Heritage Experts Analyze Trump's Budget

COMMENTARY Budget and Spending

Heritage Experts Analyze Trump's Budget

May 23rd, 2017 6 min read

Commentary By

Romina Boccia @Rominaboccia

Deputy Director, Thomas A. Roe Institute

Thomas Spoehr

Director, Center for National Security

Michael Sargent @MSargent83

Policy Analyst, Transportation and Infrastructure

Robert E. Moffit, Ph.D.

Senior Fellow

Lindsey M. Burke @lindseymburke

Director, Center for Education Policy and Will Skillman Fellow in Education

Adam Michel

Policy Analyst

Hans A. von Spakovsky @HvonSpakovsky

Election Law Reform Initiative and Senior Legal Fellow

President Donald Trump's FY2018 budget is seen printed at the Government Publishing Office in Washington. Yuri Gripas/REUTERS/Newscom

Today, the Trump administration officially unveiled their first complete budget proposal called “A New Foundation for American Greatness.” Below is reaction from Heritage experts on the president’s plans:

Balancing the Budget

"The president's budget seeks to balance in no more than 10 years. This is a laudable and important goal that fiscal conservatives should keep their eye on. The budget does this in part with sensible mandatory spending reforms to Medicaid, welfare and disability programs. This budget proposal also follows the right approach on discretionary spending, by prioritizing national defense in a fiscally responsible way, with offsetting cuts to domestic programs that are redundant, improper, or otherwise wasteful. As is so often the case, however, the devil is in the details. Long-term budget solvency must include reforms to the largest entitlement programs: Medicare and Social Security. These programs alone consume 4 of every 10 federal dollars, and they are expanding. Moreover, this budget would rely on $2 trillion in economic feedback effects for deficit reduction, a figure that is highly uncertain. Greater spending cuts would have lent more fiscal credibility. Overall, this budget takes important strides toward cutting the federal government down to size." —Romina Boccia, Deputy Director of the Thomas A. Roe Institute for Economic Policy Studies and the Grover M. Hermann fellow in federal budgetary affairs

Defense

“Though the White House is right to call for more, much-needed defense funding, $603 billion represents only a $16.8-billion increase from the Obama administration’s meager planned defense spending for 2018. A $603 billion budget for 2018 might be enough to stop the immediate deterioration and cuts in forces, but it will certainly not be enough to reverse the ravages already experienced. Perhaps the most heartening thing about this request is the administration’s follow-through on its expressed intent to repeal the defense budget caps set by the Budget Control Act of 2011, which have been both disruptive and destructive to military readiness.

The U.S. military—in both size and readiness—has shrunk to historically low levels, all while its budget has been held hostage to domestic policy whims.  Naysayers downplay the poor state of the military. But those who deny the existence of readiness problems are contradicted by the repeated testimony of dozens of senior uniformed and civilian military leaders. Those leaders uniformly agree that today’s military is desperately overtaxed and under-resourced. As the Heritage Foundation’s Index of U.S. Military Strength reports, today our armed forces would be severely challenged to execute our defense strategy with the current force.

The Heritage Foundation has proposed a 2018 funding level of $632 billion. It includes proposals for defense reform and savings to help restore our military’s strength and punch. Lawmakers finally need to demonstrate that they take the duty to provide for the common defense quite seriously. Lip service is not enough. We must begin to provide our men and women in uniform the equipment and resources they need to defend our country. Congress must hear and heed the Pentagon’s candid voice in the upcoming budget debates. And lawmakers must then act to begin rebuilding our depleted military now.” —Thomas Spoehr, Director of Heritage's Center for National Defense 

Transportation and Infrastructure

“The administration’s budget contains a number of laudable transportation and infrastructure proposals that reform wasteful or improper programs while empowering states and the private sector to meet the nation’s burgeoning transportation needs. Many of the reforms were recommended by the Heritage Foundation in its roadmap for $1.1 trillion in infrastructure investment and Blueprint for Balance, including: structural reform of our outdated Air Traffic Control system; reforming the wasteful Essential Air Service program; and auctioning off valuable spectrum for private use. Also encouraging is the proposal to reform the financing of the nation’s inland waterways infrastructure, which has long required modernization.  

“However, many questions about the Administration’s signature infrastructure proposal remain. Worrisomely, the budget includes an additional $200 billion in spending as a placeholder for ‘private/public infrastructure investment’ with few details as to how the funds will be allocated. Details regarding the plan and whether they will be offset with meaningful cuts elsewhere will be crucial in evaluating the plan and ensuring a repeat of the 2009 stimulus boondoggle is avoided. In addition, the Budget includes a proposal to assume Highway Trust Fund spending levels fall to revenue levels—a savings of $15 billion to $20 billion per year. While limiting trust fund spending to revenues would be excellent policy, it is highly unlikely Congress will decide to rein in its overspending out of the Highway Trust Fund, which it has carried on for nearly 10 years. Simply assuming these savings will accrue without putting forward a substantive proposal to ensure that Congress stops its mismanagement of the trust fund would represent a nearly $100 billion budget gimmick and cannot be considered to have a real budgetary impact.

“While the Budget contains many worthwhile reforms, more details regarding the administration’s infrastructure proposal are required in order to form a comprehensive evaluation of the administration’s infrastructure agenda.” —Michael Sargent, Policy Analyst in Heritage's Institute for Economic Freedom and Opportunity

Education

“The Trump administration’s full budget for education for FY 2018 would make some long-overdue cuts at the Department of Education, eyeing reductions in spending totaling $9.2 billion – a 13.6 percent cut in the agency’s current $68 billion annual budget. That type of reduction signals a serious commitment to reducing federal intervention in education – a necessary condition to make space for a restoration of state and local control.” —Lindsey Burke, Director of Heritage's Center for Education Policy 

Healthcare

"If enacted, the President’s budget would be a major down payment on federal entitlement reform. It cannot be overemphasized that analysts and economists, often of very different political persuasions, are united in their conviction that policymakers must take decisive steps to slow the growth of federal entitlement spending. By putting Medicaid on a budget—either through a fixed allotment to the states in the form of a block grant or a per capita cap—the Trump budget would give state officials much needed flexibility in managing the program and better target services to the poorest and most vulnerable of our citizens.” —Robert Moffit, Senior Fellow in Heritage's Center for Health Policy Studies.

Tax Reform

"A month ago President Trump proposed a true tax cut for the American people. The President’s Budget assumes economic growth will make up the lost revenue, after including revenue reductions from Obamacare repeal. The budget proposal does not spell out exactly how the new tax code would accomplish this. The feasibility of the assumed three percent annual growth rate is highly dependent on the ultimate design of tax, regulatory, and other reforms - but we should continue to be optimistic that the economy is indeed able to sustain such growth. Regardless, updating the tax code while lowering tax rates for all Americans does not need to rely so heavily on economic growth. In combination with spending cuts, President Trump and Congress can provide tax and spending relief for the American people." —Adam Michel, Policy Analyst in Heritage's Thomas A. Roe Institute for Economic Policy Studies

Border Security 

“Given the intentional neglect towards border security that was a hallmark of the Obama administration, this additional funding that will improve physical security as well as increase the technology, agents, officers, and equipment needed to actually enforce our immigration laws and secure the border should be rapidly approved by Congress.”  —Hans von Spakovsky, Senior Legal Fellow in Heritage's Edwin Meese III Center for Legal and Judicial Studies

GDP Projections

“The president’s budget includes very optimistic economic growth projections, which are a key ingredient in getting the debt under control and reaching budget balance by 2027. The growth projections have two flaws and one strength.

“The first flaw is that the Congressional Budget Office’s baseline—the rate of growth expected with no change to policy—is probably too optimistic to begin with. CBO has been forced to lower its future growth forecast every year since 2009. The second flaw is that the plan expects the president’s policies to sustain growth rates at the outer limit of pro-market optimism despite unfavorable demographics.

“The president’s economic projections do have a major data point in their favor: they represent a return toward the long-run trend in per capita GDP. That deviation from trend is partly to blame on the stultifying economic policies of the previous decade. Removing those constraints will be the first step in restoring the income growth to which Americans are long accustomed. With the right policies, 3 percent real GDP growth could be within the realm of the feasible. It would certainly be desirable.

“A restoration of growth will not, however, follow automatically from enacting the president’s agenda. A lot of other things have to go right as well as policy. So the president’s plan to eliminate the deficit and control the debt should not depend so much on things outside his control. Limiting the growth of entitlement spending would be a more certain path to balance than relying on historical forces.” —Salim Furth, Research Fellow in macroeconomics in Heritage's Center for Data Analysis