Trump’s budget finally reins in the uncontrolled size of American government — but not even close to enough

Credit: financialpost.com

First, render unto Caesar what belongs to Caesar, and unto God what belongs to God (which is even easier when it is the same person). Donald Trump’s “Budget Blueprint” released Thursday proposes many exciting expenditure cuts.


The proposal to eliminate funding for agencies like the Corporation for Public Broadcasting, the National Endowment for the Arts, and the National Endowment for the Humanities is welcome. Artists should be able to stand on their own two feet with the support of private sponsors and organizations, of which there are many in America. Lovers of concerts should finance their own passion.


Trump might just be sending a signal to his supporters, who prefer Fox News and Breitbart to Mozart and Shakespeare. There are good reasons to be suspicious of the official arts and humanities, whose public funding often serves leftists behind cultural walls. But forcing the taxpayer to pay for walls against trade and scapegoats is not better. The Budget Blueprint includes a downpayment on the Mexican wall, as well as funds to hire 20 lawyers for the necessary negotiations with private landowners and the required eminent-domain procedures.


Yet, other elements of the Budget Blueprint are commendable. Many monstrous bureaucracies would be reined in, including the Environmental Protection Agency (whose budget the Trump administration proposes to cut by 31 per cent), the Department of Labor (-21 per cent), the Department of Agriculture (-21 per cent), the Department of Commerce (-16 per cent), the National Institutes of Health (-18 per cent), and the Department of Housing and Urban Development (-13 per cent).


But the budget cuts are rather small beer. The Budget Blueprint only covers the “discretionary” budget, which amounts to 30 per cent of the US$4 trillion in annual expenditures. In fact, the requested cuts hit only half of the discretionary budget, since they are compensated by a 10-per-cent increase for Defense and a seven-per cent-increase for Homeland Security.


The rest of the budget, called “mandatory,” includes the welfare state entitlements: Social Security, Medicare, Medicaid, and a few other programs. Really cutting federal expenditures would require reducing the welfare state — which Trump has no intention of doing.


Perhaps a case can be made that the military budget needs a boost, assuming the purpose is to protect individual liberty. As for Homeland Security, it would need to be vigorously reined in, not expanded. It is probably the bureaucracy responsible for the worst attacks since the Civil War on the Fourth Amendment (prohibiting “unreasonable searches and seizures”). But go tell that to Caesar!


There are a few jokers in the blueprint’s 62-page deck but, to summarize it briefly, it reshuffles one-sixth of federal expenditures and shifts money from smiling but dangerous bureaucrats to non-smiling and dangerous ones.


Assuming this budget request is accepted by Congress and that entitlement expenditures don’t increase, total federal expenditures would remain flat in fiscal 2018 —which was already the forecast. But Congress will probably cut many of Trump’s proposed cuts. Steve Bell, a former Republican budget aide who is now a senior analyst at the Bipartisan Policy Center, says: “There’s as much chance that this budget will pass as there is that I’m going to have a date with Elle Macpherson.”


But even in the purest form of this Budget Blueprint, the forecast by the Congressional Budget Office (CBO) of a deficit nearing US$500 billion in fiscal 2018 would still be on the mark (assuming no trade war, recession, or foreign war). This means, of course, that the federal debt will continue to increase in fiscal 2018. Over the coming 10 years, the CBO forecasts an accumulated deficit of some US$9 trillion, which would add to the current federal public debt of US$20 trillion.


During the campaign, Trump suggested that he could eliminate the federal debt “fairly quickly… over a period of eight years.” To do so in equal instalments over eight years would require an expenditure cut of US$2.5 trillion in 2018, more than 60 per cent of federal expenditures; or, alternatively, an increase of nearly 70 per cent in federal revenues; or a combination thereof. The proposed budget is not even in the ballpark.


What the Budget Blueprint signals for the future is ambiguous and in line with Trump’s lack of coherent ideas.


Pierre Lemieux is an economist affiliated with the Department of Management Sciences of the Université du Québec en Outaouais. His latest book is Who Needs Jobs? Spreading Poverty or Increasing Welfare. PL@pierrelemieux.com


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