Wonkblog | Analysis
May 25, 2017 at 10:26 AM
There is plenty to criticize, or even be outraged by, in the 2018 budget unveiled this week by the Trump administration without having to resort to the hackneyed end-of-the-world rhetoric used by advocates and interest groups — and, alas, too many journalists — in response to every proposed cut in government spending.
From strictly a rhetorical point of view, it is simply inaccurate to claim that a program has been "decimated" or that lives will be "devastated" because total spending might be cut 10 percent or even 20 percent from what had been projected. Yes, it is possible that such cuts may be unwise, unfair or even economically self-defeating. But it is also possible that such cuts reflect an economic judgment that past increases in spending are unsustainable going forward (health spending, for example), or a reasonable preference for shifting control and funding to a different level of government (housing subsidies, for example), or are based on a credible assessment that programs are ineffective (job training is an example).
I like Masterpiece Theatre and a Beethoven symphony as much as the next upper-middle-class professional, but I can see why some people might wonder why their tax dollars should subsidize my taste for British drama and classical music but not their preference for NASCAR and country western music.
And is it really beyond the pale to think that the highly profitable drug and medical device industries might pay for a greater share of the cost of running the Food and Drug Administration so taxpayers can pay less?
For years now, it has been obvious to both liberal and conservative analysts that the sharp increase in the number of people who qualify for Social Security disability payments has more to do with the declining job prospects of blue-collar workers than it does with any sudden increase in physical and mental infirmities in select demographic groups. But rather than welcoming a proposal to review some of these disability designations, the president's opponents have seized the opportunity to grandstand on the issue, portraying the proposal as a cruel effort to punish everyone with a physical or mental handicap.
Some of us may also consider it hardhearted to cut off food stamps or child tax credits to poor families that have come to this country illegally, but even we must acknowledge that there are millions of Americans who are outraged by the widespread flouting of immigration laws. Candidate Donald Trump could not have been any clearer that he shared that outrage. And now that he has been elected, nobody should be surprised that Trump is proposing to deny illegal immigrants the benefits of our economic safety net.
Or consider the proposed cuts in research funding. Given the number of people who die from cancer or suffer from the ravages of Alzheimer's, some of us are inclined to spend whatever it takes to find a cure for such diseases. But is the right number necessarily $32 billion, the current budget of the National Institutes of Health? Maybe the right number is double that amount — or half of it. The answer is not self-evident. It is quite possible, in fact, that there is a point of diminishing return to research into any disease, or that too much of the money goes to administration rather than actual research, or that there are less expensive ways to save more lives.
In the area of energy, the government funds research to find new techniques to manufacture solar panels or extend the life of nuclear power plants or capture and bury carbon emissions coming from power plants. But is that the kind of basic research that only government can do, or is it developmental product research that ought to be paid for by industry?
These are legitimate questions that deserve a respectful hearing and reasoned discussion. What they don't deserve is to be shouted down by a Washington establishment that reflexively dismisses any proposal to cut any program at any time. We ought to be able to question the spending priorities of the conservative Republicans who wrote this budget without resorting to questioning their motives, their intelligence and their humanity.
Indeed, the real problem with the Trump budget is not that it challenges the efficacy of so much government spending, but that it does so selectively and inconsistently.
If, for example, it is necessary to slow the growth in spending on medical care for the poor and disabled under Medicaid, which has been rising faster than the rate of medical inflation, why is it not necessary to slow similar growth in spending on medical care for the elderly under Medicare? Entitlement reform is not something that ought to be limited to the poor.
There's a similar lack of consistency in the treatment of national security spending. Does anyone really believe that the waste, fraud and abuse that the president believes to be so rampant in programs dealing with health, education and welfare is somehow absent in programs run by the Departments of Defense and Homeland Security, where the president and his Republican allies are proposing double-digit increases?
We can, perhaps, sympathize with Office of Management and Budget Director Mick Mulvaney's determination to separate the deserving poor from the undeserving, but why is Mulvaney so unconcerned about making the same effort to weed out support for the undeserving rich?
Under the president's tax and spending proposals, someone who puts in 10-hour days at a construction site or in a hospital emergency ward will wind up paying income and payroll taxes equal to 20 percent of his income, while the billionaire hedge fund manager will pay only 15 percent. And under the same plans, someone who earns $50 million through hard work and ingenuity deserves to pay an effective tax rate of 25 percent while the ne'er-do-well son who inherits $50 million from his daddy pays no taxes at all. What is the economic or moral logic behind that?
The president and his team have also made exorbitant claims about the amount of economic growth that will be unleashed as a result of their tax and spending program — an improbable $2 trillion in additional output over the next decade.
But nowhere in the budget document is there any mention of the offsetting drag on economic growth that will result from having a workforce that is less healthy as a result of cuts to Medicaid and Obamacare, or less educated as a result of reduced subsidies for college loans and work-study programs. Nor is there any consideration of the fact that our economy would be less innovative as a result of the reduced investment in basic scientific research, or less productive because of loss of trust and social capital that results from the growing income gap between the rich and everyone else. And don't forget that an economy growing so fast will not only encourage more people who are not working to find jobs — it will also encourage people who are working and earning more to retire early and head to the beach.
If we are going to consider the positive dynamic effects of tax and spending cuts on productivity and work effort, as the president insists, then we certainly need to consider the potential negative effects as well.