WASHINGTON -- President Trump’s proposed budget for Fiscal 2019 falls far short of what is needed to put the nation’s finances on a sustainable path, particularly in light of the deficit-financed spending and tax breaks that he and Congress approved in the last two months.
Robert L. Bixby, executive director of The Concord Coalition, issued the following statement today:
This budget is essentially a confession of failure on dealing with the nation's fiscal challenges.
Last year the president’s budget at least set a goal of balancing the budget within 10 years. Yet he and Congress not only failed to work in that direction, they abandoned any pretense of fiscal responsibility by approving the recent tax and spending bills.
The depth of the budgetary hole that has been dug over the past year is made clear by the fact that the administration could not produce a balanced budget even with unrealistic growth assumptions and scoring gimmicks.
Perhaps most jarring is a proposal to cut non-defense discretionary spending by 2 percent a year (the “two-penny plan” instead of last year’s proposed “one-penny plan”), beginning with cuts in Fiscal 2018. This proposal results in “paper” savings of nearly $1.5 trillion and for 2028 a cut in spending of 42 percent. The possibility that either Congress or the administration itself would enact such severe spending restraints is belied by the spending increases just signed into law for both Fiscal 2018 and 2019.
The president’s proposed cuts in mandatory spending are disproportionately and unrealistically aimed at means-tested programs, which are not projected to grow as fast as Medicare and Social Security. Under the policy assumptions in this budget, Medicare and Social Security would grow from a little more than a third of the budget to nearly half by 2028.
Another dubious assumption is nearly $700 billion in health care savings from an Obamacare repeal-and-replace plan that could not pass the Senate last year.
Dubious assumptions about economic growth also hang over this budget. They assume a short-term spike in economic growth that would be higher than private-sector forecasts, and long-term sustained growth that is wholly inconsistent with the Congressional Budget Office (CBO), private forecasters, and what we know about the direction of the future components of growth: the aging of the population and workforce productivity.
Additionally, the administration is counting on over $800 billion in economic growth-related savings from its new proposals without any detail or logic on how that would be possible on top of economic assumptions that are already high.
The administration is focusing a great deal of attention on its infrastructure plan but counting on most of the money for it to come from state and local governments as well as the private sector. The federal government would provide only $200 billion of the $1.5 trillion spending goal. Yet the budget proposes transportation and other infrastructure cuts of around $200 billion and there is no clear, credible explanation of this juxtaposition or how any new infrastructure spending would be financed.
Trump says he is open to the possibility of raising the federal gas tax, which has not been done since 1993. This would be a reasonable step. But just hinting at such an increase is not enough; the president should show real leadership by calling on Congress to approve a specific gas tax hike.
More generally, what the nation really needs from the president at this point is some recognition that the country is on an increasingly dangerous financial path -- and some leadership in finding responsible ways to rein in the massive federal borrowing that is currently planned.
Media Contact: Steve Winn, [email protected], (703) 254-7828
The Concord Coalition is a nonpartisan, grassroots organization dedicated to fiscal responsibility. Since 1992, Concord has worked to educate the public about the causes and consequences of the federal deficit and debt, and to develop realistic solutions for sustainable budgets. For more fiscal news and analysis, visit concordcoalition.org and follow us on Twitter: @ConcordC