Trump Budget Would Cut Medicaid, Rely on Rosy Growth Projection
May 23 2017 - 12:25PM
Dow Jones News
By Kate Davidson and Peter Nicholas
President Donald Trump proposed a $4.1 trillion spending
blueprint Tuesday that amounts to a sweeping overhaul of the
government's safety-net programs. It calls for deep cuts to
programs such as Medicaid and food stamps, while projecting a big
boost to economic growth that could be difficult to achieve.
The budget would cut overall federal spending by $4.5 trillion
over the next decade, more than offsetting a short-term boost in
funding to the military, $200 billion for infrastructure investment
and $19 billion on a new parental leave program.
It assumes tax cuts will boost economic growth enough to pay for
themselves and raise enough additional revenue to eliminate the
deficit in a decade.
The budget proposal, for the 2018 fiscal year that begins Oct.
1, is one of the clearest windows yet into Mr. Trump's values and
priorities. But it is likely to face blowback on Capitol Hill, even
among some Republicans, who have balked at cuts to foreign aid,
farm subsidies and health-care programs for low-income
families.
The primary driver of savings in Mr. Trump's budget comes from
more than $800 billion in cuts to Medicaid, the federal-state
health program for the poor, despite a pledge from the president on
the campaign trail not to touch the program.
Mr. Trump's budget director Mick Mulvaney said Monday much of
the savings will come from changes in the GOP's health-care
overhaul bill, which Mr. Trump supports. But the administration's
budget would cut more than $600 billion from Medicaid and the
federal Children's Health Insurance Program on top of the $250
billion saved from repealing and replacing the Affordable Care
Act.
The plan also assumes that economic growth that would reach 3%
by 2021 will help balance the budget within 10 years. Many
economists have questioned whether the economy can grow much faster
than its current pace without long-term investments in programs
that boost worker productivity or help expand the labor force.
The Fed projects the economy will grow at a 1.8% annual rate in
the coming years. The Congressional Budget Office projects 1.9%
growth.
Mr. Mulvaney said the budget proposals will help bring workers
off the sidelines, in part by requiring them to have jobs in order
to qualify for assistance programs such as food stamps, a change
that is projected to save $193 billion. He said the new paid
parental leave programs he said will help parents keep working.
"We believe that we can get to 3% growth, and by the way we do
not believe that that is something fanciful," he said.
The budget would also limit eligibility for the earned-income
tax credit and the child tax credit, trimming $40 billion of
spending over the next 10 years, and would slash funding for
disability insurance by $72 billion. Other spending cuts include
$143 billion from changes to student-loan programs, $63 billion in
reduced retirement benefits for federal employees, and $38 billion
to curb certain farm subsidies.
Nondefense spending as a share of the economy would fall to just
1.5% by the end of the next decade, well below the lowest level in
records going back to 1962.
Write to Kate Davidson at kate.davidson@wsj.com and Peter
Nicholas at peter.nicholas@wsj.com
(END) Dow Jones Newswires
May 23, 2017 12:10 ET (16:10 GMT)
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