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Trump Plans Big Cut in Domestic Programs

February 27, 2017 at 5:30 PM

President Trump’s plans to raise defense funding by $54 billion in 2018 and cut non-defense discretionary (NDD) spending — which funds key priorities like education and job training, clean water, scientific and medical research, veterans’ medical care, and homeland security — by the same amount would lower NDD funding by 11 percent below this year’s level. The additional $54 billion cut would come on top of sequestration cuts that are already scheduled to take full effect in 2018 under the 2011 Budget Control Act.

Moreover, the cuts in most NDD programs compared to 2017 alone will likely be significantly larger than the 11 percent overall funding reduction.

Accounting for the increase in Veterans Administration (VA) funding that Congress has already approved for 2018 and assuming that Congress doesn’t cut funding for the Department of Homeland Security below current levels, the cut to all other non-defense discretionary programs would be 15 percent. And if Congress raises homeland security funding above this year’s level, as is likely (news reports indicate the Administration will boost funding for border security), or if Congress raises VA funding further (which is also likely), cuts in other NDD areas would have to be even deeper.

The President’s proposal would continue a severe, multi-year squeeze on NDD funding. NDD funding in 2018 will be 16 percent below the 2010 level, adjusted for inflation, if full sequestration cuts take effect. Under the President’s plan to cut another $54 billion, the cut since 2010 would grow to 25 percent in inflation-adjusted dollars (see graph).

Measured as a share of the economy, NDD spending is already projected to hit the lowest point on record next year in data going back to 1962: 3.09 percent of gross domestic product (GDP). (The current record low is 3.12 percent.) The Trump proposal would cut it further, likely to below 3 percent.

The Trump Administration has indicated that it plans large cuts in areas such as the Environmental Protection Agency (EPA), foreign assistance, and a number of other programs. Most of these programs are small, so even large cuts in these areas wouldn’t come close to the Administration’s reported $54 billion target. The EPA, among the largest of the program areas identified, has a total budget of about $8 billion; even deep cuts to the agency wouldn’t go far toward meeting the overall cuts the Trump Administration is proposing.

Cuts in NDD in 2018 and beyond could result in further degradation in customer service at the Social Security Administration and delays in benefit processing, more undetected tax fraud due to IRS staff shortages, fewer preschoolers attending Head Start and workers getting job training, fewer poor families receiving housing assistance, and less funding to states and localities for services ranging from education to law enforcement.

Furthermore, the Trump proposal abandons the bipartisan consensus that the sequestration cuts are too deep in both defense and non-defense and that sequestration relief should apply to both areas equally. Congress has acted on a bipartisan basis every year since 2013 (when these cuts were slated to take effect) to reduce them for both defense and non-defense.

Finally, these cuts should not be viewed in isolation. They are part of an emerging fiscal agenda that also includes large tax cuts for the wealthy, losses in affordable health care coverage for low- and middle-income Americans, and cuts in entitlements outside of Medicare and Social Security, likely including those that help struggling families who’ve been left out of the nation’s prosperity.

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