Debating the impact of Trump’s stark budget departure

The White House says President Trump's first full proposed budget puts taxpayers first. His plan would dramatically reduce Medicaid spending, food benefits and Social Security Disability Insurance, while boosting defense funding. Lisa Desjardins reports and Hari Sreenivasan gets views from Jared Bernstein of the Center on Budget and Policy Priorities and Chris Edwards of the Cato Institute.

Read the Full Transcript


    But first: While President Trump continues his trip abroad, here in Washington, the White House was busy unveiling the administration's first budget.

    Our Lisa Desjardins has more.


    Delivered this morning, this is the first full proposal from President Trump to Congress: a $4.1 trillion budget plan the White House says puts taxpayers first.

    It also puts the budget in balance in 10 years, without touching Social Security retirement funds or Medicare.

  • MICK MULVANEY, White House Budget Director:

    They are all, all campaign promises that the president made while he was running for office. That's why I say these numbers are simply the president's policies put onto paper.


    The president also promised to not cut Medicaid, the health program largely for the poor. But this budget would dramatically cut the growth in Medicaid spending by some $610 billion. That's on top of the $800 billion reduction in the GOP's American Health Care Act.

    It would also cut $192 billion from SNAP, also known as food stamps, and ask states to pay more for that program. And it would mean $72 billion less for Social Security disability insurance.

    The White House believes there is wide abuse of such programs by people who should be supporting themselves and the economy.


    We are not kicking anybody off of any program who really needs it. That's not — we have plenty of money in this country to take care of the people who need help, OK? And we will do that. We don't have enough money to take care of people, everybody, who doesn't need help.


    Democrats see it very differently.


    This is a budget that is immoral, and that will cause an enormous amount of pain for the most vulnerable people in our nation. This is a budget that will be rejected by the American people and must not see the light of day here in Congress.

  • WATCH:

    Democrats criticize Trump's budget proposal


    The Trump budget also would dramatically shift other spending, too. Currently, defense programs and non-defense programs are nearly even in spending.

    Next year, the Trump budget would boost the military spending 10 percent, by $54 billion, and it would cut $54 billion from non-defense. The White House points that it would use the savings for things like $19 billion for a new paid parental leave program.

    Today, Republicans in Congress, who ultimately control the spending, thanked the president, but didn't endorse his plan.

  • SEN. MITCH MCCONNELL, R-Ky., Majority Leader:

    Well, look, the president's budget, as we all know, is a recommendation. Every president since I have been here — and that covers a good period of time — has made a recommendation, and then we decide what we're going to do with those recommendations.


    A recommendation that is this president's fullest expression yet of how he wants the government to change.

    For the PBS NewsHour, I'm Lisa Desjardins.


    There's no doubt that this budget proposal is the sharpest departure with past plans in at least a generation.

    We look at the potential impacts, and the reasoning behind it, with Jared Bernstein. He is an economist who served in the Obama administration. He's now a fellow at the Center on Budget and Policy Priorities. And Chris Edwards, he is a budget expert at the Cato Institute, a libertarian research organization here in Washington.

    Jared, let me start with you.

    In your opinion, what's wrong with this budget?

    JARED BERNSTEIN, Center on Budget and Policy Priorities: This is a budget that solves the following problem that seems to really be vexing Republicans, which is that poor people have too much in this country, and rich people don't have enough.

    And if you simply look out at the landscape of American inequality, of the kinds of wage and income stagnation that the poor face, and the very effective anti-poverty programs that have helped to kind of push back against those market inequalities, this is a budget that goes just in the wrong direction at 100 miles an hour.


    Chris Edwards?

  • CHRIS EDWARDS, Cato Institute:

    Yes, I think there is a lot I like about the budget.

    For one thing, it takes the deficit problem seriously. We have a $600 billion deficit. It's rising to a trillion in a number of years if we don't do anything about it. The federal debt doubled under the last president. Trump is doing something serious about that. He's putting his spending cuts that he wants to see on the table.

    He would reduce the deficit to zero over 10 years. And if Republicans and Democrats on Capitol Hill — they should take the deficit seriously too, and they should propose their own plans to deal with it.


    So, if you believe the accounting in this budget, as Chris has just recounted, I have got a bridge to sell you in New York.

    Here's probably the most egregious part of the phony accounting in here. The budget will cut taxes, again, for the wealthy, remember, transferring low-income programs to wealthy people, to the tune of trillions of dollars, but it doesn't count the revenue losses in its budget accounting. So, somehow, magically, those bucks just appear.

    Also, there's a phony assumption of a growth rate of 3 percent. The trend growth rate in the economy is 2 percent. If you pretend you're going to get 3 percent, you can get $2 trillion more revenue, but no credible economist believes that fairy dust.


    Go ahead.


    I agree that there is some smoke and mirrors in this budget, as there usually is in presidential budgets.

    But there is a lot of serious policy issues being pushed here. One is the idea of federalism, to move more of the costs of Medicaid and food stamps and some other programs back to the states.

    So, you know, for example, if New York wants a bigger Medicaid or food stamp program, they can do that. If Texas wants a smaller one, they can fund that. So, that's a serious policy issue we ought to be discussing.


    Chris, you're absolutely right that every president comes out with their optimistic vision for it. But I think a lot of the concerns, even from conservatives, today is that this 3 percent number seems incredibly not just optimistic, but almost fantastic.

    I mean, we have got President Reagan's budget director saying it would require 206 months of no recession, which has never seen in U.S. history. We have got the Committee for a Responsible Federal Budget, who are not liberals, by any stretch. They're fairly hawkish of the budget. They have called this extremely unrealistic and they have said it's a combination of — it needs a combination of good policy and good luck.


    I agree the 3 percent growth number is pretty aggressive.

    But the president has since the day he's been in office been cutting regulations and he's pushing a major tax reform plan that would boost growth in the economy. No one knows exactly how much, I think, additionally the economy will grow if we make the economy more efficient.

    But I'm glad he's pushing in that direction. And, you know, it's a good start. There are serious reforms here.


    So, that's the trickle-down, kind of fairy dust story that conservatives have been trying to tell for decades now, and it's never worked.

    It shouldn't be put forth as, here's an experiment we're going to try to see what happens. And, in fact, in real time, this is being tried in Kansas, where they kind of bought this trickle-down stuff, cut a bunch of taxes. And they're — not only are they having lousy economic outcomes, but their budget is doing terribly, and they're having to cut all kinds of vital services.

    And that's where I take so much issue with this budget. Our low-income programs are effective, efficient. They're pushing back on poverty of our most vulnerable people. This is kind of an ain't broke, don't fix it moment for those things.

    But instead of accepting that, the budget takes over $3 trillion away from these programs and gives it to the wealthy in regressive tax cuts, which, frankly, they don't need.


    I won't say that — that's not right, that they're — they're proposing a budget-neutral, a deficit-neutral tax reform plan. They haven't specified it yet, but that's what they're aiming for.

    So, it's not like they're doing these cuts, and it's going to wealthy people at all. A lot of the cuts, they're saying states should make up the difference if they want. And to say that the tax cut idea is a wild one is not true.

    The centerpiece is a corporate tax cut. President Obama favored a corporate tax cut. He didn't get around to doing it. Trump is putting that front and center.


    So, let me make a quick proposal here.

    Chris just said that this is going to be a revenue-neutral plan. That's the way the Bush — that's the way the Trump team scores it. And we know that's phony accounting.

    I say we come back here after there's an official score by the CBO, by the JCT, the groups that score this without a thumb on the scale, and it's going to show seas of red ink. So, I would really like to put your foot to the fire on that.


    Now, when you look at the budget, now, let's say you look up food stamps, the SNAP program, and it says — there's a quote there. It says "close eligibility loopholes, target benefits to the neediest households, and require able-bodied adults to work."

    That sounds fair enough. What's wrong with that?


    Well, first of all, there already are work requirements within the food stamp, or SNAP, program.

    And, in fact, almost 90 percent of people on SNAP who are able-bodied and have kids are connected to the job market, are working or trying to work. So I think it's a non-solution to a non-problem.

    Again, this is a program that provides nutritional support — $1.40 per person per meal, that is what SNAP affords you. Now, if you want to look out at America and say, boy, that's the problem that is holding us back, and so we have to cut that to give reach people more tax cuts, you and I have a lot to argue about it.


    Chris, what about the underlying demographic shift, right? I mean, millennials are just not replacing the number of baby boomers that are retiring.

    How are you ever going to have labor force at the levels in the '90s that it requires to increase the productivity and get us back to the sort of optimistic vision this budget lays out?


    I agree that's a big problem. And I think the budgets helps tackle that.

    So, for example, with a lot of the welfare reforms, the budget director, Mulvaney wants — he's saying he wants to get people back in the work force. And a good example here is the Social Security disability insurance program.

    The program, they are going to be doing a lot of reforms to try to urge people back into the work force. There are probably millions of people who have moderate disabilities who can and want to be back in the work force, but the current disability program disincentivizes them.

    It encourages them to stay out of the work force. So, I think, if we can make some of these reforms, get people back to the work force, that would boost growth.



    I'm sorry. Unfortunately, we're out of time.

    Chris Edwards, Jared Bernstein, thank you both.


    Thank you.


    Thank you.

Listen to this Segment