#Budget with unexpected no red ink full#

That’s a 28 percent reduction to the existing Medicaid budget plan.Īccording to current Congressional Budget Office projections, 14 million poor Americans are already likely to lose their health care if the Republican plan becomes law. This budget’s blatant disregard for intellectual integrity is matched by the extraordinary extent to which it seeks to slash social welfare programs, including another $616 billion out of Medicaid on top of $800 billion that would be sliced as part of the Republicans’ health care plan. That makes developing policies to improve its performance challenging, but one thing can be said for certain: There is nothing in the Trump budget that would meaningfully improve the productivity picture and much that would cloud it. Productivity is more mysterious its ebbs and flows have always been hard for economists to explain. But that runs up against another part of the Trump agenda. The only sure way to reverse that trend would be to allow more - not less - immigration. Increases in the size of our labor force have slowed as our society has aged. We are mired in low growth because of two simple factors: smaller increases in the labor force and softening improvements in the efficiency of our workers. At the lower 2.2 percent rate of increase, the cumulative budget deficit over the next 10 years would be $2.1 trillion higher than the $3.2 trillion that the administration projects. The implications of falling short of the new 3 percent target are profound. For example, the Congressional Budget Office, the legislative branch’s scorekeeper and - despite what you might have heard - an honest broker, projects annual growth of 1.9 percent.

That indeed would be wonderful, but every mainstream economist I know says it ain’t going to happen.

#Budget with unexpected no red ink full#

had been using can be turbocharged by nearly a full percentage point to 3 percent by 2021. Let’s take, for example, the White House’s insistence that the economic-growth forecast of 2.2 percent a year that the O.M.B. The impact of even more staggering reductions in social welfare spending will hurt millions of needy Americans, perhaps many of the same voters who elected President Trump, as the wealthy receive a vast preponderance of the benefits from a proposed $5.5 trillion in tax reductions (none of which is accounted for in the proposal).Īll in all, the Office of Management and Budget has bestowed upon us 62 pages of fantasy. Indeed, the proposed enormous cuts to spending would make increasing efficiency harder, not easier. While the administration asserts that if the government would just get out of the way, business investment and worker productivity would rise substantially, I don’t buy the argument. But this budget will also inflict enormous short-term damage. Of course, as John Maynard Keynes wrote, in the long run, we are all dead. The bottom line: A budget that the White House says will be in balance by 2027 would, in reality, remain deeply in red ink throughout the coming decade and ultimately add trillions of dollars to the national debt. Phony math is a time-honored tradition in the Washington world of budget making, but the first full fiscal plan from the Trump administration breaks new ground.