Budget

Trump Doesn’t Really Care About His Budget

First Read: “By the way, how do we know the Trump White House didn’t really care much about its budget rollout yesterday? Because the president himself is thousands of miles away from Washington. Per budget expert Stan Collender, since the passage of the 1974 Congressional Budget Act, no president before Trump had been outside the country when the White House released its first budget proposal.”

Trump’s Budget Has a Huge Math Mistake

Dan Primack: “Budget projections are a specious business by their nature, as no one can accurately predict the nation’s next decade of economic fortunes. Let alone all of the legislative assumptions required, such as the future of healthcare, the specifics of tax reform, etc. Moreover, White House budget requests have a habit of being ignored by Congress. But this double-count is a big unforced error.”

“Trump’s budget anticipates around $2.06 trillion in extra federal revenue over the next decade, based on the aforementioned increase in economic growth. That new money then would be used to offset Trump’s proposed tax cuts, as the Administration previously said that the tax cuts would be revenue-neutral. Unfortunately, that same $2 trillion also is earmarked for closing budget gap. I tried to come up with a household analogy here, but they were all just too ridiculous. Only in D.C. can someone present this sort of math with a straight face.”

Trump’s Budget Defies Logic

Larry Summers: “Details of President Trump’s first budget have now been released. Much can and will be said about the dire social consequences of what is in it and the ludicrously optimistic economic assumptions it embodies.  My observation is that there appears to be a logical error of the kind that would justify failing a student in an introductory economics course.”

“Apparently, the budget forecasts that U.S. economic growth will rise to 3.0 percent because of the administration’s policies — largely its tax cuts and perhaps also its regulatory policies.  Fair enough if you believe in tooth fairies and ludicrous supply-side economics.”

“Then the administration asserts that it will propose revenue neutral tax cuts with the revenue neutrality coming in part because the tax cuts stimulate growth! This is an elementary double count.  You can’t use the growth benefits of tax cuts once to justify an optimistic baseline and then again to claim that the tax cuts do not cost revenue. At least you cannot do so in a world of logic.”

Vox: Trump’s budget relies on magic economic growth.

Trump’s Budget Hits His Own Voters Hardest

“Donald Trump, whose populist message and promises to help American workers propelled him to the White House, is set to issue a budget proposal on Tuesday that instead takes aim at the social safety net on which many of his supporters rely,” Politico reports.

“Rather than breaking with Washington precedent, Trump’s spending blueprint follows established conservative orthodoxy, cutting taxes on the wealthy, boosting defense spending and taking a hatchet to programs for the poor and disabled – potentially hurting many of the rural and low-income Americans that voted him into office.”

Ryan Bucks White House on Tax Plan

“Paul Ryan and the White House are barreling toward a tax reform show-down — a faceoff that’s becoming all but inevitable as the speaker continues selling a tax plan rejected by Trump officials,” Politico reports.

“At issue is a controversial pillar of the House GOP tax plan that effectively hikes taxes on imports.”

“Top administration officials from Treasury Secretary Steven Mnuchin to chief economic adviser Gary Cohn have warned the speaker that they’re not exactly fans of the so-called border adjustment tax — hoping Ryan would take a hint and change direction.”

White House Frames Budget as Welfare Reform

“The Trump administration is billing its budget as a plan to ‘reform the welfare system’ and replace ‘dependency with dignity of work,’ while saving $274 billion over 10 years,” according to a four-page memo obtained by Politico.

“The White House budget, to be released Tuesday, will suggest taking an ax to safety net programs like food stamps and popular family benefits like the child tax credit, in order to achieve the ambitious goal of balancing the federal budget over a decade.”

Washington Post: Trump’s plans to cut food stamps could hit his supporters hardest.

Trump Wanted to Force a Government Shutdown

Jonathan Swan: “Publicly, President Trump didn’t seem overjoyed when, earlier this month, he signed a $1 trillion bill to keep the government open. Privately, his mood was much, much worse.”

“When the spending bill had been negotiated and finalized, White House chief of staff Reince Priebus phoned the former House Speaker John Boehner and told him the president doesn’t like how the negotiation came out and is thinking about vetoing the bill. Boehner has told associates that Priebus asked him if he could talk Trump into signing the spending bill. Boehner said he would.”

Trump Will Propose Massive Cuts to Medicaid

“President Trump’s first major budget proposal on Tuesday will include massive cuts to Medicaid and call for changes to anti-poverty programs that would give states new power to limit a range of benefits… despite growing unease in Congress about cutting the safety net,” the Washington Post reports.

“For Medicaid, the state-federal program that provides health care to low-income Americans, Trump’s budget plan would follow through on a bill passed by House Republicans to cut more than $800 billion over 10 years. The Congressional Budget Office has estimated that this could cut off Medicaid benefits for about 10 million people over the next decade.”

“The White House also will call for giving states more flexibility to impose work requirements for people in different kinds of anti-poverty programs, people familiar with the budget plan said, potentially leading to a flood of changes in states led by conservative governors.”

GOP Plans Massive Cuts to Programs for the Poor

“House Republicans just voted to slash hundreds of billions of dollars in health care for the poor as part of their Obamacare replacement. Now, they’re weighing a plan to take the scalpel to programs that provide meals to needy kids and housing and education assistance for low-income families,” Politico reports.

Wall Street Journal: “Conservative Senate Republicans are weighing faster and steeper cuts to Medicaid that could drop millions of people from coverage and mark the biggest changes to the program in its 52-year history.”

Republicans Battle Over Tax Reform

“House Republican leaders are battling the Trump administration as well as many of their own colleagues in Congress — including the Freedom Caucus — over one of the most basic questions surrounding their tax plans this year: Should they go for a once-in-a-generation overhaul of the code or settle for an old-fashioned tax cut?,” Politico reports.

“With Republicans in complete control of the government, Speaker Paul Ryan and his chamber’s tax writers see a rare opportunity for a sweeping makeover, something lawmakers have long promised but haven’t done since the Reagan administration.”

“The other side wants to focus on cutting taxes. That would not only be a much easier lift but, with all the uncertainty over Republicans’ Obamacare replacement plans, would also help ensure they go into next year’s midterm elections with a major legislative accomplishment.”

A Massive Fiscal Cliff Is Coming

Politico: “Over the next several months, Republicans will have to figure out how to cut deals with Democrats to avoid a default on the national debt and avert a government shutdown, among several other must-pass items.”

“Though Congress avoided a government closure this month — a major bipartisan legislative accomplishment for an institution otherwise devoid of any this year — a quintet of critical deadlines in the early fall will force either a furious round of deal-making or brinkmanship that could have dire effects on the economy. It will be a major test of Trump and the all-GOP Congress’ ability to govern, who are bound to be blamed for any problems given their dominant political position.”

“As if avoiding a government shutdown and debt default weren’t enough, Congress will have to tackle three important programs set to expire at the end of September: Federal Aviation Administration law, federal flood insurance and a children’s health insurance initiative.”