Published: Wed, May 24, 2017
World | By Paul Elliott

Trump Budget Plan Relies On Optimistic Growth Assumptions, Analysts Say

Donald Trump's budget that is expected to be unveiled on Tuesday will include $800 billion in cuts to Medicaid - a move that underscores the President's resolve to significantly downsize the federal program even as Republican lawmakers are clashing over the issue in Congress.

In all, the Trump proposal cuts about 32 percent from USA diplomacy and aid budgets, or almost $19 billion.

That comes as no surprise after Trump, who confounded Republicans on the campaign trail for straying from conservative principles, tapped Mick Mulvaney, a former SC tea party congressman, as his budget director.

"They're not putting money into the places that help people go to work", said Stacy Dean, vice president for food assistance policy at the liberal-leaning Center on Budget and Policy Priorities.

And even with optimistic assumptions about the tax code specifically and the overall economy more broadly, the White House still needed to claim over $1 trillion in unidentified cuts to miscellaneous programs to balance the budget.

The Trump budget is based on sustained economic growth of 3 percent, a level that critics say is unlikely to be achieved. "It's either been a recession or a slow, sluggish economy stumbling along at less than 2 percent growth", Mulvaney said.

Trump's balanced-budget goal depends not only on the growth projections but also a variety of accounting gimmicks, including an nearly $600 billion peace dividend from winding down overseas military operations and "double counting" $2.1 trillion in revenue from economic growth - using it to both pay for tax cuts and bring down the deficit. But House conservatives also want to embark on a round of cuts to benefit programs and are open to Trump's suggestions for cuts to mandatory programs such as federal employee pensions. The second-highest-ranking Republican in the Senate, John Cornyn of Texas, told the Associated Press that White House budgets, including Trump's, are "basically dead on arrival" in Congress.

"All POTUS budgets are", he tweeted.

No one thinks the president's budget will pass as proposed, since Congress has budget and spending authority. Susan Collins, a Maine Republican. "I've never seen a president's budget proposal not revised substantially". Republicans and Democrats in Congress have criticised the size of the cuts to the State Department and US Agency for International Development.

'I thought Mexico was going to pay for the wall, why is this in our budget?' Upton said, only partly joking.

On the campaign trail, Trump promised not to make cuts to Medicaid. Earlier, this year, the Department of Homeland Security reportedly estimated a border wall will cost about $21.6 billion.

But the biggest changes in the proposed budget come in changes to the social safety net.

In his introductory message in the budget, Trump wrote that "to unleash the power of American work and creativity - and drive opportunity and faster economic growth - we must reprioritize Federal spending so that it advances the safety and security of the American people". "It's going to be up to us to work through that and I dare say just after voting to plus up NIH funding in in the 21st Century Cures bill, it would be hard to get the votes to then cut it".

It wasn't just Democrats who dismissed the blueprint as a "nightmare" scenario, with its beefed up military spending and tax breaks for the wealthy; Republicans also winced at steep domestic program cuts and rosy growth projections that may not achieve its promise of balancing deficits. "And we will do that".

According to Mulvaney, the budget does not cut core Social Security benefits and does not cut Medicare benefits.

The fleshed-out proposal follows up on an unpopular partial release in March that targeted the budgets of domestic agencies and foreign aid for cuts averaging 10 percent - and made lawmakers in both parties recoil.

The budget envisions changes to the President's Emergency Plan for AIDS Relief (PEPFAR) program, a cornerstone of USA global health assistance, which supports HIV/AIDS treatment, testing and counseling for millions of people worldwide.

"From Day 1, President Trump has worked to keep his pro-life promises, including stopping taxpayers from being forced to fund abortion and abortion businesses", says Marjorie Dannenfelser, president of the anti-abortion group Susan B. Anthony List. He has called it a hoax perpetrated by the Chinese multiple times, although he has seemingly softened that stance in recent months.

President Trump's budget landed on Capitol Hill the way White House fiscal proposals traditionally do - with a thud.

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