The White House released the outline of President Trump’s first budget, dubbed a “skinny budget.” Here are some basics you should know. A more detailed analysis can be found here.
This is just an outline. A more detailed budget will be released later in the year. New presidents in the past have also released preliminary outlines before the actual budget, though this one is more bare bones than previous presidents have put forth. This proposal involves just a small portion of the overall budget and only covers fiscal year 2018, which begins on October 1 of this year, along with some adjustments for the current year. Traditional budgets cover all spending and revenue and include numbers for 10 years.
What spending is cut?
The budget reduces spending for most government agencies outside of defense. The Environmental Protection Agency (EPA) would see a 31% reduction in funding while the budget would also cut the State Department (29%), Labor Department (21%), Department of Agriculture (21%), Department of Health and Human Services (18%), Commerce Department (16%), and the Education Department (14%). Additionally, the budget calls for eliminating 19 smaller agencies. This includes the Corporation for Public Broadcasting, which supports the Public Broadcasting System (PBS), and the National Endowment for the Arts. Other agencies and departments are on the block for significant cuts.
What spending is increased?
Security is the big winner in this budget. The Defense Department is set for a 9% increase relative to current levels. The Department of Homeland Security sees a 7% rise and the Department of Veterans Affairs gets a 6% budget bump. New funding is also proposed to begin construction of the border wall and for school vouchers. The new spending will be offset by the cuts noted above.
How much of government spending is covered in this budget?
This budget only covers discretionary spending, which is a small and declining portion of the federal budget, currently about 30% of government spending. Discretionary spending is the part of the budget determined by Congress on an annual basis. Most of the spending reduction in recent years has come from this part of the budget. Learn more about the federal budget and spending.
What is left out of this budget?
There is nothing regarding the revenue side of the equation in this budget. In addition, the largest and fastest growing parts of the budget are left untouched. This includes Social Security, Medicare, Medicaid, and interest on the debt, which are essentially on autopilot since they do not require annual approval. This spending currently represents 70% of government spending and will account for 90% of the growth in spending over the next decade. Social Security and Medicare also face financial problems because their trust funds will be depleted down the road, which will result in benefit cuts for all recipients if nothing changes. This budget does nothing to address that issue. See more on Social Security’s trust fund solvency challenge.
Does the skinny budget bloat the national debt?
It is difficult to tell what this budget does to the national debt because there is so little information. The introductory message from Office of Management and Budget Director Mick Mulvaney says, “This 2018 Budget Blueprint will not add to the deficit.” It also says, “Our $20 trillion national debt is a crisis, not just for the Nation, but for every citizen.” But the budget has no specific policies to address the debt at this point. See five ways to start fixing the debt.
It is a good sign that this budget pays for the increased security spending with cuts elsewhere. However, $15 billion of the new spending recommended for the current year is not paid for and will be added to the debt. All new initiatives should be paid for with spending cuts or revenue increases. And unless the autopilot spending that will drive the most of the growth of the debt is addressed, little progress will be made to fix the debt. The debt is already historically high and will rise to unsustainable levels if action isn’t taken. See the state of the debt.
What happens next?
This is just an outline of a proposal. None of it is binding. Hopefully, the more detailed version of the budget that we expect later this year will address revenues, autopilot spending, and the debt. This outline and the more detailed budget request will help inform what happens in Congress, where the final say will be on the budget. See more on how the government spending process should work.