This week on Facing the Future, Concord Coalition Executive Director Carolyn Bourdeaux discussed her initial reaction to President Trump’s “skinny budget” and outlined some trouble spots for House Republicans as they try to make the numbers work on a bill to extend expiring provisions of the 2017 Tax Cut and Jobs Act (TCJA).
We also heard from two college students who recently took part in the annual Fiscal Challenge competition where teams from around the country devise and defend their own plans for putting the federal budget on a sustainable path. Professor Mike Aguilar of UNC Chapel Hill, who created and runs the Fiscal Challenge, joined the conversation along with Concord Coalition National Field Director Phil Smith.
We have yet to see a full budget from the Trump Administration, but on Friday, May 2 the White House released a partial budget (its “skinny budget”) limited to the president’s recommended levels for defense and non-defense discretionary spending. This is the portion of the budget that goes through the annual appropriations process and comprises roughly one-quarter of total federal spending.
“It’s only dealing with a fraction of the budget,” Bourdeaux said. “But this is the material that we often think of when we think of the full budget. It is the Department of Defense. It’s education, it’s labor, it’s agriculture. It is all of the foreign policy programs, pretty much everything that is not Social Security, Medicare, Medicaid, interest on the debt and some of our entitlement programs.”
“What has generated a lot of controversy,” she explained, “is that the President has proposed to cut non-defense spending by $163 billion, about 22 percent of that total, which is about $720 billion right now. He’s proposing to whack it down to $557 billion. And then, he is proposing to increase funding for defense, but not through the regular appropriations process. He wants to tuck that in with the reconciliation bill, which is a separate piece of legislation where he is trying to incorporate reauthorization of the Tax Cut and Jobs Act plus a number of his other tax cuts.”
Adding up the proposed cuts and increases, Bourdeaux said it all evens out. “There’s not any deficit reduction really going on here, though to be fair he is paying for at least these discretionary shifts in priorities that he wants. Whether you agree or disagree with those priorities, at least they are paying for it.”
Bourdeaux pointed out, however, that, “the big action right now is around reconciliation,” which is the special budget procedure that can be used to avoid a Senate filibuster. The budget resolution approved by the House and Senate includes reconciliation instructions that would allow tax cuts and spending increases to increase budget deficits by $5.8 trillion over the next 10 years.
“We have been running around here at Concord with our hair on fire about this because the total bill, once you increase spending and add these tax cuts, is $5.8 trillion,” Bourdeaux said. “That is the largest one-time increase in modern American history. It is more addition to the debt than Biden did in his entire four years. So it’s a big deal.”
She pointed out that Republicans are looking for offsets to cover some of the cost of extending the tax cuts and “of that about $880 billion is expected to come from Medicaid. This is one of several places where they are really getting tangled up because of a lot of state level resistance to the Medicaid cuts that they have on the table.”
“Another big area where things are getting tangled up,” she said “is around the state and local tax deduction which we often refer to as SALT. So there are two areas of big thorny knots they’re trying to untangle.”
Regarding the student Fiscal Challenge, Aguilar said he started it in 2013 because he felt that fiscal policy was not getting enough attention in college classes. “We teach in college a lot about monetary policy within the economics community – interest rates, the Federal Reserve – but not a lot about government spending, taxation, debt, and deficit, so I wanted to fill the gap.”
Two students who took part in Fiscal Challenge teams this year described their plans and what they would like to share about the experience with policymakers in Washington.
John O’Neill of the winning Notre Dame team said, “I’ve realized just the immense scale and problem of our government debt and what that will pose for my generation as we get older and enter the workforce. And just the fact that a lot of the programs that we have now are simply not sustainable. Social Security is going to be insolvent in less than 10 years, and we’re going to be spending trillions of dollars on interest payments rather than investing in public education or defense, or other social programs for the general good. This is detrimental to both the economy, and the U.S. financial standing. And so if there are any policymakers out there listening, I would urge them to really prioritize setting us on a path towards more physical sustainability.”
Kristina Krichmaryov of Pace University added a message to youth, “Do not be afraid, because what I’ve noticed, at least among my generation, is many people are either not caring, or maybe they’re too afraid to take the step forward and really make positive change. So I think it’s really important to do what they are passionate about. And in terms of current policymakers, I think that they do see the troubles, and I think they do hear us, but I think they hopefully would be a little bit more open-minded. Sometimes change is good and regardless of political stances, I think it’s important that as a country, we all look at each other and see we all are human. We all are here in it together. And I think by the youth getting more involved and getting more educated and taking it more seriously, that this is something that actually is going to affect us in the future, and not just us, but our future kids and our future generations. I think in that mind we can maybe potentially stay hopeful, and one day see the change that we would like.”
Hear more on Facing the Future. Concord Coalition Senior Advisor Bob Bixby hosts the program each week on WKXL in Concord N.H., and it is also available via podcast. Join us as The Concord Coalition team discusses issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.
