The Trump administration will propose the deepest cuts to government programs in a generation, delivering the opening salvo in a new round of budget battles in Washington.
The proposal, titled “A New Foundation for American Greatness” and set for release at 11 a.m. on Tuesday, sets out a 10-year plan to balance the budget.
It relies on a mix of cuts to anti-poverty programs, optimistic economic forecasting and deep cuts to nondefense discretionary funding to meet its targets. It would not touch Social Security and Medicare, which President Trump promised to leave alone during his campaign.
The budget would dramatically shift spending to the Pentagon from domestic programs.
In 2018, it would shift $54 billion from nondefense discretionary spending to defense by enacting major cuts to the State Department, the Environmental Protection Agency, the Department of Agriculture and other agencies.
It would eliminate or phase out funding for the Corporation for Public Broadcasting and the National Endowment for the Arts.
In subsequent years, that shift between defense and nondefense discretionary spending would grow to the point where defense spending would make up two-thirds of discretionary domestic spending, a huge shift from the 50-50 split of today.
By 2027, the Pentagon would continue to benefit from increased annual spending, while nondefense discretionary spending would be $260 billion less than what would be spent without Trump’s budget.
A sizable portion of the cuts to domestic spending would be made to Medicaid.
The budget assumes full passage of the House-passed version of the American Health Care Act (AHCA) to repeal and replace ObamaCare, which cuts $839 billion from Medicaid and pulls funding from Planned Parenthood.
In addition, the budget would make another $610 billion in cuts to Medicaid over 10 years by transitioning the program from a traditional entitlement to either a block grant program or a per-capita program that puts a ceiling on federal Medicaid funding to states. It would also allow states to impose work requirements for certain Medicaid beneficiaries to reduce costs.
A budget document explaining the cuts to Medicaid and other healthcare programs was briefly posted on the Health and Human Services Department (HHS) website.
“This proposal will free States to advance solutions that best serve their unique populations—for example, encouraging work, promoting personal responsibility, and meeting the spectrum of diverse needs of their Medicaid populations,” the budget document said.
Overall, the Trump budget would reduce the deficit from 3.2 percent of gross domestic product in 2017 to 2.2 percent in 2018.
Besides the cuts to Medicaid, the budget finds $274 billion in savings over 10 years from spending cuts to anti-poverty programs. These would include $193 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP), $21 billion from Temporary Assistance for Needy Families (TANF) and $40 billion from cuts to the earned income tax credit and child tax credit.
The budget documents revealed at a briefing on Monday night didn’t specify how these savings would be found, but Office of Management and Budget (OMB) Director Mick Mulvaney said they would chiefly come from tightening eligibility for the programs, adding work requirements and shifting more of the financial burden to states.
“We are no longer going to measure compassion by the number of programs or number of people on those programs,” Mulvaney told reporters.
“If you’re on food stamps and you’re able-bodied, we need you to go back to work.”
The same is true, he added, for people who get disability benefits but should not receive them.
An OMB spokesperson said the budget would lead to a larger economy and increased jobs.
The budget office assumes that the economy will hit 3 percent growth in five years and sustain that growth through 2028.
The Congressional Budget Office, in comparison, estimates the nation will see 1.9 percent growth on average for the next 10 years.
Anti-poverty advocates reacted to the cuts with horror, arguing they would increase inequality while doing nothing to reduce the deficit.
“The Trump budget would make inequality and poverty significantly worse, while allowing deficits, when honestly measured, to soar,” said Bob Greenstein, president of the left-leaning Center on Budget and Policy Priorities.
But Mulvaney argued the budget would reform programs while putting people to work.
“We believe in the social safety net. We absolutely do,” Mulvaney said.
A well-administered safety net, he continued, could boost economic activity by mitigating risk for would-be entrepreneurs.
The budget allocates $2.6 billion for improved border security, including $1.6 billion for Trump’s physical wall on the Mexican border, though the OMB did not say what percentage of a full wall would be covered by that expense.
Estimates of the cost for a wall on the border have generally run between $10 billion and $20 billion.
The budget plan proposes a $25 billion expenditure for paid family leave, an issue first daughter Ivanka Trump has championed.
Mulvaney said the benefit would ultimately give people more security to stay in the workforce, which would further help the economy.