Thursday, January 19, 2017

Republican Budget Policy, A New Look

At the Inauguration Panel on Tuesday, I noted that Mick Mulvaney, President-elect Trump's nominee for Director of the Office of Management and Budget, was considerably more of a deficit hawk while a Representative than was the Republican leadership in the House. This AP article from last month describes his time in the House well:
Mulvaney quickly came to oppose Boehner’s leadership before Boehner was pushed out in 2015. In 2013, Mulvaney declined to support Boehner’s re-election to the post. That year, Mulvaney unsuccessfully pushed for amendments to reduce Pentagon funding and proposed broad across-the-board federal cuts, including for the military.

He was an early backer of Trump during the presidential campaign, noting that the Republican billionaire had tapped into a populist sentiment dissatisfied with Washington.

“If you want to know, members of Congress, why you have Donald Trump, go look in the mirror, because we’ve over-promised and under-delivered for so long,” Mulvaney said in February.

The problem with the Republican Party on the budget in recent years is that it likes to portray itself as fiscally responsible, but when it actually comes time to impose budget discipline, its leaders lose their nerve. They either don't vote for grand compromises like Simpson-Bowles that balance expenditure reductions with revenue increases, don't run a budget process that offers a disciplined budget even when they control both houses of Congress, or confuse tax cuts with budget cuts.

In a report today, The Hill describes the budget being contemplated by the incoming administration. It specifies reductions of $10.5 trillion over a decade in federal spending:
The proposed cuts hew closely to a blueprint published last year by the conservative Heritage Foundation, a think tank that has helped staff the Trump transition.

Similar proposals have in the past won support from Republicans in the House and Senate, who believe they have an opportunity to truly tackle spending after years of warnings about the rising debt.

Many of the specific cuts were included in the 2017 budget adopted by the conservative Republican Study Committee (RSC), a caucus that represents a majority of House Republicans. The RSC budget plan would reduce federal spending by $8.6 trillion over the next decade.

“Mick Mulvaney and his colleagues at the Republican Study Committee when they crafted budgets over the years, they were serious,” said a former congressional aide. “Mulvaney didn’t take this OMB position to just mind the store.”

“He wants to make significant, fundamental changes to the structure of the president’s budget, and I expect him to do that with Vought and Gray putting the meat on the bones,” the source added.
That would be a genuine change in Republican policy, as implemented. It also suggests how the Trump administration would make good on promises to leave entitlement programs largely intact while restoring some balance to the budget without significant tax increases. It remains to be seen whether Congressional Republicans will go along.

1 comment:

wjshack said...

The Heritage does cut entitlement programs and Medicaid significantly. ROM the report:

Medicaid: No details. There will be a spending cap, and all mandatory spending will somehow be cut to fit.

Medicare: Increase eligibility age, add a "temporary" premium for Part A, increase premiums for Parts B and D, phase out subsidies for seniors with "significant" income, "reform" cost-sharing arrangements, transition to vouchers premium support starting in 2021.

Domestic Discretionary: Spending cap.

Social Security: Increase retirement age, index retirement age so it keeps going up, reduce benefits by adopting chained CPI for inflation adjustments, and "transition the payment to a flat, anti-poverty benefit focused on individuals who need it most," whatever that means.

No miracles available. Big cuts hit either defense or entitlements.