Trump Budget Would Cut Medicaid, Rely on Rosy Growth Projection

By Kate Davidson and Peter Nicholas Features Dow Jones Newswires

President Donald Trump proposed a $4.1 trillion spending blueprint Tuesday that amounts to a sweeping overhaul of the social safety net. It calls for deep cuts to programs such as Medicaid and food stamps, while projecting a big boost to economic growth that could be difficult to achieve.

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The budget would cut overall federal spending by $4.5 trillion over the next decade, more than offsetting a short-term boost in funding to the military, $200 billion on infrastructure investment and $19 billion on a new parental leave program.

It assumes tax cuts will boost economic growth enough to pay for themselves and raise enough additional revenue to eliminate the deficit in a decade.

The proposal is one of the clearest windows yet into Mr. Trump's values and priorities. But it is likely to face significant blowback on Capitol Hill, even among some Republicans, who have balked at cuts to foreign aid, farm subsidies and health care programs for low-income families.

The primary driver of savings in Mr. Trump's budget comes from more than $800 billion in cuts to Medicaid spending, despite a pledge from the president on the campaign trail not to touch the program.

Mr. Trump's budget director Mick Mulvaney said Monday much of the savings will come from changes in the GOP's health-care overhaul bill, which Mr. Trump supports. But the administration's budget would cut more than $600 billion from Medicaid and the federal Children's Health Insurance Program on top of the $250 billion saved from repealing and replacing the Affordable Care Act.

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The plan also assumes that economic growth that would reaching 3% by 2021 will help balance the budget within 10 years. Many economists have questioned whether the economy can grow much faster than its current pace without long-term investments in programs that boost worker productivity or help expand the labor force.

Write to Kate Davidson at kate.davidson@wsj.com and Peter Nicholas at peter.nicholas@wsj.com

(END) Dow Jones Newswires

May 23, 2017 11:51 ET (15:51 GMT)