http://jaredbernsteinblog.com/the-presidents-new-budget-sorry-but-attention-must-be-paid/
Every year around this time, we ask the Talmudic question: is there any reason to pay attention to the president's budget?
This year, given that the Congress just passed, and President Trump just signed, a spending deal covering the next couple of years, the question is particularly germane, as "dead on arrival" would be an upgrade for this year's budget.
And yet, I once again conclude that attention must be paid. People should know an administration's priorities, but in the case of team Trump, as the gulf between their rhetoric and their budget preferences is uniquely wide, tracking their priorities is particularly important. They make a huge deal over infrastructure but cut transportation funds; they talk about helping the left-behind but propose cuts to health care, nutritional assistance, and housing. They preach fiscal rectitude but practice fiscal recklessness.
In this regard, the basic structure of Trump's second budget is closely related to those Republicans have been writing for years, reflecting their shared priorities of tax cuts for the wealthy and spending cuts for the economically vulnerable.
For example, according to CBPP analysis, the budget takes us back to the big health care debate of last year, calling for repealing the Affordable Care Act, cutting Medicaid, and eliminating protections for people with pre-existing conditions. It proposes cuts in nutrition, housing, and other basic assistance for millions of vulnerable Americans. For example, SNAP (formerly food stamps) would face a $213 billion, or a nearly 30 percent cut over ten years; at least 4 million low-income people would lose their SNAP benefits altogether.
Regarding infrastructure, do not—I repeat, do not—take seriously the claim that there's a plan here to invest $1.5 trillion in our public goods. Far, far from it. The budget proposes $200 billion over 10 years, but as budget analyst Bobby Kogan tweeted: "The budget cuts $178 billion in…transportation [not including cuts to] water, broadband…and energy. This means [Trump is] giving $200 billion with his left hand but taking away that much with his right."
In fact, the "plan" depends on shifting the costs of infrastructure investment to private investors, states, and cities. Regarding the states' ability to fund infrastructure, there's a critical interaction with the Trump tax cut to consider. Recall that the plan significant lowers the amount of federal taxes that state and local taxpayers can deduct from their tax bill. This change will make it much harder for states and cities to raise the revenue to support this sort of infrastructure plan. As I recently wrote on this topic, "Trump and the Republicans are shifting infrastructure costs to the states at the same time they're cutting the states' revenue-raising capacity off at the knees."
One thing to watch is the extent to which the budget violates the terms of the bipartisan spending plan Trump just signed. Remember, at this point, a lot of that spending is just topline amounts, yet to be allocated to specific spending lines. Nudged on by this budget, which sets funding for Democratic priorities from the deal $57 billion below the agreed-upon levels, conservatives will try to chip away at non-defense allocations to education and worker training, medical research, transportation, low-income housing, environmental protection, the national parks, child care, and more.
For example, CBPP points out that "the bipartisan agreement calls for adding $2.9 billion per year over the next two years to the discretionary Child Care and Development Block Grant, boosting this key federal program to help make child care affordable for low- and modest-income parents. But the budget reneges on that and proposes essentially flat funding for the program."
Again, I don't think Congress will violate the new agreement, but there's no question the president's budget dials up the pressure to re-open the deal at the expense of programs in those areas.
Here's one area where the budget reveals serious damage that's already been done to government under Trump's watch. As the Wall St. Journal's Richard Rubin put it, "A big result of President Donald Trump's tax cuts is a predictable one: Less revenue for the federal government." Even using the administration's own rosy economic scenario, projected revenue is down 6 percent from their last budget."
In 2019, they predict revenues as a share of GDP to be 16.3 percent. What's alarming about that number is that it's projected to occur in a period when the economy is at, or at least near, full employment. In such periods, the percolating economy should be spinning off increasing revenues as a share of GDP, as more people make more money and pass into higher tax brackets. Using data back to the 1960s, when the unemployment rate has been around where it is now—in the 4 percent range—revenues have come to about 18 percent of GDP. In today's economy, that difference of two percentage points (16 vs. 18) of GDP amounts to $400 billion per year in revenues lost to the tax cuts.
Of course, that's a feature, not a bug, for those in the starve-the-beast camp. But as I argued the other day, with the recent spending bill as exhibit A, it doesn't work that way. Once they whack the tax base and take new revenues off the table, the beast doesn't starve. It gets fed in deficit dollars.
The media is probably one or two crazy tweets away from never mentioning this budget again, and I certainly understand that in terms of news value. But it is incumbent on those of us who recognize what Trump and the Congressional Republicans are up to, to call them out.
And what is it that they're up to? Channeling revenue from the Treasury to the wealthy, while trying to convince the public that America's problem is not inequality, dysfunctional government, disinvestment in physical and human capital, and an increasingly non-representative democracy. Instead, their budget implies that what's holding America back are poor people getting $1.40 a meal in nutritional assistance, or a family whose housing assistance and Medicaid allows them to get by on a minimum wage job.
Immediate political salience aside, anytime that demonstrably false argument is made, it must be highly elevated and thoroughly rejected.
-- via my feedly newsfeed
No comments:
Post a Comment