Rosy Assumptions on the Economy’s Growth
Mr. Trump’s plan could easily result in much larger federal deficits.
The administration made its calculations using assumptions about the nation’s economic trajectory that are more optimistic than the consensus among private-sector forecasters, or the assumptions used by other parts of the government.
The forecasts in Monday’s plan are also significantly more optimistic than the Trump administration itself used in its budget calculations last year.
Most notably, the administration projected annualized economic growth of 3.1 percent over the next three years. The Federal Reserve in December projected annualized growth of 2.2 percent over that period. The Survey of Professional Forecasters estimated the annualized growth rate at about 2.4 percent.
There is a similar gap in the projections of long-term growth. If the less optimistic forecasts were correct, the government would collect significantly less revenue. By its own estimates, the result would be another $3 trillion in federal debt.
The administration attributed the difference to the expectation that the president’s policies would significantly increase productivity growth.
Jason Furman, the former chairman of President Barack Obama’s Council of Economic Advisers, calculated that productivity growth would have to reach the highest level in any decade since the immediate aftermath of the World War II. Productivity growth was 1.1 percent over the last decade; it would have to reach 2.5 percent.
“It is hard to understand where this growth would be coming from,” Mr. Furman tweeted.
A 5% Reduction for the Department of Education
Mr. Trump’s 2019 budget proposal requests $63.2 billion in discretionary spending at the Education Department, a reduction of $3.6 billion, or 5 percent, from 2017 spending levels.
The proposal calls for a $1.5 billion “school choice” program, which includes taxpayer-funded scholarships for private schools and a vast expansion of charter schools. However, the budget would eliminate or cut 39 programs including two staple programs in public schools that provide teacher training and after-school programs to low-income children.
The Department’s budget also funds initiatives that Mr. Trump has given lip service to in the last year, calling for $43 million in “School Climate Transformation” grants to help fight the opioid epidemic in schools, and $200 million in new grants to improve science, technology, engineering and mathematics education.
—Erica A. Green
A Hint at the Special Counsel’s Timeline
The proposal indicates that the work of the special counsel, Robert S. Mueller III, could last another year and a half. It allocates $10 million to his office from October 2018 through the end of September 2019.
But that does not mean the Russia investigation itself will last that long. The office would also oversee a trial of Paul Manafort, the president’s former campaign chairman, who has pleaded not guilty to charges he laundered millions of dollars through overseas shell companies. No trial date has been set, but the judge in the case has indicated it would not start before the fall.
Documents released last year by the special counsel’s office, which is part of the Justice Department, provided a view into its expenses. Those documents showed that between the time the office was opened in May and the end of September it racked up $3.2 million in costs. The largest portion of that money — $1.7 million — went to personnel, compensation and benefits. The second highest cost was for the “acquisition of equipment” at $733,969.
The Justice Department’s $28 billion proposed budget overall is relatively flat from last year, with notable increases in spending to combat violent crime and drug use as well as house more prisoners. The department wants to increase its immigration enforcement efforts and add 75 immigration judges and support staff. The department counts more than 117,000 employees.
To offset the spending increases, the Justice Department plans to close two of its six Bureau of Prisons regional administrative offices and two of its seven minimum security prisons.
Targets Planned Parenthood
The president’s budget singles out abortion providers and would prohibit Health and Human Services funding, including money used for family planning, from going to any clinic or health care facility that also offers abortion services.
Though the language is broadly written, its intended target is Planned Parenthood, which relies on government funding to offer a variety of services to women other than abortion. The budget would help achieve the longstanding goal of social conservatives to cut off Planned Parenthood from federal assistance.
—Jeremy W. Peters
Less Money for Food Stamps
The White House again proposes cutting the Special Supplemental Nutrition Program for Women, Infants and Children, known as WIC — which helps low income families — requesting $5.8 billion for that program, down from the $6.2 billion the White House requested last year. The White House is also proposing a change to the program by requiring “100-percent American grown foods.”
More for Immigration Enforcement and a Border Wall
The Department of Homeland Security would receive $46 billion, a $3.4 billion increase over the enacted 2017 budget, all part of the administration’s efforts to crack down on illegal immigration and build a wall on the border with Mexico. The request calls for $18 billion for border security, including $1.6 billion to build about 65 miles of the wall in South Texas. The request also calls for the department to hire 2,000 new Immigration and Customs Enforcement and 750 Border Patrol agents.
While most of the budget increases focus on illegal immigration and border security, the administration also requested funding to hire 450 new agents for the chronically-short staffed Secret Service, $1 billion for the department’s cybersecurity efforts and $71 million for new scanning technology for the Transportation Security Administration. The new budget request would provide $1.9 billion for the Federal Emergency Management Agency’s grant program to state and local communities, $800 million less than the $2.7 billion funded in 2017.
Deep Cuts to the Environmental Protection Agency
Mr. Trump’s second federal spending plan proposes steep cuts for the Environmental Protection Agency, despite Congress’ rejection of a similar plan last year to dramatically shrink the agency’s budget.
The fiscal 2019 budget blueprint would pare the E.P.A. by $2.8 billion or 34 percent from its current level, while eliminating virtually all climate change-related programs. It also would cut the agency’s Office of Science and Technology nearly in half, to $489 million from its current $762 million.
In outlining the budget, the administration said the E.P.A. is refocusing on what it called “core activities” and eliminating “lower priority programs.” That list includes a program to promote partnerships with the private sector to tackle climate change; environmental education training; and an effort to protect marine estuaries.
The White House estimated cutting those programs and others will save taxpayers $600 million compared to 2017 levels.
Another Call to Repeal the Affordable Care Act
Mr. Trump’s budget proposes once again to “repeal and replace” the Affordable Care Act and to eliminate the law’s expansion of Medicaid. More than 30 states have expanded Medicaid under the law. Republican efforts to dismantle the law failed in Congress last year.
As a presidential candidate, Mr. Trump said there would be “no cuts” to Medicare or Medicaid if he won the election. But his 2019 budget request is full of proposals to squeeze savings out of the two programs, which together provide health insurance for more than 100 million Americans.
Proposed savings in Medicare total more than $490 billion over 10 years, or about 5 percent of Medicare spending expected under current law.
The budget would cut $69.5 billion over 10 years in projected Medicare payments to hospitals for “uncompensated care.” It would cut more than $95 billion over 10 years from nursing homes and home health agencies, and $22 billion from Medicare Advantage plans, which manage care for about one-third of Medicare beneficiaries.
In addition, the budget would cut $48 billion over 10 years in Medicare payments to teaching hospitals for graduate medical education,
The budget includes several proposals intended to reduce out-of-pocket drug costs for Medicare beneficiaries by requiring insurers and pharmacy benefit managers to share at least one-third of the discounts and price concessions they receive from drug manufacturers. The budget would also establish a limit on beneficiaries’ out-of-pocket costs for prescription drugs covered by Medicare.
Paring Back a Dodd-Frank Watchdog
The Treasury Department plan calls for continuing to cut the budget of the Office of Financial Research, which was set up in the wake of the financial crisis to help federal agencies stay ahead of financial risks. The office, which provides analysis and research to the Financial Stability Oversight Council, has previously been targeted for both funding and personnel cuts. “The Budget reflects continued reductions in O.F.R. spending commensurate with the renewed fiscal discipline being applied across the Federal Government.”
Changing the Role of the A.T.F.
The budget would allocate $28 billion to the Justice Department — a 1.2 percent decrease from the department’s 2017 budget. That budget funds agencies like the F.B.I., the Bureau of Alcohol, Tobacco, Firearms and Explosives and Drug Enforcement Administration. The budget proposal would take tobacco and alcohol enforcement authority away from the A.T.F. and move those authorities to the Treasury Department.
The D.E.A. would receive an addition $41 million to specifically combat the opioid crisis, and the agency would also take over the High-Intensity Drug Trafficking Areas program, which is currently run by the White House drug czar’s office.
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