Opinion: Trump’s budget is a fantasy
By Robert J. Samuelson Robert J. Samuelson Columnist focusing on economics Bio Columnist March 14 at 11:09 AM The good news about President Trump’s proposed 2020 budget is that it vividly illustrates the basic causes of large, chronic deficits — a mismatch between the government’s commitments and the taxes needed to pay for them. The bad news is that the budget does virtually nothing to close the gap.
Under his budget, the federal government would spend $4.7 trillion in fiscal 2020, a 15 percent increase from the $4.1 trillion of spending in 2018. With tax receipts at $3.6 trillion, the projected deficit is $1.1 trillion. Although the economy is at or near “full employment,” the annual deficit remains around $1 trillion until 2023 and then begins to decline, though it’s still in deficit by 2029 when the projections stop.
The most obvious of these is projected economic growth. The Trump administration argues that, under its policies, economic growth will average about 3 percent over the next decade. By contrast, private forecasters predict growth at about 2 percent annually. Higher growth would mean billions in added tax revenue. Prudent policy would base its forecasts on the lower figure and hope that it’s too cautious.
Congress, which sets spending, seems likely to resist such deep cuts. For example, Trump would cut college student-loan programs by tightening repayment requirements. Over a decade, the estimated savings would be $207 billion. This would almost certainly be unpopular. Similarly, Trump’s budget also includes a proposal to reduce federal payments to hospitals to cover their costs of unreimbursed care. Hospitals seem bound to fight that.
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