President Trump’s 2019 budget proposal is every bit as bad as our repetitions of “amnesty now, enforcement later” on immigration.
How ironic that the White House would release its annual budget proposal for 2019 right after Congress voted to hose taxpayers once again on the budget for 2018. While Trump didn’t create this debt, nor is he solely responsible for exacerbating it, this budget makes it clear that he will certainly not serve as an agent of change. Worse, the few good provisions of the budget will never be enacted, as we painfully learned this past year, while the new spending proposals will only grow bigger over time. The president has refused to use his veto pen as leverage to enact some spending cuts, and until he does so, we will be left with nothing but more spending now with promises of cuts later.
Here are eight quick observations on the framework released by the Office of Management and Budget (OMB).
1) More spending than Obama: The proposal would spend an unconscionable $4.4 trillion next year. Obama’s final budget request was $4.15 trillion. Despite a record $3.4 trillion in revenue, this budget would result in a trillion-dollar deficit. These numbers are actually low, because they assume spending cuts the president has, thus far, failed to fight for.
2) Economic growth can never outpace debt: The budget blueprint would spend $52.6 trillion over the next 10 years. Because of unrealistically rosy revenue predictions and economic growth, it assumes $45.5 trillion in revenue, resulting in only $7 trillion more in accumulated debt, as opposed to the $11 trillion under the current baseline. The budget assumes four to five percent GDP growth. But with the debt payments from these spending policies slated to rise to crippling levels, there is no way our economy will be able to grow that fast. Furthermore, this budget assumes repeal of Obamacare and reforms to Medicaid that Trump didn’t even feel strongly enough about to mention in his State of the Union address. Thus, undoubtedly, the revenues will be much lower and the spending will be much higher, unless we change our culture or Trump finds his veto pen.
3) Medicaid is the new Medicare: Spending on Medicaid alone is projected to be $412 billion in 2019 and $5.2 trillion over 10 years. And that includes $445 billion in cuts that will never happen under the current policies. Consider the following statistic: Defense spending in this blueprint is projected to be $7.4 trillion. That means that Medicaid, when combined with the likely state costs of $2 trillion, will cost as much as the military. Medicaid now costs as much as Medicare did when I started in public policy. And I’m not old.
4) Social Security hits a milestone: The annual cost of Social Security, the single largest expenditure of the federal government, is slated to break $1 trillion for the first time.
5) Interest on debt is a threat to the republic: The real killer here is interest on the debt. For years, it was stagnant at around $230 billion. That is slated to grow to $447 billion in 2019, which is already a 70 percent increase from Trump’s first year. Under the incorrect assumptions of this blueprint, it will rise to $760 billion in 10 years, more than the current cost of Medicare. Under the more likely baseline scenario, it will rise to $859 billion. And this proposal assumes that the 10-year Treasury note will not rise above 3.7 percent, still well below historical averages. This means that by 2025, we will spend more on interest to service our debt than the entire cost of non-defense discretionary spending, and by 2026, it will exceed defense spending.
6) It’s health care and welfare, stupid! Slightly more than half of all federal spending over the next 10 years will be from health care, welfare, other mandatory spending programs (not including Social Security), and interest on the debt. That means that if we abolished the entire military, the entire non-defense bureaucracy of the federal government, and Social Security, health care and welfare alone would eat up the lion’s share of revenue. This budget proposal assumes that $554 billion in gratuitous handouts to the hospital/insurance cartel through the Medicare program would be eliminated. Yet up to now, Congress has shown no willingness to clamp down on Medicaid spending, and in fact, the president just signed a budget bill expanding similar programs that aren’t nearly as popular.
7) Discretionary cuts that were already rejected: This budget proposal contains $2 trillion in cuts to non-defense discretionary spending, which Congress has already not only ignored but downright steered in the opposite direction. Unless the president is willing to wield the veto pen, the tab for this budget will be much higher.
8) The unwieldy expansion of infrastructure: In a separate 55-page report, which was incorporated into the budget blueprint, the president is calling on the federal government to throw an additional $200 billion at the states for transportation needs in the hopes of “leveraging” states and the private sector to spend an additional $1.3 trillion. If this proposal had come from a Democrat, conservatives would ridicule it as much as they did the Obama stimulus. Granted, his proposal does call for regulatory reform and for limiting judicial meddling predicated on junk lawsuits from environmental groups, as well as selling off some federal assets. But much like with other proposals, we will get the increased spending from Congress without the reforms.
This is the Medicaid expansion of transportation policy, and this plan would crown the Commerce Department (a department we were supposed to abolish) the king over local decisions made by all 50 states. A cool $50 billion would be doled out to states based on governors submitting sufficient plans to beef up rural roads, and the grant formula would be determined by the number of rural lane miles. This is more urban planning from Washington. A better compromise would be to make this the final $200 billion plan to throw at states but then completely turn over all revenue and the ensuing responsibility to the states, so that states would be forced to prioritize spending or raise taxes based on efficient decision-making and local input. Running the transportation policy of all 50 states from Washington at this stage in our republic is stupider than running education from the Department of Education.
Folks, this is an optimistic budget, and yet it still results in eye-popping debt. That factors in acceptance of “spend now, save later” promises that this administration has already broken. Taxpayers have simply been disenfranchised.
After last year’s budget blueprint, I praised the president’s proposal but called on him to “make it stick” by actually fighting for it and threatening a veto to leverage enactment of at least a few major provisions. That didn’t happen. This is nothing more than a “Lucy and the football” budget until the White House is willing to play hardball with Congress. Last year was “trust but verify”; this year, conservatives must verify before trusting.
Author: Daniel Horowitz
Daniel Horowitz is a senior editor of Conservative Review. Follow him on Twitter @RMConservative.