Briefing Book

The Trump Budget: Deconstructing Government

It’s not about fiscal responsibility; it’s about cuts to the core functions of government.

By David Kamin

Tagged Briefing BookbudgetEconomics

The Trump Administration announced Monday that it is proposing to slash the non-defense budget for FY2018 by $54 billion to “pay for” an increase of similar size to the defense budget. The Administration has so far not given any real details beyond that: just a target for its large cuts.

What is certain is that, if this were enacted, the cuts would affect core agency service and investments—further cutting an area that has already seen major reductions in recent years and that composes less than 15 percent of total federal programs, despite the importance of many of them.

Compared to the 2010 level (the last year before cuts began), Trump’s proposed funding level for non-defense discretionary spending would represent more than a 35 percent reduction as a share of GDP. It is even a cut relative to the last year of the Bush administration: a more than 20 percent reduction as a share of GDP relative to 2008. The table below illustrates this, also showing the cuts adjusting only for inflation.

Screen Shot 2017-02-27 at 9.04.38 PM

And this understates the pressure many key programs would face that help low- and moderate-income Americans and invest in our future through education and research. That’s because “non-defense” encompasses areas like the Department of Homeland Security, where Trump is pledging major funding increases. With those areas increasing and the total falling sharply, how much will be left for the National Institutes of Health, Head Start, or even the prosecutors at the Department of Justice?

The irony is that Trump says that he is for investing in the future of America. But this is the part of the budget that finances non-defense research as well as much of the federal government’s investments in education. There is more to investment than roads and bridges—though Trump is falling short there too.

The Administration frames this as necessary to pay for a defense increase. But all of this should be put into put into perspective by comparing against the size of the tax cut for the top 1 percent that Trump had in his campaign tax plan (the revised “smaller” one).

That tax cut would average in the range of 1.3 percent of GDP over the next decade based on estimates from the Tax Policy Center. By cutting the non-defense budget by more than 10 percent (from its already reduced levels), Trump is saving 0.3 percent of GDP. In other words, the tax cut for the top 1 percent is nearly five times larger than the planned domestic discretionary savings. The Administration says it is back at the drawing board on the tax plan, but, as I’ll describe in a later post, there is in fact no way for them to cut rates like they say they will without a big tax cut at the top.

In short, this isn’t about fiscal responsibility. It’s instead about cutting further into the important functions in this relatively small area of the budget. It’s about deconstructing government and core services and investments.

cuts in base

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David Kamin is a professor of law at New York University. From 2009-2012, he served in the White House as special assistant to the president for economic policy and, before that, as an adviser to the director of the Office of Management and Budget.

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