On March 11, President Donald Trump sent to Congress a record $4.75 trillion budget plan that calls for increased military spending and sharp cuts to domestic programs like education and environmental protection for the 2020 fiscal year. President Trump’s budget, the largest in federal history, includes a nearly 5% increase in military spending and an additional $8.6 billion for construction of a wall along the border with Mexico. It also contains what White House officials called a total of $1.9 trillion in cost savings from mandatory safety-net programs, like Medicaid and Medicare, the federal health care programs for the elderly and the poor. The budget is not likely to have much effect on actual spending levels, which are controlled by Congress. Democratic leaders in both the House and the Senate pronounced the budget dead on arrival and President Trump’s budgets largely failed to gain traction over the previous two years, when fellow Republicans controlled both chambers. Here is are the main takeaways from the budget:
Despite proposing the “most spending reductions ever sent to Congress,” as one of President Donald Trump’s top aides stated, the budget deficit is expected to hit at least $1 trillion this year and stay above $1 trillion every year until at least 2024. This budget deficit is unprecedented in a time of economic growth and resulted from the 2017 Tax Cut and Jobs Act, which reduced revenues by as much as $1.5 trillion. Additionally, the budget predicts no economic recession for at least another decade and 3% economic growth each year for the foreseeable future, an extremely optimistic picture considering that the US is nearly a decade into its current economic expansion. To meet this goal, the US economy would have to grow at a 3% rate for the next few years with no economic recession, something that the US economy has never achieved before.
Arguably the departments that have seen their biggest boost in funding this year are the Departments of Defense, Homeland Security, and Veterans Affairs, which have all received a nearly 10% increase this year. The increased funding for the Defense Department will likely be used to help the Pentagon prepare for potential military conflicts with Iran and Venezuela (two countries that President Trump and members of his administration have repeatedly expressed interest in attacking). Additionally, President Trump’s budget also requests a slight increase in funding for NASA, with the goal of fully funding the proposed “Space Force” as well as a manned mission to Mars by the late 2030s. Under Trump’s budget proposal, ten major departments and agencies would see their budgets slashed by 10% (or more) in the next year alone, including Agriculture, Education, Energy, Health and Human Services, Housing and Urban Development, Interior, State, Transportation, Corps of Engineers, and the Environmental Protection Agency. In particular, the EPA and HHS will see their funding cut by as much as 1/3 over the next year.
President Trump’s budget also includes nearly $9 billion for the border wall and draconian cuts to entitlement programs for the poor, elderly, and disabled such as Medicaid, SNAP, Social Security, and Housing Vouchers. Trump also wants to implement controversial policies to require more people receiving such benefits to find work or actively search for jobs. Many advocates for the poor say stringent regulations are already in place, but the Trump administration wants to go further, and it is calculating it can save a lot of money by doing so. The budget also includes a $845 billion cut to Medicare over the next decade. Trump wants to “reduce wasteful spending” on Medicare by expanding the list of treatments that require prior authorization before the procedure can be done and putting medical providers on notice who charge more than others. The administration argues these cost savings are bipartisan ideas that will help ensure Medicare can last for many years to come, but some claim it will result in people who need treatment having it delayed or not receiving it because of extra paperwork and hurdles.
Under President Trump’s plan, state governments would play a larger role in crafting policies. For example, much of Medicaid would become “block grants” so states get a lump sum amount from the government and then have to figure out how to spend it effectively. The net result would be a $241 billion reduction in Medicaid spending over the next decade for the federal government. Trump also wants to do away with the Public Service Loan Forgiveness program that pays off student loans for people who enter various government jobs. His budget calls for streamlining the student loan repayment system and having colleges and universities “share a portion of the financial responsibility associated with student loans.” The details are thin on how all of that would work, but Trump banks on his various changes to student loans saving the federal government $207 billion over the next decade.