President’s Budget Relies on Rosy Assumptions
For Immediate Release
President Trump’s first full budget was previewed tonight. The budget calls for $3.6 trillion of spending reductions and reforms over the next decade. The White House Office of Management and Budget estimates that under the President’s budget debt would decline from 77 percent of GDP today to below 60 percent by 2027, and deficits would disappear in that year. However, the budget relies on a number of very rosy assumptions.
Committee for a Responsible Federal Budget President Maya MacGuineas said the following:
While we appreciate the Administration's focus on reducing the debt, when using more realistic assumptions, the President’s budget does not add up.
The budget balances on paper – and having a specific fiscal goal is an important first step. But it only achieves that goal by relying on incredibly rosy economic growth assumptions along with very aggressive and unrealistic future cuts while omitting a potentially extremely costly tax reform plan.
If the Administration is serious about meeting the nation’s fiscal challenges, it will need to focus on structural reforms to our nation’s largest spending programs along with new revenue to finance them. Relying on heroic assumptions and vague promises instead of confronting tough policy choices will not fix our country’s fiscal woes.
The President certainly deserves credit for putting forward a number of specific and detailed spending cuts and program reductions. Many of these cuts merit consideration in any serious discussion over how to reduce the debt.
But to make the numbers work, the budget assumes 3 percent economic growth, which is unlikely to occur even in the best of circumstances. The budget also uses the entirety of the dynamic revenue from growth to pay down the debt – a move that we support but that is inconsistent with their past statements that economic growth would help pay for tax reform. The same money cannot be used twice.
Furthermore, while the budget does put forward many serious and specific spending cuts, it also assumes some areas of spending – particularly non-defense discretionary spending – get to unrealistically low levels by the end of the decade.
At the same time, too much of the pressure for cuts falls on too small a sliver of the budget. The President does not address two of our largest and fastest-growing programs – Medicare and Social Security old-age insurance. Promising to ‘protect’ these programs will ultimately hurt those who depend on these programs the most since reforms are needed to ensure solvency and sustainability.
We hope that Congress and the President work together to build on the budget’s best policies and replace its gimmicks with thoughtful reforms to Social Security, Medicare, and the tax code. We need a full plan that fixes the debt, not just wishes it away.
For more information contact Patrick Newton, Press Secretary, at email@example.com.