When Budget Cuts Are Actually Budget Increases

Yesterday Investor’s Business Daily posted an editorial about President Trump‘s budget proposal.

The article included the following graph:

As you can see, the federal budget does increase. However, it increases at a lower rate than it would if baseline budgeting were used. Baseline budgeting is a tactic used by people who want to grow the government to convince the rest of us that the sky is falling. It is very simple–if you got a 3% budget increase last year and you get a 2% increase this year, your budget has been cut (even though it grew by 2%).

The article further reports:

Trump’s proposed spending cuts for entitlement programs have been described as “massive,” “sweeping,” and on the surface, the $1.7 trillion spending cuts Trump proposes look massive.

But these reports always leave out one key fact. Spending on entitlement programs isn’t being cut. At least not in the traditional sense of spending less next year than you spend this year. Trump’s budget doesn’t touch Social Security or Medicare, and only slows the growth of the remaining “safety net” programs.

In fact, the projected 10-year spending for all entitlement programs under Trump’s budget would be trimmed by less than 8%. (See the accompanying chart.)

Some analysts say Trump’s budget would end up cutting $1.4 trillion from Medicaid over 10 years, because his proposed $610 billion in savings from reforming the program would come on top of the $800 billion proposed cuts contained in the House ObamaCare repeal-and-replace bill. (The budget doesn’t spell this out, but does contain a mysterious “allowance for ObamaCare repeal and replace” line item, with annual savings that match up to spending reductions in the House repeal bill.)

If true, that looks like a huge chunk, even from a program slated to spend $5.3 trillion. But keep in mind that states also contribute almost an equal share to Medicaid. In fact, when you combine federal and state spending, Medicaid is forecast to shell out more than $8 trillion over the next decade.

The article concludes:

Is Trump’s budget perfect? Hardly. We’d prefer that he tackle Social Security and Medicare reform in addition to Medicaid. The ObamaCare repeal savings are likely exaggerated. His $200 billion in infrastructure spending will only whet the appetite of lawmakers.

But on balance, this budget is far more realistic, and more responsible, than anything that ever came out of the Obama White House.

And as a statement of Trump’s governing principles — which is really all the presidents’ budgets ever amount to — Trump’s focus on spending restraint, entitlement reform, work incentives and on removing government impediments to growth is spot on.

In the world of Washington politics, power is measured by how much money you control. Bureaucrats love to spend our money. They will not give up that power easily. There will be a lot of people running around in the coming days yelling “the sky is falling.” They are misinformed. I wish this budget could pass Congress in its present form, but that is highly unlikely. However, I hope that the principles behind the budget will somehow survive and we will see a recognition of the fact that we are currently spending ourselves into destruction. The Washington establishment will not go down easily, but they seriously need to go down.