Trump’s $4.7 trillion budget proposal: Why should the third time be the charm?

Despite eye-popping debt on every page of Trump’s latest fiscal year (FY) 2020 budget proposal, some in the administration are pushing for a spending fight with Congress at least on one portion of the budget. Will they succeed this time? Only if conservatives get focused.

At the beginning of the Trump presidency in 2017, his Office of Management and Budget (OMB) immediately introduced a budget to cut spending for the remainder of FY 2017. Yet despite his party controlling both houses of Congress, the president signed a budget that spring ignoring every facet of his proposal.

Later that year, he introduced his budget proposal for FY 2018. The same thing happened. Then, the following year, the administration didn’t even pretend to cut spending and agreed with Congress to bust the budget caps by $300 billion, expanding the budget of almost every program and agency Trump promised to cut or eliminate.

Now, Trump has introduced his FY 2020 budget proposal with plans to make some modest cuts from the record high baseline of spending he and congressional Republicans have agreed to, even though Democrats now control the House. They blew through about seven budget deadlines plus a debt ceiling with control of both houses, when it would have been easier to leverage a veto threat to force McConnell to play hardball on filibusters against budgets. They failed to do so. This is just Charlie Brown with another football.

Even though the administration proposed even bigger spending cuts in past budgets, here we are today, 26 months into this administration and $2.1 trillion more added to the debt, and they are promising to cut some spending again. It could be the administration now feels that a more modest approach will somehow net better results in Congress. It is proposing a five percent across-the-board reduction in current non-defense discretionary spending levels for FY 2020 over the current year’s. That is roughly $54 billion from current high levels, although proposed disaster spending chews up about half of that savings.

Before exploring the opportunity for conservatives in the budget fight this year, it’s important to take stock of how far to the left we have all moved and how we have all become OK with it.

• The proposal would spend an unconscionable $4.75 trillion next year. Remember, for all our talk about the terrible spending under Obama, his final budget request was $4.15 trillion. Despite a record $3.6 trillion in revenue, this budget would result in a trillion-dollar deficit. These numbers are actually low, because they assume nearly $4 trillion in spending cuts the president has, thus far, failed to fight for.
• The budget blueprint would spend $56.3 trillion over the next 10 years. It would create $7.3 trillion in deficits. That is less than under the current baseline, but that is only because the OMB predicts three percent growth for the remainder of the decade. This is very unlikely, precisely because of all the debt we are amassing. The debt has prevented us from enjoying more than three percent growth even during the best job market. It also assumes $2.8 trillion in mandatory spending cuts, which everyone on all sides has demonstrated will never materialize.
• This coming year alone will result in another $479 billion in interest payments on the debt. That is more than the entire federal share of Medicaid and the Obamacare subsidies.
• In 10 years, interest on the debt will rise to $823 billion, a cost that even Medicare is not projected to reach for another five years. And this proposal assumes that the 10-year Treasury note will not rise above 3.8 percent, still well below historical averages and unlikely to occur given our projected desperation for debt servicing.
• The budget creates a massive new market-distorting entitlement program for paid family leave. The White House blueprint assumes it to be essentially revenue-neutral because it would rely on individuals drawing funds from their Social Security benefits early on in life, and those funds would not be replaced. As I’ve explained before, it’s inconceivable that this program would not spiral out of control and cost a lot more.

It’s quite evident that fiscal conservatism has gone the way of, well, social conservatism and national security conservatism.

So, is there any glimmer of hope?

If the administration is actually willing to fight for the strategy put forth by acting OMB Director Russ Vought, then there are at least some discretionary spending cuts that could easily be salvaged. While most of what is driving the insane debt is entitlement spending, it’s important to remember that when we cut the discretionary spending, we are not only saving money but draining the Swamp and its policies.

The strategy to win the spending fight goes as follows: Unlike last year, the status quo in any budget stalemate at the beginning of FY 2020 in October should benefit fiscal conservatives. That is because under current law, the spending caps of the 2011 Budget Control Act automatically revert to previous levels. This means that defense and non-defense discretionary spending automatically drop $35 billion beginning in October. Then, on January 1, 2020, automatic sequestration kicks in and another $89 billion is cut. Thus, if we simply operate on a continuing resolution without anything extra tied in during the first few months of the fiscal year, it will result in $124 billion less in discretionary spending than the current year.

Until now, the administration has been too scared to play chicken with Democrats on sequestration because, in the coming year for example, it would slash $21 billion more from defense spending than non-defense spending. However, Russ Vought warned Congress last month that the administration would be willing to shoot the hostage of defense spending and allow the budget caps to relapse for everything, while seeking the extra military spending from what is known as “Overseas Contingency Operations” (OCO) accounts, which are not subject to the spending caps.

While conservatives usually detest the use of this budget gimmick because it allows Congress to spend even more, he is suggesting we use it to assuage the fears of military spending hawks so it frees us up to fight to cut spending across the board without fear of collateral damage to the military.

This is a good strategy, but it will only work if the conservative movement gets focused in the next few months and actually holds the rest of the administration and GOP leaders in Congress to this strategy. Otherwise, it will just result in the same capitulation we saw in February 2018, when Trump agreed to bust the budget caps for two years, even with Republicans in control of the House. As we get closer to September, Democrats and the media will warn of “draconian” spending cuts and threaten a government shutdown. The majority of those in the “shallow state” of this administration will then oppose this strategy and signal capitulation. Then, unless conservative media figures change their attitude, they will obsequiously follow the administration’s cues, thinking they are standing with the president but in fact standing with the Swamp in this administration against the MAGA figures.

Consequently, the importance of today’s budget is not in any numbers or figures. Either way, we are swamped in debt and will continue to be until we fundamentally alter our approach to health care. But if conservatives want to secure a single victory on spending during this entire administration, the time to defend the president’s budget is not now, when it’s just a piece of paper, but headed into the fall, when it could become a reality — if we hold the line.

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