March 9, 2017
The Trump administration is about to formally lay out its spending priorities for the country in its first budget proposal.
Some of the outlines are already out there, signaling a massive increase in military appropriations that will be offset by deep cuts to other discretionary spending, including foreign aid, the National Endowment for the Arts and the Coast Guard. President Donald Trump himself touched on some of these themes in his recent speech before Congress.
But some key Republicans wasted little time before deeming the president’s budget blueprint “dead on arrival,” with Senator Lindsey Graham calling it “politically unrealistic.”
A more apt description, however, might be “dead before arrival.”
Why would that be? Partly because it’s challenging to craft a budget during a transition year. More importantly, however, it’s because Trump’s proposal combines a slap-dash process with heavy-handed non-defense-spending cuts.
How the budget process works
While Congress is ultimately responsible for writing the federal budget – which last year contained about US$4 trillion in spending – the legally mandated proposal provided by the executive branch is essential to getting it done. That’s because Congress does not have the capacity to replace the extensive work done by all the departments when they prepare the president’s annual budget request.
Current law requires that the president send his budget to Congress by the first Monday in February. During transition years, however, that usually gets pushed to April or May because it takes a while for incoming presidents to staff key positions. This delay happens despite the fact that the Office of Management and Budget (OMB) includes hundreds of professional examiners who exemplify the practice of “neutral competence” – providing expert analysis to both Democratic and Republican presidents.
In fact, prior to 1990, lame duck presidents submitted their own budget blueprints because Congress required one before Inauguration Day, and their successors either edited it a bit or, in a couple cases, left it as is.
But after the deadline was extended in 1990, the past three presidents have had to hastily assemble their own vision for the country, largely from scratch, in what eventually became known as a “skinny budget,” meaning it skimped on many of the usual details.
Now it’s Trump’s turn to propose a budget for fiscal year 2018, which starts Oct. 1. Trump’s skinny budget, expected to come out around March 16, will be a lot skinnier than usual.
The announced focus of Trump’s budget will be on discretionary spending, which for fiscal year 2017 is projected to total $1.2 trillion, or about 30 percent of the overall budget (the rest includes Social Security, Medicare and other mandatory spending such as interest payments on the national debt). About half of discretionary spending funds the military, while the rest pays for a wide range of programs from education to environmental protection.
Most notably, Trump reportedly wants to increase defense spending by $54 billion and fully offset that amount by cutting other discretionary programs. According to OMB Director Mick Mulvaney:
“It reduces money that we give to other nations, it reduces duplicative programs, and it eliminates programs that simply don’t work.”
While Mulvaney declined to describe where exactly those cuts would fall, elements of the plan have leaked. Examples include a 69 percent cut to the EPA’s spending on climate change and 78 percent for its environmental justice programs. These cuts are designed, it seems clear, to reduce the ability of the government to regulate business groups that have supported the Republican Party.
But some cuts are already meeting strong resistance. Even Trump’s hand-picked Environmental Protection Agency director, Scott Pruitt – who as Oklahoma attorney general repeatedly sued the agency he now runs – has voiced opposition to the reduced EPA spending.
A closer look at the process of how these plans were reached reveals a significant flaw and the reason this budget will not be acceptable to Congress.
A top-down process
The process of creating a spending blueprint typically begins during “budget season” – October through December – when government agencies submit their wish lists to the OMB, which then compares requests with the president’s desired policies and edits them as necessary.
That didn’t happen during this transition, because the Obama administration – as sometimes happens when there’s a change in government – asked departments only to submit estimates of continuing current policies rather than the usual full requests that would have been reviewed by the outgoing government. That gave Trump’s team a slow start, which was made worse by the transition’s delays in identifying key political appointees.
Yet the overall direction of the budget was still set at the top by the president. OMB Director Mulvaney summed up how this budget was prepared this way:
“We are taking his words and turning them into policies and dollars.”
In reality, however, as is clear from a reading of what is proposed, Mulvaney has relied on conservative advocacy organizations such as the Heritage Foundation to identify many of those specific “policies and dollars.”
That groups affiliated with the incoming president have such influence is nothing new. What is different this time is that their proposals did not receive much of a vetting.
In the typical process, the budget requests that have been trimmed by OMB analysts are sent back as “passbacks” to originating departments for potential appeal, giving them a chance to explain why certain spending or programs are necessary. But when Mulvaney revealed the outline of his budget, he made the remarkable admission that the OMB had not yet delivered its passbacks to the departments – less than three weeks before the budget would be released.
The bottom line is that the White House publicized a target of $54 billion (11 percent of 2017 discretionary spending) in cuts without receiving any feedback from agencies about the feasibility of making them. Further, because the administration and Congress have also already called for increases in spending in certain areas – such as veterans health programs, doubling the number of border patrol agents and infrastructure investments – that means the $54 billion hammer will fall even harder on everything else.
Hence the negative reaction from Congress, which understands how politically popular many of the programs targeted for cuts are. Some previous proposals to impose similar cuts were defeated, such as in the successful campaign to “save Big Bird.”
After all, non-defense appropriations have already been cut greatly since 2010, when they tallied an inflation-adjusted $612 billion. Spending caps adopted in 2010 placed a ceiling of $516 billion for such spending. Trump’s budget would drop it further to $462 billion.
So even though Trump’s skinny budget will propose big cuts – and some will be adopted – Congress will not rubber-stamp many of them.
And oddly, there was no reason to rush in the first place.
The government is currently running on a continuing resolution for fiscal year 2017 after Republicans decided not to pass regular appropriations bills – which were supposed to be enacted by last October – until after President Trump took office. That continuing resolution expires on April 28.
So Congress will need to pass 2017 appropriation bills before it can even look at the 2018 budget. Clearly the administration could have taken its time before releasing its proposal.
Budgets are complicated too
In other words, the lack of substance combined with politically toxic spending cuts mean Trump’s first budget blueprint stands little chance of full adoption.
Over the rest of the year, if Republicans are to enact a full budget for 2018, there will have to be a meeting of the minds between Congressional Republicans and President Trump – which currently seem very far apart on key issues.
Most Republicans tend to advocate for a balanced budget and debt reduction. In contrast, the nonpartisan Committee for a Responsible Federal Budget estimated before the election that adopting all of Trump’s campaign promises – including tax cuts, the “wall” and infrastructure spending – would increase the public debt to 105 percent of GDP from 86 percent today. And that’s in part because he’s also promised not to touch entitlements like Social Security and Medicare.
There are also large differences between Trump and Republican lawmakers on how to change the tax code, how to replace the Affordable Care Act and whether to subsidize corporations for creating jobs.
To date, Trump has not shown much facility to resolve these budgetary conflicts – or in the realization that some subjects, like this and health care, are in fact very complicated. And so in the absence of presidential leadership that wrestles with the complexities of government, don’t expect his skinny budget to provide a consistent vision for the nation – or to have a future.