Some White House officials have gone as far as exploring policies such as automatic spending cuts as the economy improves, or prepaying Social Security benefits to workers before they become eligible, although these measures are unlikely to advance given the political stakes, said these officials and advisers, who spoke on the condition of anonymity because of the sensitivity of internal deliberations.
The concerns about the deficit are coming from traditional conservatives at the White House, including new chief of staff Mark Meadows and acting budget director Russ Vought. But officials say they are likely to face much more skepticism from President Trump himself. Trump has shown little interest since becoming president in shrinking the deficit and has so far stood firm on his campaign pledge not to alter Social Security.
It’s unclear how hard conservatives will push Trump on the deficit. As the novel coronavirus crisis has intensified, Trump has cut deals with congressional Democrats that largely ignored the impact on the federal debt, approving more than $2 trillion in spending already.
Trump, who promised during the 2016 campaign not to touch Medicare or Social Security, also has political incentives to avoid pushing cuts. About 39 percent of voters think Trump is more likely to cut Medicare, while 51 percent say presumptive Democratic nominee Joe Biden is more unlikely to cut their benefits, according to a 17-page Republican National Committee poll shown to the president last month, according to a person with knowledge of its findings.
Still, the growing conservative angst within the White House over the spending blitz may affect the next congressional stimulus package. Despite a brutal jobs report Friday showing 20.5 million job losses last month and the threat of an economic depression, Trump said Friday he is in “no rush” to cut another deal.
“I think that many people would like to just pause for a moment and take a look at the economic impact of this massive assistance program, which is the greatest in United States history,” National Economic Council Director Larry Kudlow said Sunday on ABC’s “This Week with George Stephanopoulos," while pledging to continue conversations with both parties.
Democrats and many independent economists say there is pressing need for additional stimulus, as states battered by collapsing revenue shed hundreds of thousands of government jobs and consumers hold back amid the downturn.
Trump’s White House has numerous conservative advisers who railed against spending under President Obama and have quietly chafed at the trillions spent under Trump, both before and during the crisis.
“A lot of people in the administration are concerned Republicans have completely surrendered the argument on spending, and they want to address it,” said Jason Pye, vice president of legislative affairs at FreedomWorks, a conservative organization. “And it’s an entirely valid concern.”
In addition to Meadows and Vought, Marc Short, chief of staff to Vice President Pence, has privately questioned how much the administration is spending, two people who have spoken to him say.
Vought also has voiced concerns about the growing fiscal impact and wants to focus on constraining the long-term deficit, according to two people familiar with his internal remarks.
Meadows, who founded the conservative House “Freedom Caucus,” has warned against an emergency relief package for the states, although he has told others in the White House Trump is unlikely to support deficit-limiting measures being considered and that the president is most focused on improving the economy.
Officials have started to look at several possible ways to limit the fiscal impact of additional spending. It’s not likely any will advance, officials say, but that they’re even being explored underscores the discomfort among administration officials with the heavy spending.
For instance, White House officials have discussed including measures in the next relief package that would trigger automatic spending reductions once the economy improves, according to two people aware of internal conversations.
Senior White House economic officials also are exploring a proposal floated by two conservative scholars that would allow Americans to choose to receive checks of up to $5,000 in exchange for a delay of their Social Security benefits, according to three people familiar with the internal matter. That plan was written by Andrew Biggs of the right-leaning American Enterprise Institute and Joshua Rauh of the right-leaning Hoover Institution at Stanford University.
Senior administration officials have discussed the “Eagle Plan,” a 29-page memo that called for an overhaul of federal retirement programs in exchange for upfront payments to some workers, but the White House has already rejected it, according to three administration officials. A copy of the plan was obtained by The Washington Post.
The proposal calls for giving Americans $10,000 upfront in exchange for curbing their federal retirement benefits, such as Social Security, the report says. Art Laffer, a conservative economist who is advising the White House on its economic response, said in an interview he reviewed the presentation and supports it.
The plan’s first page says it was written by Paul Touw, chief strategy officer to U.S. State Department undersecretary Keith Krach, whose responsibilities do not include creating domestic policy. Krach is close to Jared Kushner, Trump’s son-in-law and a senior adviser. Kushner and Krach served together on the presidential delegation to the World Economic Forum in Davos, Switzerland, in January.
Kushner received the memo and sent it to the White House Council of Economic Advisers for review, according to one person familiar with its handling.
The State Department declined to comment on the plan. White House spokesman Hogan Gidley decried the Eagle Plan and said the president would not support it or any proposal that cuts into benefits.
“The mere thought of this so-called ‘plan’ is ludicrous on its face,” Gidley said. “President Trump has been clear that while he is in office, the American people can feel secure without a shadow of a doubt that he will completely protect Social Security and Medicare — end of story, full stop.” A person familiar with the matter said it has not been presented to the president for review.
The internal concerns about the deficits come amid broad uncertainty about what Washington will do about the economic crisis. Trump has expressed confidence that lifting public health restrictions will jump-start the economy, even as expectations are that the spring will be an economic disaster.
“The reported numbers are probably going to get worse before they get better, but that’s why we’re focused on rebuilding this economy,” Treasury Secretary Steven Mnuchin said Sunday on “Fox News Sunday.”
But Trump’s proposed new steps for Congress are unlikely to go anywhere.
The president’s top economic policy idea — a payroll-tax cut — appears dead on arrival with congressional lawmakers and was publicly dismissed by leading Senate Republicans.
Administration officials conveyed little urgency on Friday to replace that proposal with another. Larry Kudlow, director of the White House National Economic Council, told reporters formal negotiations with Congress are “paused” and suggested it could be another month before additional stimulus measures are approved.
“We just had another big infusion. … Let’s see what happens,” Kudlow said. “As we move into the reopening phase this month, maybe spillover to June, let’s have a look at it before we decide who, what, where, when.”
Trump on Friday was similarly nonchalant in comments to reporters about additional spending. “Well, we’re in no rush, we’re in no rush,” the president said. “The Democrats have to do what they have to do, but I would say we’re not looking. … We want to see what they have, but I can’t say that we’re in a rush.”
House Speaker Nancy Pelosi (D-Calif.) has vowed an additional $2 trillion package, including hundreds of billions in aid for states. Numerous congressional Democrats have also called for making the $1,200 stimulus checks recurring, so they arrive in Americans’ bank accounts every month until the crisis abates.
Mnuchin, who has been Trump’s point person on the economic rescue so far, has overridden the concerns of the conservatives who have balked at the deficit numbers. His authority to cut deals with congressional Democrats could change, as Trump has expressed frustration with his treasury secretary over the rollout of the small-business program that rewarded some large firms and publicly traded firms, two senior administration officials said.
A White House official disputed that account. “The president has been extremely pleased with Secretary Mnuchin’s implementation of this program during an unprecedented pandemic, and anything to the contrary is completely false,” the official said.
Concerns linger among some economists that the White House is not moving fast enough to approve additional stimulus. The potential downsides of debt — rising interest rates and inflation — can be safely ignored right now in favor of more stimulus, said Ernie Tedeschi, an economist who served in the Treasury Department during the Obama administration.
“The consequences of debt and deficits is not an issue in the short term,” Tedeschi said. “Our priority should be to do whatever it takes to overcome the coronavirus, and we’ll deal with the consequences later.”
Ashley Parker contributed to this report.