Presidential budgets are visionary documents — fiscal roadmaps of where the White House wants to lead the country. For Donald Trump, it is all about growth and a return to prosperity after 15 years of malaise.
The centerpiece of the White House budget is the business tax cut, which will cost about $2 trillion to $3 trillion over the next decade, and the rest of the budget includes some steep cuts in domestic programs to pay for it. Defense spending also gets a boost, as Trump promised on the campaign.
The big money brawl will be over some of the entitlement programs like Medicaid, food stamps, and disability. All of these programs are rampant with fraud and erroneous payments. The government’s own auditors say the government spends $150 billion a year in checks and payments.
White House budget director Mick Mulvaney put it well when he said, “If you’re able-bodied and on food stamps, we’re going to need you to work.” Ditto for disability where claims have skyrocketed over the last decade, even as the workplace has become safer. Food stamp recipients skyrocketed from 28 million to 46 million under Barack Obama (remember the absurd claim that food stamps were an “economic stimulus”?) and still remain 50 percent higher than before the recession.
Work requirements not only cut caseloads, but they also improve lives by restoring the dignity of having a job. Don’t believe the welfare industry’s moaning that these reforms are “cruel.” That was what was said after the 1996 welfare reform work requirements in 1996 and signed into law by Bill Clinton. Those work requirements are now almost universally applauded as one of the great social policy success stories of modern times with caseloads falling by more than half as paychecks replaced welfare checks.
Trump’s big gamble here is that the tax cuts will generate 3 percent to 4 percent growth. I have made the case to the White House and in my studies at the Heritage Foundation that growth is absolutely essential to taming the debt and deficit. With 3 percent growth, over the next 20 years, the debt as a share of GDP falls to about 50 percent of GDP and with 4 percent growth balancing the budget is a layup. Meanwhile, the 1.8 percent growth path Obama left Trump will cause a Greece-like debt crisis over the next decade or two.
In this Trump budget the White House is predicting 3 percent plus growth over the next decade once the tax cut, deregulation, and ObamaCare repeal are enacted. Liberals and the media are protesting that Trump can’t deliver 3 percent growth and that his forecast is “unrealistic” and a “rosy scenario.”
What hypocrites. Every Obama budget assumed 3 percent to 4 percent growth and I don’t recall the wailing and gnashing of teeth even though Obama’s policies failed to get us over the 3 percent low hurdle in a single year.
So are we really supposed to believe that Obama could get unleash 3 percent to 4 percent growth by raising taxes, but Trump can’t do it by cutting onerous taxes?
These same economists said Reagan’s tax cuts wouldn’t work and he produced quarters of 8 percent growth and seven years of just under 4 percent. How did that happen?
On the budget, we tried it Obama’s way for eight years and that produced the worst debt record — $9 trillion added during his two terms — of any president by a country mile. The economy severely underperformed. Welfare caseloads exploded.
Trump is gambling that a lean fiscal budget with tax cuts and budget reforms that inspire hiring, investing, and working will grow the economy. This is a budget that Mulvaney says will “put taxpayers first.” Is it ever about time.
* * * * *
Stephen Moore is the distinguished visiting fellow for the Project for Economic Growth at The Heritage Foundation and an economic consultant with FreedomWorks. He served as an economic advisor to Donald Trump’s 2016 presidential campaign.