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White House 2018 budget proposal is out, and it slashes the social safety net

  • The budget would cut $1.7 trillion in spending over 10 years.
  • Medicaid, student loans and food stamps would see big reductions.
  • EPA, State Department and Education Department funds would be slashed.
  • Economists doubt the White House's growth projections.

The White House is seeking to slash federal spending by $3.6 trillion over the next decade through steep cuts across most agencies and tough new restrictions on aid to the poor — a dramatic rethinking of the role of government in the American economy.

About half of the money — $1.7 trillion over 10 years — comes from changes to programs such as Medicaid, food stamps and federal student loans that swelled during the Great Recession and long recovery. It also includes previously announced double-digit spending cuts next fiscal year for the Environmental Protection Agency, the State Department and the Education Department, among others, and eliminates popular institutions such as the National Endowment for the Arts.

The president's proposed fiscal 2018 budget became public Monday night.

Defense is one of the few areas slated for increased funding. The White House is requesting an additional $25 billion next fiscal year, following a similar bump in the current budget. Veterans Affairs would also get a boost next year, along with the National Nuclear Security Administration.

"We are no longer going to measure compassion by the number of programs or the number of people on those programs. We will measure compassion and success by the number of people who get off those programs." -Mick Mulvaney, director, OMB 

Office of Management and Budget Director Mick Mulvaney on Monday called the proposal a "taxpayer-first budget."

"We are no longer going to measure compassion by the number of programs or the number of people on those programs," he told reporters. "We will measure compassion and success by the number of people who get off those programs."

Reforming entitlement programs has long been a goal for Republican leadership — and some were disappointed that President Donald Trump vowed on the campaign trail not to touch the two biggest ones, Social Security and Medicare. But Trump left the door open to overhauling the patchwork system of other safety net programs that Republicans argue have become unwieldy and wasteful. Social Security disability insurance, for example, is in the crosshairs, though retirement payments are not. The proposal estimates that eliminating fraud and waste alone will save the government $143 billion over a decade.

"I think that it is a key step toward putting the budget toward a sustainable path to balance," said Romina Boccia, a fellow at the Heritage Foundation, a conservative think tank. "While I think this is a good start, and the budget includes important reforms, we do need to continue to push for broader reforms to Medicare and Social Security because they are the key drivers of our growing spending and debt."

A sign painted on top of a mural says 'We accept food stamps,' in Harvey, Ill. About 45 percent of food stamp benefits went to children under 18 in 2013.
Melanie Stetson Freeman | The Christian Science Monitor | Getty Images
A sign painted on top of a mural says 'We accept food stamps,' in Harvey, Ill. About 45 percent of food stamp benefits went to children under 18 in 2013.

Tackling entitlement programs puts the White House on politically treacherous terrain: Trump will need backing from at least some Democrats for his proposals to pass the Senate. But several line items they had dubbed "poison pills" during negotiations over the 2017 budget have reappeared in the new proposal, including funding for a wall along the Mexican border.

And on Monday, Democrats were already starting to draw battle lines, calling the programs critical for workers who are still struggling to recover from the recession.

"It's a budget that takes a meat cleaver to the middle class by gutting the programs that help them the most, including many that help create jobs and power the economy," Senate Minority Leader Chuck Schumer (D-N.Y.) said Monday on the floor.

The size and scope of the White House's proposed cuts could make it tough to swallow even among Republicans. The proposal includes, for example, changing the funding formula for Medicaid, which some GOP moderates and state governors have opposed. It also calls for changes to "CHIP," which provides benefits for low-income children who do not qualify for Medicaid. Finance Committee Chairman Orrin Hatch (R-Utah) was one of the original sponsors of the bill that created the program.

"The president ... should not rely on unrealistic and rosy economic growth projections to pay for his proposals or fix our debt. It is not a good idea to spend as if you won the lottery in hopes that you actually do." -Judd Gregg and Edward Rendell, co-chairmen, Campaign to Fix the Debt

The budget assumes the White House will be able to dramatically lower tax rates for households and businesses. The administration has proposed reducing the corporate rate to 15 percent and streamlining individual rates from seven brackets to just three. The White House provided no additional details about its proposal Monday but said it is a key component to pushing economic growth to 3 percent.

Mulvaney said the deep spending cuts, coupled with faster growth, will reduce the deficit as a percentage of GDP starting next year. He said the budget will balance by 2027.

However, many economists doubt the administration will be able to reliably and repeatedly hit a 3 percent target — even with significant tax cuts — due to the country's aging population and declining productivity. The Congressional Budget Office currently estimates growth at about 1.9 percent.

"The president is right to focus on job creation and tax reform. But he should not rely on unrealistic and rosy economic growth projections to pay for his proposals or fix our debt," said Judd Gregg and Edward Rendell, co-chairmen of the Campaign to Fix the Debt. "It is not a good idea to spend as if you won the lottery in hopes that you actually do."

But Mulvaney said the administration stands by its forecast and that economists are underestimating the benefits of Trump's proposals.

"That assumes a pessimism about America, about the economy, about the people, about its culture that we're simply refusing to accept," Mulvaney said. "We do not believe that [3 percent] is something fanciful."