administration’s Budget Charade

This article originally appeared on this site.

Rather than trying to defend all the accounting trickery, Trump's budget director, Mick Mulvaney, insisted that the White House was not in a position to go into more detail than a summary provided.Rather than trying to defend all the accounting trickery, Trump’s budget director, Mick Mulvaney, insisted that the White House was not in a position to go into more detail than a summary provided.CreditPHOTOGRAPH BY CHIP SOMODEVILLA / GETTY

In March, the Trump Administration released a so-called skinny budget, which contained the broad outlines of its spending plans. The proposed cuts in domestic and international programs were so draconian, mean-spirited, and misguided that I termed it a Voldemort budget, and many other commentators offered similar reviews. On Tuesday, the White House released the full version of its budget, and, if anything, the details are even more disturbing.

The document describes how the Trump Administration would shred the social safety net, particularly Medicaid, which provides health care to the poor, to finance tax cuts for corporations and rich households. On top of this, the budget’s revenue and deficit projections are so contingent upon wishful thinking and accounting sleights of hand that they are virtually meaningless.

Let’s start with the cuts, the impacts of which would be very real if they were enacted. Reversing a pledge he made during his campaign to protect Medicaid, Trump would slash spending on the program by about six hundred billion dollars over ten years, partly by rolling back the expansion that was part of the Affordable Care Act, and partly by changing the program to a block grant system with smaller federal subsidies. By 2027, according to the detailed budget tables, annual spending on Medicaid would be reduced by about a quarter relative to the current policy baseline. These changes would amount to an unprecedented hit on the poor, and many Trump voters would be among those affected.

This all would be accompanied by a cut of almost a third to the Supplemental Nutrition Assistance Program, which is the modern version of food stamps. We like to think of the United States as the world’s richest country, but it is sobering to think that last year, more than forty million Americans received this type of assistance. According to government figures, the typical recipient got a monthly benefit worth about a hundred and twenty-five dollars.

In addition to these headline items, the Administration would cut many other lesser-known programs that serve the poor. Bob Greenstein, the president of the Center on Budget and Policy Priorities, listed some of them: “Large cuts in rental assistance that would eliminate housing vouchers for more than 250,000 lower-income households; Elimination of the Low Income Home Energy Assistance Program, which helps poor households . . . pay high heating bills; 53 percent cut to rural health programs at the Department of Health and Human Services.”

Even with all these economies, however, the Trump Administration wasn’t able to balance the books within a ten-year window. Not without resorting to two pieces of trickery.

The first bit involved assuming that between now and 2021, the annual rate of economic growth will accelerate to three per cent, and then stay there until 2027. To the uninitiated, three per cent growth may not seem like an outlandish assumption. But, for that rate to materialize, the clock would need to turn back to the postwar “Golden Age,” when the country’s labor force grew by about 1.5 per cent a year and output per hour (productivity) grew at more than two per cent a year.

During the past decade, the annual growth in the workforce has slowed to about 0.5 per cent, and productivity growth has fallen below one per cent. That’s why the Congressional Budget Office and other reputable forecasters reckon that the economy’s sustainable growth rate is now about two per cent, or even a bit less. The Trump Administration is saying that it can wave a magic wand—or, rather, cut taxes—and raise the G.D.P. growth rate by about a third, which, over ten years, would generate about two trillion dollars in extra tax revenues.

But even that wouldn’t be enough to balance the books—not given the rising costs of Social Security and Medicare, the big increase in defense spending that Trump wants, and, of course, the looming tax cuts that he says will be the largest in history. To accommodate all these things and still be able to claim that the budget deficit would be eliminated by 2027, the President’s budget advisers had to resort to some magical accounting.

On the one hand, they counted the two trillion dollars in extra revenues that the economy would supposedly generate after tax cuts (and a regulatory bonfire) had supercharged it. But they also assumed that the Trump tax plan—which includes reducing income tax rates, abolishing the alternative minimum tax, and slashing the business tax rate to fifteen per cent—would be deficit-neutral: i.e., it would pay for itself.

That means that if the Trump tax cuts amounted to, say, five trillion dollars over ten years (a figure roughly in the middle of expert estimates), they would somehow produce five trillion in offsetting revenues, plus the two trillion dollars from the growth bonus, or seven trillion dollars in total.

If your head is spinning, it should be. This isn’t serious budgeting. It is cooking the books to achieve an unattainable goal: huge tax cuts and a balanced budget. At a press conference on Tuesday, rather than trying to defend the accounting trickery, Trump’s budget director, Mick Mulvaney, insisted that it was done merely for convenience. If the White House said that its tax plan was going “to add to the deficit, then we have to go into more detail than what’s in the summary right now,” Mulvaney told reporters. “If we say it’s going to reduce the deficit, we have to go into more detail than what’s in it right now. And we simply are not in a position to do that.”

But, if the budget doesn’t account for Trump’s tax plan, what conceivable use is it? It’s like the members of a family sitting down to plan their expenditures for the year without first figuring out what they have to spend, and then assuming that the new car they want to buy will somehow pay for itself. Such an exercise might be fun, but it is also worthless.

Why did Trump and his advisers bother going through with it? Perhaps, as Vox’s Matt Yglesias suggested, they just went through the motions, and “Whether or not it makes any sense is a matter of total indifference to them.” Or perhaps Slate’s Jordan Weissmann was right when he said that the White House was signalling to “Congressional Republicans that they should feel free to eviscerate the government’s social spending programs once they get around to formulating their own budget.”

Whatever went on in the budget’s preparation, it’s yet another example of the Trump Administration tossing out prior norms and combining malevolent intent with blundering practice. The whole thing is a bit of a charade. But it’s a very cruel one, given how it could impact the poor and defenseless.

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