Marc Goldwein: Three Smart Reforms in Trump's Budget
Marc Goldwein is the senior vice president and senior policy director of the Commitee for a Responsible Federal Budget. He recently wrote an opinion piece for RealClearPolicy.
There is a lot to criticize in President Trump’s first full budget. It is based on phony economic growth assumptions; omits what could be a multi-trillion-dollar tax plan; practically ignores the government’s three largest spending programs; and calls for disproportionate cuts to programs for children and low-income adults.
But don’t throw the whole thing out just yet — tucked inside are a few pages that should be spared the shredder. Some may even have the potential for bipartisan support.
Here is a guide to a trio of ideas that bring some sense to an otherwise broken budget.
Social Security Disability Insurance Reform
Social Security Disability Insurance (SSDI) is only six years from insolvency and, financial considerations aside, in serious need of improvement. The president’s SSDI proposals begin the conversation on such improvements.
Let’s first dispense with the idea that the president is proposing some deep cuts to Social Security. Actual cuts to benefits total only about $1 billion per year, which is half a percent of the disability program’s costs and only 0.1 percent of total Social Security costs.
Over time, the combination of these very modest reductions and several reforms to improve the program while also saving money would be enough to close one fifth of SSDI’s long-term solvency gap. It would also make the program fairer and more efficient as well as address some unwarranted overlap with other programs.
More importantly, the budget calls for aggressively testing and implementing ideas to help workers with disabilities remain in or return to work. Many of the ideas suggested in the budget come straight out of SSDI Solutions, a book of disability reform ideas that I worked on with former Congressmen McCrery and Pomeroy, along with dozens of disability experts and advocates. Among the ideas suggested in that book include offering vocational rehabilitation and support to prospective applicants, expanding health and wellness programs, as well as requiring benefit re-application for those who enter the program with expected medical improvement. The budget also prescribes some tougher medicine that could prove effective, such as requiring certain applicants to engage in job-seeking activities or try physical therapy before applying for disability benefits.
Since most people are on the SSDI program precisely because they cannot work, we shouldn’t expect these new ideas to reduce SSDI rolls drastically. And it is doubtful they can achieve anywhere close to the $50 billion of savings the budget estimates over a decade. However, the right supports and incentives could help a fraction of beneficiaries to collect a paycheck instead of a disability check. That would be a win for workers, families, the trust fund, and the overall economy.
Student Loan Reform
The way the federal government subsidizes student loans is a mess. The budget’s recommendations would target support to those who truly need it while removing some of the bad incentives and complexity of the current system.
The budget continues to offer low interest rates for nearly all college students. However, it would no longer allow debt to accumulate interest-free while students are in school — a policy that does nothing to encourage college enrollment and ends up subsidizing students regardless of eventual income.
The budget also eliminates the current hodgepodge of loan forgiveness programs that promote more debt rather than better education.
In place of these subsidies, the administration proposes a single and progressive “Income-Driven Repayment” plan that limits total loan payments in a given year based on income. It also forgives all debt after 15 years (or 30 years for those with graduate school debt).
Overall, this part of the budget would be a real win for low- and middle-income borrowers with undergraduate degrees. And, indeed, the proposals are not too different from — though they are much more aggressive than — the ideas put forward by the Obama administration.
One could argue that some of the savings from the plan should be plowed back into Pell Grants, free community college, or a more generous income-driven repayment program. But it’s hard to argue we should keep today’s broken student loan system in place.
A Down Payment on Paid Family Leave
The United States is one of only a handful of countries without a government-sponsored paid family leave program.
The president’s budget would change this by requiring states to offer six weeks of unemployment benefits to new parents, paid for mainly with higher unemployment payroll taxes. Yes, you read that right, a tax increase in a Republican budget!
Some may criticize this proposal as not being generous enough, and it might not be. However, there are a few advantages to the modesty of the benefit. First, its cost is low and thus the public is more likely to accept the taxes needed to pay for it. Second, unemployment benefits are generally capped in a way that ensures that spending is fairly well targeted to those who need it, rather than offering huge windfalls to those who do not.
Perhaps most importantly, the administration’s proposal is unlikely to crowd out employer-provided parental leave benefits that are in many cases far more generous, more flexible, more efficient, and better for the economy than what the government would be able to offer.
These proposals takes a fiscally responsible first step toward ensuring no parent faces undue financial hardship from raising a newborn.
Don’t Throw Out the Baby with the Bathwater
Many have declared President Trump’s budget “dead on arrival.” And regardless of what you think of the policy specifics, the gimmicks and phony assumptions employed by the administration make it impossible to argue this is anything close to a responsible budget. Nevertheless, there are some good ideas in this budget worth keeping alive. These include the president’s SSDI, student loan, and family leave policies.
None of these policies is perfect and all could be improved and refined in the legislative process. Yet, taken together, they would grow the economy, reduce the deficit, and help improve peoples’ lives. Congress owes it to the American people to consider these important reforms.
"My Views" are works published by members or staff of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the Committee.