Chris Edwards, a friend of mine and the director of tax policy studies at Cato Institute, gives praise to the President’s budget proposals.
Edwards recognizes that Trump’s budget is the first in some time to actually reduce spending from the baseline. The budget shifts priorities with boosts to defense, infrastructure, paid leave, and a few other small items, but makes up for those increases with cuts to planned spending in other areas.
Here Edwards details the benefits of some of the specific cuts in the proposed budget:
- Overall Spending. The budget would cut spending $4.6 trillion over 10 years, which sounds like a huge cut, but it would be just 9 percent of the $53.5 trillion in projected spending over the period.
- Medicaid. Spending on this huge health program has soared from $118 billion in 2000 to $389 billion this year. The explosive growth is caused by the program’s poor design—it lacks incentives for cost control and it has open-ended matching for state spending. The budget would shift the program to a more efficient structure of capped payments for states, saving federal taxpayers $610 billion over 10 years. More on the program here.
- Food Stamps. The cost of the food stamp program has moderated in recent years as the economy has grown, but this $71 billion program has grown from just $18 billion in 2000. The Trump budget would reduce the program’s cost by tightening work requirements and imposing a state government match. The reform would save $193 billion over 10 years. More here.
- Social Security Disability Insurance. The SSDI has soared in cost from $56 billion in 2000 to $144 this year. It is in desperate need of reform. A key problem is that SSDI discourages disabled Americans who can work and want to work from entering the labor force. The budget would restructure the program to encourage work and save $72 billion over 10 years. More here.
- Federal Pensions. The CBO found that federal workers receive benefits 47 percent higher, on average, than comparable private-sector workers. One cause of the excess is that federal workers receive both a defined-benefit and defined-contribution pension plan. The Trump budget would scale back the cost of the defined-benefit plan to save $63 billion over a decade. More here.
- Earned Income Tax Credit. The EITC is mainly a spending program, which has soared in cost from $32 billion in 2000 to about $70 billion today. The program has been plagued for years by an error and fraud rate of more than 20 percent. The budget would trim the waste by about $40 billion over the decade. More here.
- Farm subsidies. Farm welfare damages the economy, harms the environment, and skews heavily toward wealthy households. In 2015 the average income of farm households was $119,880, which was 51 percent higher than the $79,263 average of all U.S. households. The budget would trim subsidies modestly by $38 billion over the decade. More here.
- Discretionary Programs. The budget builds on the discretionary cuts proposed in the March mini-budget by reducing nondefense spending $1.8 trillion over 10 years compared to the baseline. Many discretionary programs—such as education subsidies—are properly state and local responsibilities. If state and local governments believe that programs are crucial, they can pony up the funding themselves. There is no magic money tree in Washington, as the $20 trillion federal debt makes clear.
Read more from Edwards and Cato here.
Chris Edwards discusses President Trump’s budget plan on FBN’s Coast to Coast with Neil Cavuto
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E.J. Smith - Your Survival Guy
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris.
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