The complete proposed budget for Donald Trump’s first fiscal year will not be released until next week, but advance word is that the president will propose a plan to balance the federal budget within 10 years. The budget will reportedly ask for cuts in federal entitlement programs in conjunction with an overhaul of the tax and regulatory system.
The Wall Street Journal reports that the plan will not include cuts to the two largest drivers of future spending, Medicare and Social Security, but will ask for trillions of dollars in cuts to discretionary spending such as education, housing, environment programs and foreign aid as well as nondiscretionary spending in programs such as food stamps, Medicaid and federal employee-benefit programs.
The budget will also include budget increases that were announced in the budget blueprint released in March. One of the largest increases in funding would go to the military, which was slated for an additional $54 billion to be split between the Departments of Defense and Homeland Security. There is also likely to be additional infrastructure spending, a neestimatedement for paid parental leave and border security measures.
The Journal notes that the budget does not include the details of the tax reform, but is likely to estimate the Republican tax reform as revenue neutral. Rate cuts would be offset by the elimination of tax breaks so that a Congressional Budget Office estimate would show no loss of revenue.
Balancing the budget will require growth as well as spending cuts. “The way we balanced the budget in the 1990s is we had spending restraint and GDP growth caught up—government revenues caught up, as the GDP growth came in,” Office of Management and Budget Director Mick Mulvaney said. “That’s what we’re trying to get back to.”
White House estimates of growth are much more optimistic than CBO estimates. The White House estimates three percent growth by 2021 while the CBO forecasts a 1.9 percent growth rate. Economists polled by the Journal estimate growth at 2.3 percent if Mr. Trump’s policies are enacted.
Conflicts over the growth rate may make it hard for the Trump Administration to find support among budget hawks for its spending increases. “I am extremely pessimistic that you can show a balanced budget unless you’re going to make the mother of all ‘rosy scenario’ type assumptions,” said William Hoagland, a former Republican budget aide who is now senior vice president at the Bipartisan Policy Center.
The spending cuts are also certain to draw fire from Democrats. Expect much weeping, gnashing of teeth and rending of garments over the proposed slashing of funds for safety net programs. Some moderate Republicans are also likely to object, making it extremely unlikely that the full measure of the cuts will become law.
House Minority Whip Steny Hoyer (D-Md.) said as much on Thursday, claiming, “It is an ideological document, not a document that will ever be utilized.”
The budget is slated to be released next Tuesday, while President Trump is touring Europe and the Middle East. Given Mr. Trump’s problems over the past two weeks, that may increase Republican chances of getting the budget passed.