Highlights of President’s FY 2018 Budget Proposal
- CBO released its annual re-estimate of the President’s Budget, but the conclusion that deficits would drop is misleading because the Budget includes deep cuts in domestic discretionary and entitlement programs that Congress is likely to reject in large part, and the Budget does not include the deep cuts in tax rates likely to be included in a yet-to-be-released tax plan.
- Congressional Quarterly reported June 19 that House Budget Committee Republicans are considering a limit on defense spending (not counting war funds) of $620 billion – a $70 billion increase above the statutory $549 billion cap that is current law. Trump had proposed exceeding that cap by $54 billion. The committee is also discussing a $511 billion cap on non-defense discretionary spending, a $5 billion reduction from the current cap of $516 billion. (Trump proposed a $54 billion reduction in non-defense.)
- President’s FY 2018 Budget was transmitted to Congress on Tuesday, May 23, launching a contentious debate over America’s priorities. See our Blog, FY 2018 Trump Budget – Top 10 Things You Should Know, for details. Highlights of the Budget:
- Medicaid Cuts: Budget assumes phasing out the Obamacare Medicaid expansion and scales back the underlying Medicaid program by making it a ”capped entitlement,” under which federal reimbursements to States for enrollee health expenses would no longer be open-ended. However, Budget Director Mulvaney was unable to pin down whether the Budget calls for $800 billion or $1.4 trillion in Medicaid cuts over 10 years, saying the cuts would be “someplace between” the two amounts, as reported by Congressional Quarterly. Medicaid cuts are inconsistent with a Trump promise in June 2015 to “save Medicare, Medicaid and Social Security without cuts.”
- Other Entitlement Cuts (billions of $ over 10 years): Food Stamps (SNAP) ($193b); Federal Retirement reduced benefits and increased contributions ($147b); Student Loan reductions ($76b); Reduce Veterans’ COLAs and Terminate IU upon reaching retirement age ($42b); Cut Child Tax Credits and Earned Income Tax Credits by requiring SSN ($40b); Cut farm payments ($38b); Cut Temporary Assistance for Needy Families, TANF ($22b); Eliminate Social Services Block Grant ($16b); Reduce Unemployment Insurance ($13b); Cut Supplemental Security Income ($9b).
- Education Cuts: spending cut for student financial aid by $143 billion over ten years; eliminates subsidized education loans ($39b); eliminates Public Service Student Loan Forgiveness ($27b); assumes no inflation-adjustment for Pell Grant awards; cuts grant aid and work-study; and $8 billion overall cut to Department of Education.
- Cuts Non-Defense Spending by Nearly One-Third: The Budget cuts $54 billion (11%) from non-defense discretionary (NDD) programs in FY 2018, with more cuts in each subsequent year. By 2027, the budget provides only $367 billion for NDD – $152 billion below the current 2017 level and a cut of nearly 30 percent before adjusting for inflation.
- Largest Cuts by Departments and Agencies: State Dept. and USAID, 32%; EPA, 30% ($2.5 billion); Army Corps of Engineers, 29%; Agriculture, 21%; Labor, 20%; Centers for Disease Control, 17%; Transportation, 17%; Health and Human Services, 16%; Commerce, 15%; Housing and Urban Development, 12%; Small Business Administration, 11%; Interior, 11%
- Proposed Program Eliminations include: Economic Development Administration; NOAA grants; 21st Century Community Learning Centers; Federal Supplemental Educational Opportunity Grants; Impact Aid; Effective Instruction State Grants; ARPA-E energy research; Agency for Healthcare Research and Quality; Community Services Block Grant; Health Profession and Nurse Training Programs; Low-Income Home Energy Assistance Program (LIHEAP); Community Development Block Grant (CDBG); HOME Investment Partnership; Senior Community Service Employment Program; International Development Assistance; PL 480 Food Aid; Global Climate Change Initiative; TIGER Infrastructure Investments; Energy Star to promote energy efficiency; EPA grants to States; NASA Earth Science Missions and Office of Education; AmeriCorps; Senior Service Corps; Corporation for Public Broadcasting; Legal Services Corporation; National Endowments for the Arts and Humanities; Neighborhood Reinvestment Corporation; Overseas Private Investment Corporation; Appalachian Regional Commission; US Trade and Development Agency.
- Non-Defense Program Reductions include: USDA Conservation Operations; Rural Development; Federal Work Study; Applied Energy Programs at DOE; National Institutes of Health; NIOSH; Low-Income Rental Assistance; Federal Prison Construction; Global Health Programs; Overseas Contingency Operations; Peacekeeping; Transportation Capital Investment Grants; Essential Air Service; Amtrak; Community Development Financial Institutions Fund; Environmental Protection Agency grants, enforcement, R&D, and Superfund toxic waste cleanup.
- Revenues – Few Details and Double-Counting: Reiterates the intention to propose multi-trillion-dollar tax cuts and reforms, but does not provide detailed revenue numbers and “assumes” that tax reform will be “deficit neutral” based on economic growth assumptions and vague statements about repealing deductions and credits. The Budget also appears to “double count,” by using revenues from economic growth to pay for tax cuts, and to reduce projected deficits.
- No Funding for Infrastructure: The promised $1 trillion in infrastructure investment is unfunded except for unspecified outlays of $200 billion.
Link to “Update” Page for latest developments
Link to Blog, FY 2018 Trump Budget – Top 10 Things You Should Know
Link to President’s Budget Documents
Link to Congressional Budget Resolutions
Link to Appropriations Portal
Link to Budget Process
House Budget Committee Majority Statement on Trump Budget
House Budget Committee Minority Analysis of Trump Budget
Senate Appropriations Committee Majority Statement on Trump Budget
Senate Appropriations Committee Minority Statement on Trump Budget