The Trump administration proposed sweeping cuts to many parts of the federal government Thursday morning, including foreign aid, environmental protection, trade development, the arts and programs geared at helping the poor. But although many see these cuts as draconian, they still don’t come close to fixing the country’s budget problem.
That’s in part because the proposed cuts were all offset with increased spending on the military. But it’s also because the blueprint the Trump administration issued Thursday focuses on just one part of federal spending. And as the Peter G. Peterson Foundation, which advocates a balanced budget, pointed out in a tweet Friday, it's not the part of spending that budget hawks worry about.
“While every part of the budget is important, discretionary spending is not a key driver of our growing debt,” the foundation said.
— Peterson Foundation (@pgpfoundation) March 17, 2017
For the spending plan released Thursday, that's by design: Trump's “skinny budget” includes only discretionary spending — funding for things like fighter planes, the Department of Education, and foreign aid that is approved on a regular basis by Congress. White House decisions on mandatory spending — funding that goes to programs like Medicare, Medicaid and Social Security and is required by law — are expected to come later this year.
As Peterson’s chart shows, the Congressional Budget Office estimates that discretionary spending, including defense and nondefense spending, could be relatively flat in years to come. Of course, that could change if a new administration decides to cut or raise spending.
What's certain is that the United States will face a challenge in controlling the budget for Social Security and especially major health programs.
The vast majority of the budget is made up by Social Security, Medicare and Medicaid — popular programs that Trump promised not to touch on the campaign trail. And it is mandatory spending, not discretionary spending, that is guaranteed to rise in years to come, as the chart shows.
For anyone who knows much about the budget, these points are obvious. But unfortunately, few Americans do. In an often-cited January 2016 poll, the Kaiser Family Foundation found that Americans on average said that foreign aid makes up 31 percent of the federal budget. Just 3 percent of those polled guessed the correct figure — less than 1 percent.
Some economists, especially on the liberal side, have been arguing that the debt is not much of an issue. They argue that global interest rates are ultralow and that an economy that has been dragged through the muck by the Great Recession needs to focus on spending more to help American families catch up — not risk choking off growth through austerity.
But many others argue that the country's debt has a real cost. In 2016, the federal government paid $432 billion to service its debt, dwarfing many times over the $58 billion Trump proposed to cut from dozens of departments and agencies. Meanwhile, the Federal Reserve looks to be on a path of raising interest rates — meaning that debt could become a lot more expensive to hold onto in the years to come.