For those who missed it, I decided to turn my recent email about Trump’s Budget Proposal into a blog post.
“Trump seeks historic cuts to government,” the headline reads.
And then proceeds to say, “The Trump Administration on Tuesday will propose the deepest cuts to government programs in a generation.”
So which is it? Historic cuts? Or the deepest cuts in a generation? Or have we gotten so accustomed to massive budgets (which the Congressional Budget Office predicts will run at an annual average of a half-trillion dollar deficit fiscal years 2017-2021) that the largest cuts in a generation are considered “historic”?
The article I am referring is a headline on TheHill.com, which you can read here.
As you read on, it is based on three points: “cuts to anti-poverty programs, optimistic economic forecasting and deep cuts to nondefense discretionary funding.” At he same time, the coming budget is intended to leave Medicare and Social Security alone, and increase the Defense budget.
Let’s examine this a bit closer:
First of all, major anti-poverty programs began with Lyndon Johnson. Interesting statistic: By modern standards, the U.S. poverty rate fell from 95% in 1900 to around 14% by the mid/late 1960s (when the “War on Poverty” and its spending programs began), where it has consistently hovered. In inflation adjusted dollars, spending on anti-poverty went increased by 8.1 times from 1964 to 1996 alone (in-depth analysis at “The Legacy of Johnson’s War on Poverty”). Surely, even if you favor the social safety net, the cost/benefit analysis ought to at least be re-considered.
Second, regarding optimistic economic forecasting, the most recent recession was the 2008 Great Recession. For a century, recessions have happened on average no less than every 7 years. Now, I believe there are rather clear reasons for economic recessions other than “it’s just a downside of capitalism” (which I’ll get to eventually), but whether you rely on historical pattern or economic theory, there are plenty of reasons to think that recession may be around the corner. I wish I had time to get into all of them here.
Third, non-military discretionary spending is a fraction of the budget, ranging from around 9-13% of the total budget, years 2011-2017.
Fourth, Social Security and Medicare are the two largest current and coming budget black holes. As of today, the total unfunded liabilities (unfunded planned payments due to be paid out at existing rates and with projected population trends) for these programs is estimated to be $106 trillion, and some studies have put it as high as $200 trillion. That’s a tax liability of $884,037 per taxpayer (source: usdebtclock.org).
Let’s just say that whatever this “historic” budget proposal is, you will have it decried as some evil hatred of the poor and progress, or praised as some remarkable achievement for which to shower praise. Either way, it’s a bare drop in the fiscal bucket of liabilities.
What do you think? Is this a step in the right direction? Harmful? Join the new Facebook discussion group at the LCKeagy Forum and let’s discuss it, or anything else of interest.