Trump's budget calls for staggering cuts to domestic programs

The White House began its roll out of its fiscal year 2018 budget on Monday, setting the stage for a battle over proposed massive cuts to domestic programs at the expense of increased defence spending.

While the full budget will be released and distributed to Capitol Hill lawmakers on Tuesday, Office of Management and Budget director Mick Mulvaney shone a light on some of the details during a call with reporters on Monday.

The budget, officially dubbed “A New Foundation for American Greatness,” includes massive cuts over the next ten years to social safety net programs like Medicaid, food stamps, and the Children’s Health Insurance Program (CHIP) while increasing the budget for the Department of Homeland Security and Department of Defence. According to Bloomberg’s Justin Sink and Erin Wasson, the budget would cut domestic agencies’ budgets by 40% in 2027.

The plan is expected to receive pushback not only from incensed Democrats, but likely many Republicans. Additionally, cuts to farm subsidies and student loan programs will also face pushback from strong interest groups.

While the bipartisan resistance to the budgetary ideas will be huge, the White House’s attempt does represent the first bid in a long process to funding the government.

Here’s a breakdown of some of the key points from Mulvaney’s briefing on Monday:

  • An assumption of 3% economic growth: Part of the Trump team’s assumptions in paying for plans from the budget to their massive tax cuts has been a system called dynamic scoring, which factors in an assumption of stronger economic growth for increased payments to the government. The White House budget proposal, said Mulvaney, is “part of an effort to get to sustained 3% economic growth.” GDP growth in the first quarter of 2017 was 0.7% annualized according to the Bureau of Economic Analysis.
  • Massive cuts to Medicaid: The budget proposes an additional $US610 billion cut to Medicaid, with $US250 billion in savings to offset it. Based on Mulvaney’s comments, it appears this is in addition to the $US880 billion already cut under the House’s American Health Care Act. “We go another half a step further [beyond the AHCA] and ratchet down some of the growth rates that are assumed in the AHCA,” Mulvaney said. “So if you assume growth rates — I can’t remember what the exact measure is — it’s a CPI-plus measure. We take a measure that we think is closer to what the actual growth rates look like.
  • Large cuts to foods stamps, officially known as the Supplemental Nutrition Assistance Program (SNAP) According to Bloomberg, the cuts to the food stamp program in the budget would amount to $US193 billion. The program would also phase in a work requirement, according to Mulvaney, so that people without dependents would have to be employed to qualify.
  • $US1.6 billion for border-wall funding: “The spending on the border security is $US2.6 billion, of which I think $US1.6 billion is actual bricks and mortar construction,” Mulvaney told reporters. “The other $US1 billion is infrastructure and technology.”

Mulvaney will testify on Capitol Hill in the House on Wednesday and speak to the Senate on Thursday.

A budget is needed by the end of September to prevent a government shutdown.

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