Bipartisan Pushback Greets Trump's Proposed Budget

By Kate Davidson, Kristina Peterson and Natalie Andrews Features Dow Jones Newswires

President Donald Trump faced pushback from Republicans and Democrats on Capitol Hill on Tuesday after offering a 10-year plan to balance the federal budget that depends heavily on cuts to the government's safety-net programs such as food stamps and Medicaid and expectations of a big gain in economic growth.

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The White House budget proposal for the 2018 fiscal year that begins Oct. 1 would cut federal spending by $4.5 trillion over 10 years. But it leaves untouched the big entitlement programs -- Social Security and Medicare for retirees -- and proposes increases to infrastructure spending, a new parental leave program and a short-term boost to military spending.

With those priorities set, the White House offered up sharp reductions in other programs that touch households and the broader economy in myriad ways, large and small.

Payments to Medicaid, the federal-state health program for the poor, would be cut by more than $600 billion over a decade from levels projected under current law in addition to proposed Medicaid cuts under the House bill repealing and replacing much of the Affordable Care Act.

Under the proposed budget, the food-stamp program would be cut by $193 billion, the student-loan program by $143 billion, disability payments by $72 billion and farm subsidies by $38 billion.

Smaller programs, some of them touching regions that voted heavily for Mr. Trump last November, would be zeroed out. Those include the Appalachian Regional Commission and Great Lakes Restoration Initiative.

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In all, nondefense spending as a share of the economy would fall to just 1.5% by the end of the next decade, well below the lowest level in records going back to 1962.

The budget proposal now heads to Congress, where it is assured of stiff resistance -- even from Mr. Trump's own party. The plan drew praise from some Republicans for balancing the budget over 10 years, but many balked at cuts to foreign aid, farm subsidies, health-care programs for low-income families and other programs that touched their constituents.

"It's nothing new -- it's just a lot of people who don't know what the hell is going on in farm country," said Senate Agriculture Committee Chairman Pat Roberts (R., Kansas), who objected to proposed cuts for farm subsidies and new limits on crop insurance. "You would think a budget would be applicable to the problems we're facing."

Mr. Roberts, along with House Agriculture Committee Chairman Mike Conaway (R., Texas), also voiced concerns over the budget's goal of wringing savings out of food stamps, formally known as the Supplemental Nutrition Assistance Program. Mr. Conaway said he wanted to see spending on food stamps based on policy changes the committee has spent years researching, not pegged to an arbitrary number. "We want to get the policy correct, then we'll see if we can afford it," he said.

Democrats blasted the overall budget proposal.

"This is the budget you write if you think working families have it too easy," Sen. Ron Wyden (D., Ore.) said.

With Mr. Trump traveling through the Middle East and Europe, his deputies were left to defend the plan.

Mick Mulvaney, the president's budget director, said Monday the plan will boost economic growth by bringing workers off the sidelines, in part by requiring them to have jobs to qualify for assistance programs such as food stamps, in addition to funding a new parental leave policy.

Besides wide-ranging spending reductions, the proposal depends on a projection that economic growth will reach 3% by 2021 and stay there through 2027, bolstering government revenue and holding down the need for support programs like unemployment insurance.

That growth projection is more aggressive than the Congressional Budget Office projection of 1.9% over a decade or the Fed's 1.8% projection. It also assumes the country's economic expansion, already nearly eight years old, won't be interrupted by another economic downturn.

Republicans in both the House and Senate now will craft their own budget resolutions in the coming months. Those will set overall funding levels and become a blueprint to write spending bills.

The 2018 budget blueprint is especially important this year because Republicans plan to use it as a vehicle to advance an overhaul of the tax code. The party, which has 52 seats in the Senate, will need to hold together most of its coalition to proceed, but party fractures became apparent with the budget proposal.

House Freedom Caucus Chairman Mark Meadows praised the Trump budget's cuts. But the North Carolina Republican said he was given pause by the proposal to reduce funding for Meals on Wheels, which provides free food service daily to homebound individuals.

"Meals on Wheels, even for some of us who are considered to be fiscal hawks, may be a bridge too far," said Mr. Meadows, noting that he himself has delivered meals. Meals on Wheels America said its funding would be affected by the budget's proposed elimination of some community grants and a cut in funding for the Older Americans Act Nutrition Program.

Other Republicans leapt to defend regional interests. Michigan Republicans including Reps. Fred Upton and John Moolenaar objected to proposed cuts to Environmental Protection Agency programs aimed at protecting the Great Lakes region. The Trump budget proposes cutting the EPA's "geographic programs" protecting and restoring the Great Lakes, Chesapeake Bay and Puget Sound ecosystems, saying they are best handled by state and local entities. The move would save $427 million.

"We're going to continue to work with the administration to make a case that this Great Lakes restoration funding is important in keeping invasive species out of the Great Lakes -- Asian carp and others," Mr. Moolenaar said. "It is a concern."

Deficit hawks also took swipes at the plan, arguing it does virtually nothing to address the two biggest drivers of government spending: Medicare and Social Security.

"This is not sustainable over the long-run because Social Security and Medicare costs will continue growing rapidly even after lawmakers have run out of other offsets," said Brian Riedl, a senior fellow at the Manhattan Institute and former chief economist for Sen. Rob Portman (R., Ohio). "At that point, the only options will be damaging tax cuts or drastic Social Security and Medicare cuts.

Despite the resistance he will surely face, the president has important allies in Congress; most notably House and Senate leadership with a mutual incentive to ensure the Republican economic agenda doesn't stall in Congress.

"We finally have a president who is willing to actually balance the budget," said House Speaker Paul Ryan. Echoing the president's promise, he said, "clearly getting to regulatory reform and tax reform will help us grow the economy."

Senate Majority Leader Mitch McConnell (R., Ky.) said the budget reflected "recommendations" from Mr. Trump that Republicans would take into consideration as they write their own budgets. "We'll be taking into account what the president recommended. They will not be determinative," he said.

Write to Kate Davidson at kate.davidson@wsj.com, Kristina Peterson at kristina.peterson@wsj.com and Natalie Andrews at Natalie.Andrews@wsj.com

(END) Dow Jones Newswires

May 23, 2017 16:58 ET (20:58 GMT)