This morning, President Trump and the Office of Management and Budget released their budget proposal for fiscal year 2018. The proposal includes cuts to various programs while increasing funding for major discretionary departments such as Defense and Homeland Security. The two largest government programs—Social Security and Medicare—were left untouched.
The proposed total outlays for the year would be $4.094 trillion, while the receipts
would be $3.654 trillion in 2018. The deficit would go from $603 billion to $440 billion if the budget were adopted in its entirety. In total, it includes $3.6 trillion in spending reductions over 10 years, the most ever proposed by any President in a Budget. If their economic assumptions are correct, this will lead to a balanced budget by 2027.
The budget focuses on 8 pillars of reform: health reform, tax reform and simplification, immigration reform, reduction in federal spending, regulatory rollback, American energy development, welfare reform, and education reform.
For health reform, the budget focuses on savings from the repeal of the Affordable Care Act and also includes an extension of CHIP and the Veterans Choice Program.
Lowering both the corporate and individual rates are primary components of the tax reform portion, which they believe will spur massive economic growth and lead to a healthy economy. They also project that reducing regulations will help grow the economy and save the government money. The regulatory reforms stem from executive orders that the President has issued in the past few months.
In addition to these policy areas, the budget also focused on defense priorities, requesting $639 billion in funding for the Pentagon—$52 billion increase from the previous level, plus around $2 billion for “other defense national defense programs.” It would also add 56,400 more Soldiers, Sailors, Airmen, and Marines while further increasing the number of military ships and planes.
The budget also requests $44.1 billion for the Department of Homeland Security (DHS) and $27.7 billion for the Department of Justice (DOJ) for law enforcement, public safety and immigration enforcement programs and activities. As well as investing $2.6 billion in high-priority tactical infrastructure and border security technology, including funding to plan, design, and construct a physical wall along the southern border.
The budget also lists a $1 trillion private/public infrastructure investment program, reforming Medicaid and disability programs and allowing states to establish paid parental leave programs.
The budget addresses some discretionary programs that the government has funded in the past but fails to address huge programs—like Medicare and Social Security—that are hurting taxpayers the most. If the economic assumptions on growth are correct, this budget is a good start to reining in federal spending, as long as Congress can agree on all of the details. But appropriators should also seek more substantive reforms across the government, not just in the areas identified.