Even with $3 trillion in proposed cuts, budget doesn't balance after a decade
President Donald Trump this morning released his latest budget proposals. The budget proposal, titled “Efficient, Effective, Accountable: An American Budget,” sets forth Trump’s priorities as Congress prepares to consider spending bills for the next fiscal year. You can read the full budget at this link.
The White House projects a large gap between government spending and tax revenue over the next decade, adding at least $7 trillion to the debt over that time. In 2019 and 2020 alone, the government would add a combined $2 trillion in debt under Trump’s proposed plan. With what some say are upbeat economic forecasts and numerous proposed cuts to social programs, most of which are dead-before-arrival in Congress, the Trump administration projects it would run a deficit of $450 billion in 2027.
Congressional pushback expected. Some if not the bulk of the $3 trillion in proposed Trump spending cuts would be very difficult to pass through Congress. For example, the budget would slice $554 billion from Medicare spending over 10 years. It proposes to save $139 billion over 10 years by reducing “improper payments government wide.” Congress, which controls the government’s purse strings, is unlikely to approve the level of cuts. Perspective: For fiscal 2018, the White House had requested $5.66 billion for the agency, which would have slashed EPA’s budget by a third. Instead, House appropriators rejected that proposal and passed a bill that would have funded the EPA at $7.5 billion, while the Senate bill, which has not gotten a floor vote, proposed $7.91 billion.
Even with these reductions, it would not bring the budget into balance because of tax revenue lost to the recent tax cut and higher spending on other programs.
Trump budget summary: The fiscal 2019 budget request, a $4.4 trillion blueprint, does not balance after 10 years while calling for a major military buildup and assuming lower savings from economic growth than in last year's iteration.
Spending plans: Priorities for fiscal 2019 echo many of his requests last year: a massive military buildup, border security, veterans’ programs and resources to curb the opioid epidemic. He’s also seeking $200 billion in new federal funds for his infrastructure overhaul, aiming to leverage nearly $1.5 trillion in total spending with the rest coming from private investors and state and local governments.
The budget would cut $1.8 trillion from mandatory spending programs over the next decade. More than a third of those savings would come from repealing the 2010 health care law. Another $236 billion in 10-year savings would come from cutting “wasteful spending in Medicare” and changing “drug pricing and payment policies;” $263 billion comes from reducing welfare programs and $203 billion from changes to federal student loans.
USDA: Requests $19 billion for USDA (excluding changes in mandatory programs), a $3.7 billion or 16% decrease from the 2017 enacted level. The president is proposing to slash crop insurance and other farm programs by $47 billion over 10 years and to significantly overhaul the Supplemental Nutrition Assistance Program (SNAP/food stamps).
Crop insurance cuts: Would reduce the average premium subsidy for crop insurance from 62% to 48% and limit commodity, conservation, and crop insurance subsidies to those producers that have an Adjusted Gross Income of $500,000 or less. Proposes reductions to “overly generous subsidies” provided to participating insurance companies by capping underwriting gains at 12%, “which would ensure that the companies receive a reasonable rate of return given the risks associated with their participation in the crop insurance program.”
Food stamps/SNAP: One area that would see the biggest reduction is Supplemental Nutrition Assistance Program (SNAP/food stamps) run by USDA. The White House proposes cutting $214 billion from that program over 10 years, though Congress often fights about changing SNAP and rarely ends up enacting changes. The budget calls for partially converting SNAP to a commodity distribution program and tightening work requirements.
Farm programs. Proposes to eliminate “an unnecessary and separate payment limit for peanut producers and limit eligibility for commodity subsidies to one manager per farm.” Proposals to streamline Federal conservation efforts to focus on programs that protect environmentally sensitive land and increase conservation practice implementation. The budget also would target the Conservation Stewardship Program and Regional Conservation Partnership Program to slash conservation spending by $13 billion, and the plan would eliminate the Livestock Forage Program, a form of disaster assistance, to save $4.5 billion. The Conservation Reserve Program (CRP) would see enrollment targeted to "environmentally sensitive areas," the USDA budget said, and "limit the enrollment of whole farm fields and eliminate all funding for signing incentive payments (SIPs) and practice incentive payments (PIPs), with the exception of the Conservation Reserve Enhancement Program." Plus, the CRP annual rental payments would be capped at 80% of average county rental based on data from the National Agriculture Statistics Service. But the budget does propose expanding the Environmental Quality Incentives Program (EQIP) by $60 million per year while eliminating the Conservation Stewardship Program (CSP). It eliminates Eliminating all funding for the Economic Adjustment Assistance Program (EAAP) for Upland Cotton users.
Food Aid: The White House calls for eliminating the Food for Peace program, as well as Food for Progress, which combined would save about $2.4 billion annually. The White House also proposed eliminating the McGovern-Dole Food for Education Program, which costs $200 million each year in donations of U.S. agricultural commodities, as well as financial and technical assistance, to support school meals in developing countries. These cuts are similar to those proposed in last year’s Trump budget proposals.
EPA: President Trump again called for a far leaner agency in his fiscal 2019 request, which proposed slashing its budget to $5.4 billion, a 34% reduction from the $8.2 billion that Congress approved for fiscal 2017. The White House estimates fiscal 2018 funding would reach $8 billion, according to an overview provided. The White House also suggested spending $5 million in fiscal 2019 to expand the use of pesticide licensing fees, a proposal estimated to raise $21 million over a decade.