Trump and Congress are about to collide on the budget. And Trump's going to win.
President Trump's plans for the federal government's budget are coming into focus. And in some critical ways, they directly contradict the long-held hopes and dreams of Republicans in Congress.
Of course, the president doesn't make fiscal policy unilaterally. Trump's plans are, in many ways, a mere suggestion to Congress. Still, there are major lessons to be learned from his spending blueprint, and what it says about his deviations from conservative economic orthodoxy.
The centerpiece of his plan for the 2018 budget is an increase in defense spending of roughly $54 billion. And crucially, it looks like Trump wants to offset that spending increase with cuts elsewhere in the budget — but without touching Social Security or Medicare
Think of the budget as being broken down into three categories: mandatory spending, defense spending, and non-defense discretionary spending. "Mandatory spending" means programs whose spending is automatically determined by the legal design of the programs. The two big programs for American retirees — Social Security and Medicare — fall into this category, as do a number of other large welfare state programs, like Medicaid.
The remaining two categories have to be explicitly appropriated each year by new legislation. "Defense spending" is pretty self-explanatory. So "non-defense discretionary spending" is the catch-all bucket for everything else: federal government agencies, regulatory budgets, public investment, all sorts of grants, a smattering of other government aid programs, and more. Basically, all the day-to-day stuff government does that keeps civil society going, and that doesn't provide national security or the biggest welfare programs.
The official allowance for 2018's non-defense discretionary spending is $516 billion, and adjustments could take it as high as $616 billion. But either way, if you need to cut $54 billion from this column to add it to the defense column, you're looking at a reduction of anywhere from 8.8 to 10.5 percent in one year.
For context: The EPA's total annual budget is $8 billion. The State Department's is $38 billion. So you could eliminate those two agencies completely and still not offset Trump's defense increase.
The White House won't go that far, of course, but it gives you a sense of the sort of radical reductions required to make Trump's math work.
But let's assume, for a moment, that Republicans won't cut the entire $54 billion from non-defense discretionary spending. Maybe they'll take some from mandatory spending programs. If they do that, it would surely come out of welfare state programs that aren't for older Americans. That means Medicaid and food stamps and other parts of the safety net that protect low-income Americans.
In some ways, this spending plan actually isn't surprising. Trump doesn't really care about Republicans' traditional dedication to smaller government. He cares about strength and domination and "winning." So "soft" namby-pamby stuff like protecting the environment, making sure the poor don't starve, alleviating famines in other countries, or sorting out geopolitics by actually talking to other countries gets cut. Instead, we stock up on guns and bombs and warships and other means of raining destruction down on our fellow human beings.
Meanwhile, the base of Trump's support comes from older white Americans, from working class to wealthy. The U.S. welfare state for low-income people is already stingy enough that most Trump voters don't really benefit from it. So cutting those programs doesn't much affect many of them. However, many of these voters do make use of Medicare and Social Security. They care about those programs a lot.
And that's where things get tricky.
The wealthy GOP donor base, probably best represented by fiscal hawks like House Speaker Paul Ryan, are all about cutting taxes (and safety net spending). They're committed to an overarching vision of pre-New Deal small government, and are itching to slash Social Security and Medicare.
Nearly every year, Ryan pushes a scheme to turn Medicare — a single-payer health care provider — into a system where retirees get vouchers from the government to help them buy private coverage. Over time, Medicare spending would be cut by holding down the generosity of the vouchers. And back before he became speaker, Ryan's grand budget schemes included big cutbacks in Social Security, too.
Since then, the latter cuts have largely disappeared from Ryan's plans. (This is largely the result of the popularity among GOP voters of a "welfare for me but not for thee" philosophy.)
Will the congressional GOP bow to Trump and spare Social Security and Medicare? Probably. After all, they've bowed to him on everything else. But if you aren't going to cut entitlements for retirees, and you are going to increase military spending, and you won't raise taxes, and you've sworn off deficit increases, then you've only got one remaining option: Gut all the agencies that keep our workplaces safe and our water clean and that invest in health research. And gut all the programs that keep the poor from starving or ending up on the streets.