Smart. Sharp. Funny. Fearless.
Wednesday, October 18, 2017

Reprinted with permission from the Center for Economic and Policy Research.

The budget proposal put forward by the Trump administration has been widely attacked on a variety of grounds. It is clearly making ridiculous assumptions on tax revenue, which don’t make sense even with its implausible assumptions on economic growth. It also calls for large cuts to a variety of programs on which low and moderate income families depend like food stamps and Medicaid.

But in addition to these features, the budget also calls for a major downsizing of the federal government as we know it. If we pull out Social Security, Medicare and Medicaid, and the military, the rest of the government is projected to shrink from 6.3 percent of GDP at present to 3.6 percent of GDP by 2027. This 3.6 percent of GDP includes the cost of education programs, infrastructure, the Justice Department, research and development, national parks, the Environmental Protection Agency, the Food and Drug Administration, TANF, foreign aid, and all the other things we think of as the federal government.

It doesn’t seem plausible that we can downsize the federal government by more than 40 percent relative to current levels and still expect it to function. As much as Republicans may hate the federal government, they still expect it to enforce laws, keep our food and drugs safe, ensure the infrastructure is usable, and support basic research in health care and other areas. This cannot be done if we downsize the government as projected in the Trump budget. This is either a joke or a plan to ensure that the government no longer provides basic services.

Unfortunately, the Trump budget is not the first time the Republicans have proposed largely eliminating the federal government. Paul Ryan went even further in the budgets that he repeatedly proposed as head of the House Budget Committee and got the Republican controlled House to approve.

Ryan’s budgets virtually eliminated everything except Social Security, Medicare and Medicaid, and the military by 2050. According to the Congressional Budget Office’s analysis of the Ryan budget (done under Mr. Ryan’s supervision), spending on everything other than Social Security, Medicare and Medicaid would be reduced to 3.5 percent of GDP in 2050. With military spending likely running in the neighborhood of 3.0 percent of GDP, this left around 0.5 percent of GDP for everything from education to foreign aid.

Rather than earning Ryan and the Republicans ridicule, these proposals for eliminating the federal government won him widespread applause in Washington policy circles. Folks like The Washington Post editorial page writers welcomed Ryan as a serious budget wonk. The deficit hawk Peter Peterson crew even gave Ryan an award for his budget plans.

Obviously, they could see that Ryan’s plan was either a ridiculous lie, assuming that he had no intention of following through on his plans, or alternatively incredibly dangerous if he was serious. But the Washington establishment types were so anxious to have a politician who was prepared to take an axe to large chunks of the government that they didn’t care about such details.

Given this background, the Trump administration can hardly be blamed for thinking that it could get away with the same sort of dishonesty that brought Paul Ryan to the top echelons of the Washington power structure. If it wants to show a budget that balances in a decade by making absurd assumptions on tax revenue and projects downsizing the federal government to the point of elimination, this is just par for the course in Washington policy debates.

In this sense, it would be nice if we could say that President Trump is bringing new levels of dishonesty to budget politics, but that is not true. The key problem is that the Washington elite types are dead set on sharp cutbacks to programs like Medicare, Medicaid and Social Security, which enjoy massive public support across the political spectrum. Even the vast majority of Republicans do not want to see cuts to these programs, which is a major reason they voted for Donald Trump in the primaries.

In order to overcome this mass based opposition, the elites are perfectly happy to lie to advance their agenda. They can hardly blame Donald Trump for adopting their tactic.

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.