President Donald Trump released a $4.8 trillion budget proposal Monday that includes a familiar list of deep cuts to student loan assistance, affordable housing efforts, food stamps and Medicaid.
The proposal for fiscal year 2021, which must be approved by Congress, includes additional spending for the military, national defense and border enforcement, along with money for Trump’s Space Force initiative and an extension of the individual income tax cuts that were set to expire in 2025. Its biggest reduction is an annual 2% decrease in spending on discretionary domestic programs, such as education and environmental protection.
President Donald Trump’s position
Speaking to the nation’s governors at the White House on Monday, Trump said his budget proposal would bolster the U.S. military and nuclear arsenal and bring the deficit close to zero in “not that long a period of time.”
“We’re going to have a very good budget with a very powerful military budget, because we have no choice,” he said, adding that he was aiming to reduce spending by rooting out “waste and fraud.”
Where things stand
Trump’s past budget proposals have been defined by a belief that the economy will grow significantly faster than most economists anticipate. The latest version, released Monday, is a brief departure: It concedes, for the first time, that the administration’s past projections were too optimistic.
Then it goes right back to forecasting 3% growth, for the better part of a decade.
Despite the deep cuts in the budget’s numbers, Trump’s budget does not detail another round of tax cuts that his administration has suggested he will pursue if he wins reelection. Instead, it extends for 10 years the expiring cuts contained in the tax overhaul Trump signed in 2017, at an estimated revenue loss of about $1.4 trillion.
What it means
The White House budget is largely a messaging document that reflects the administration’s spending priorities.
While Monday’s proposal is similar to the president’s previous requests, it is a stark contrast with his leading Democratic rivals for the White House, who have proposed large tax increases on the rich and expansions of government efforts to provide health care, education, affordable housing and aid for the poor.
Trump’s $4.8 trillion budget proposal is slightly larger than last year’s $4.75 trillion request and calls for increased spending on the military, the border wall, infrastructure and other priorities, including extending the president’s 2017 tax cuts.
It also includes trillions of dollars of cuts to safety-net programs such as Medicaid and discretionary spending programs outside of the military, including education and the environment.
Why it matters
If enacted, the proposals would probably widen the gap between rich and poor. Many of the ideas have already been proposed by Trump and rejected by Congress. But some are being enacted by regulation. Taken together, they underscore the president’s desire to chip away at the nation’s social safety net while increasing spending on the military and border security.
Trump’s budget emphasizes increasing labor force participation of people with disabilities and addressing fraud. In recent years, the improving economy has drawn many Americans with disabilities back into the labor force; the budget argues there is room for further movement in that direction.
The budget maintains the administration’s tradition of highly optimistic economic growth forecasts, which have not borne out the last two years.
Trump’s budget does not estimate wiping out the deficit until 2035 and gets there only through rosy assumptions about economic growth — an area in which the administration’s past predictions have proved to be overconfident — and the continued ability of the government to borrow money at rock-bottom rates.
Past administrations have also dressed up their budget forecasts with economic projections that proved far too good to be true. In its fiscal year 2011 budget, for example, the Obama administration predicted several years of growth topping 4% in the aftermath of the 2008 financial crisis — a number it never came close to reaching even once.
The budget also projects adding $3.4 trillion to the national debt by 2024, at the end of a potential second Trump term.
Major cuts to Medicare
The budget proposes numerous changes to Medicaid that reduce spending on the health program for the poor and the disabled. Combined with a section of the budget devoted to “health care reform vision,” it cuts spending on Medicaid and subsidies for the Affordable Care Act by a combined $1 trillion.
The budget specifies changes that would tend to reduce enrollment in Medicaid and that the Congressional Budget Office has estimated would cause some states to reverse their expansions of coverage to childless adults without disabilities as part of the Affordable Care Act.
Many Medicaid beneficiaries would be subjected to work requirements and asset tests, and states would be pressed to verify eligibility for the program more often under the budget’s proposals, strategies that have been shown to reduce enrollment even among those who are eligible. States that preserve their Medicaid expansions under the Affordable Care Act would be asked to gradually pay a larger share of the medical bills for those patients.
The budget would also reduce the federal share of spending for all Medicaid patients, by changing rules about how states can offer extra payments to certain health care facilities run by state or county governments, a policy that the administration has already proposed as a regulation. It would reduce a funding stream meant for hospitals that serve a “disproportionate share” of uninsured patients.
The budget also makes some small expansions of Medicaid coverage: It would allow states the option to cover inpatient care for psychiatric care or drug addiction treatment.
Medicare tweaked but not slashed
For Medicare, which the president has repeatedly pledged to leave untouched, the budget includes more than a dozen proposals to streamline the program and eliminate what the document describes as waste. Altogether, those strategies save about half a trillion dollars over the decade. But the changes do not represent major structural changes to the program that would reduce benefits or limit who would be eligible for the programs. Many of these shifts were included in President Barack Obama’s budgets as well.
Among the changes: Doctors would be paid the same price for services, regardless of whether they work for a hospital or a private practice. It also includes an effort to reduce payments to long-term care hospitals for patients after they are discharged from a regular hospital.
The budget suggests, for the first time, allowing Americans over 65 to opt out of Medicare entirely if they wish. And it would allow Medicare beneficiaries enrolled in a high-deductible health plan to set aside more tax-free savings for health expenses.
It also calls on Congress to pass legislation to reduce the prices paid for prescription drugs. Such legislation, should it be developed and passed, would almost certainly cut spending by Medicare, which is among one of the budget’s costliest items.
Cuts to social programs
The White House also wants to cut the federal food stamp program, once again calling for reductions in the number of adults who can qualify for the Supplemental Nutrition Assistance Program, or SNAP. The 2021 budget proposes cutting SNAP funding by about $15 billion from last year.
The White House has been making changes to the program on its own, raising eligibility requirements and tightening rules to prevent states from obtaining waivers from work requirements. That includes a rule change that goes into effect in April, which will require many adults without children who are able to work to find employment quickly or risk losing their food stamps. The administration estimates nearly 700,000 people across the country would lose access to the program.
Credit: SAMUEL CORUM
Credit: SAMUEL CORUM
Money for low-income housing would also be depleted, as Trump’s budget proposed a 15.2% decrease from last year in gross discretionary funding for the Department of Housing and Urban Development, eliminating several block grant programs and reducing funding for rental assistance for low-income people.
The budget would eliminate the Choice Neighborhoods program, which awards grants to neighborhoods with deteriorating public and federally assisted housing, arguing that states and local governments are better able to revitalize neighborhoods.
Trump also requested less money for rental assistance programs, such as Housing Choice Vouchers, and proposed that tenants who can work contribute 35% of their income to rent instead of 30%.
But Democrats seized on the proposals Monday as evidence that the president was out of touch with the plight of working families.
“Once again, the president is showing just how little he values the good health, financial security and well-being of hardworking American families,” House Speaker Nancy Pelosi said.
Tom Perez, the chairman of the Democratic National Committee, accused Trump of breaking his promises to the middle class by prioritizing his border wall over food stamps.
“He’s going after critical funding for education and SNAP benefits while prioritizing funding for his unnecessary border wall and putting our national security at risk with massive cuts to resources for international aid and diplomacy,” Perez said.
Military spending
The budget assumes large amounts of new military spending.
The administration's budget revealed for the first time that it intended to create a new submarine-launched nuclear warhead, named the W93. Its development is part of a proposed 19% increase this year, to $19.8 billion, for the National Nuclear Security Administration, the Energy Department agency that maintains the nuclear stockpile and develops new nuclear warheads. More tellingly, that is a jump of more than 50% since 2017, Trump’s first year in office.
There is $15.5 billion scheduled for development and deployment of new space assets — part of the new Space Force created by Trump — that are central to detecting incoming launches and for the command and control of American offensive weapons.
Buried in the budget is a significant new effort to develop intermediate-range missiles — largely conventional weapons — that were prohibited by the Intermediate Nuclear Forces treaty with Moscow that Trump withdrew from last year.
The budget also proposes $3.2 billion for hypersonic weapons, a 23% increase in research and development meant to compete with a growing number of similar Russian weapons. The missiles are particularly hard to defend against because they follow an unpredictable path to a target, at tremendous speed. But there were few specifics about whether the American versions would be fielded around the time that Russia’s weapons roll out, now scheduled for later in this decade, or whether they would follow by a number of years.
The Trump budget also proposes putting significant funds into reinvigorating old systems.
For years, strategists have debated whether the United States could abandon its ground-based nuclear missiles, spread out in silos across the West. They are considered highly vulnerable and so old — many of them date to the 1970s — that they are a hazard.
But Trump has produced a base budget of $1.5 billion in 2021 to prepare for deploying a new generation of missiles in the late 2020s. That is a nearly threefold increase from last year.
Student loan debt
At a time when many Democratic candidates are proposing sweeping efforts to forgive student loan debt and make some or all public colleges tuition-free, Trump’s budget again recommends eliminating subsidized federal student loans and ending the public service loan program. The program is an incentive for teachers, police officers, government workers and other public servants that cancels their remaining federal student loans after a decade of payments. Those proposals were in last year’s budget, but Congress did not adopt them.
The budget also calls for the creation of a single income-driven loan repayment program, to replace what has become a confusing jumble of different payment plans. Under the administration’s plan, borrowers would pay 12.5% of their discretionary income toward their loans, instead of the 10% many currently pay.
Education funding
The administration would drastically change the way states are allocated funding for programs that support disadvantaged K-12 students. The budget proposes consolidating 29 programs into a $19.4 billion block grant that would dispense funding to states, who would then determine how to use it. Among the programs that would be zeroed out to fund the grant are 21st Century Community Learning Centers, which fund after-school programs for low-income students; funding for programs in rural schools and magnet schools; and funding for homeless and migrant students.
The measure would overhaul the role of the Education Department, reducing its staff and administrative costs, and “empower states and districts to decide how to best use federal funds to meet the needs of their students,” the department’s budget said.
Health care
The new budget leaves Obamacare funding in place but asks Congress to develop policies that would “advance the president’s health reform vision,” with a corresponding price tag, which it says would save $844 billion over the decade.
“While Americans have the best health care options in the world, rising health care costs continue to be a top financial concern for many Americans,” the budget document read. “The president’s great health care vision will ensure better care at lower costs.”
In previous years, Trump’s budget has proposed repealing the Affordable Care Act and replacing it with a system that would provide block grants of funding to states with far fewer rules about how the money should be spent. The new budget backs away from that approach.
The budget’s approach to health care is particularly striking given the administration’s actions in court. The White House has joined a lawsuit brought by a group of Republican states that would seek to invalidate all of the Affordable Care Act. The Supreme Court is deciding whether it will take up that case or allow the lower courts to continue reviewing it. The president has repeatedly promised to release a health care plan that could be deployed if he wins in court but has yet to do so.
The budget still makes major changes to health care programs, including several that would tend to lower federal spending on Medicaid, by reducing the share of medical bills the federal government will pay for the Obamacare expansion population and imposing new requirements on beneficiaries who wish to enroll. All together, it proposed combined cuts to spending in Medicaid and Affordable Care Act subsidies that equal $1 trillion — cuts that would mean substantial program changes.
Democratic candidates, in contrast, have offered detailed plans, which typically cost trillions of dollars raised via new taxes on corporations and the rich, to expand health care coverage and reduce costs for American patients. Health care remains a top issue for many of Trump’s supporters, while Democrats’ “Medicare for All” plans have fared well in many opinion polls.
Reaction on Capitol Hill
Democrats dismissed the budget out of hand and vowed to prevent the changes from going into effect. Pelosi accused Trump of “a complete reversal of the promises he made in the campaign and a contradiction of the statements he made at the State of the Union.”
Democratic Rep. Richard Neal of Massachusetts, the House Ways and Means Committee chairman, said when he saw the budget, “I felt an immense sense of relief — relief that there is absolutely no chance of his ruthless cuts to critical programs ever becoming law.”
Trump’s budget avoids some hot-button issues that Democrats could seek to turn against the president in November — notably by not reducing Social Security or Medicare benefits. Most of the administration’s initiatives to save money on Medicare are cost-reduction proposals first offered under President Barack Obama.
Administration officials appeared to make little effort Monday to sell congressional Democrats on the budget’s proposals. They canceled a planned briefing for some Democratic staff members, two congressional aides said. One aide said it was because elements of the budget leaked Sunday night. A senior administration official confirmed the cancellation of the briefing because of the leaks, but a separate bipartisan, bicameral briefing remained scheduled.
"Presidents' budgets are a reflection of administration priorities, but in the end, they are just a list of suggestions, as the power of the purse rests with Congress. Bipartisan consensus will be necessary to bring our debt and deficits under control. I hope to work with my colleagues on both sides of the aisle to put our country on a more sustainable fiscal course." — Sen. Michael Enzi, R-Wyoming, chairman of the Senate Budget Committee
While Republicans have made relatively little noise about the ballooning federal deficit since Trump took office, some lawmakers suggested Monday the budget would not pass muster with fiscal conservatives.
“Presidents’ budgets are a reflection of administration priorities, but in the end, they are just a list of suggestions, as the power of the purse rests with Congress,” said Sen. Michael Enzi, R-Wyoming, the chairman of the Senate Budget Committee. “Bipartisan consensus will be necessary to bring our debt and deficits under control. I hope to work with my colleagues on both sides of the aisle to put our country on a more sustainable fiscal course.”
Sen. Kevin Cramer, R-North Dakota, sent out two statements that, while initially complimentary of Trump’s efforts to cut federal spending, voiced concern with cuts to defense and agriculture programs. Cramer said he disagreed with a number of defense provisions, including “cuts to intelligence-gathering resources for our military.” He also said that cuts to certain farm programs “would save little but inflict severe pain in American agriculture.”
Democrats do not plan to release a separate budget proposal, pointing to the overall figures for military and nonmilitary spending approved in the summer’s bipartisan budget deal.
Shrinking the EPA
The administration reserved some of its deepest cuts for the Environmental Protection Agency, which would face a 26% reduction in funding and the elimination of 50 programs that Trump deemed “wasteful” or duplicative. The budget would shrink the agency to funding levels it last saw during the 1990s and focus it on “core functions” such as addressing lead exposure in water and revitalizing former toxic sites, while excluding efforts including beach cleanup. It does not mention climate change.
Congress has typically ignored the administration’s proposals for cuts to the agency. Democratic presidential candidates have proposed trillions of dollars in new spending to reduce carbon emissions and try to stem the resulting rise in global temperatures.
Also notable
Trump's budget proposes creating an entirely new agency to police tobacco, moving that responsibility out of the Food and Drug Administration and into the Department of Health and Human Services.
In what Trump said was an attempt to “put our nation on a fiscally sustainable course,” he proposed reducing a scheduled pay raise for civilian federal workers in 2021 to 1% from 2.5%. Congress can set its own levels in spending bills later this year.
— This report was compiled by ArLuther Lee for The Atlanta Journal-Constitution.
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