President Trump released his budget proposal this week. As may be expected from someone who promised to shake up Washington, his spending plan outlines some big changes to federal spending.
One of the major differences between Trump and previous presidents involves entitlement programs. These are programs such as Medicaid and welfare that do not require an annual appropriation from Congress. Instead, if you qualify for them, you are entitled to receive them, and the federal government must find money to pay. Over the next ten years, the president’s budget lays out major alterations to these programs that could result in some big savings:
Medicaid – $880 billion. These reductions come from ending the expanded Medicaid matching rate for childless adults that was put in place by the Affordable Care Act. The budget also assumes that states will be given a capped amount of money per enrollee starting in 2020 (right now, states receive a matching rate for every person on Medicaid with no cap).
Food stamps – $191 billion. This assumes savings from allowing states to impose work requirements on Supplemental Nutrition Assistance Plan (SNAP) recipients.
TANF - $21.6 billion. The budget calls for reducing the Temporary Assistance for Needy Families (TANF) block grant to states as well as eliminating the contingency fund that states can access if there is more demand for the program.
For some programs, such as Medicaid, the spending projected by the Trump budget is a reduction in the future growth of the program. That is, there is a certain baseline spending growth that is assumed right now. Trump’s budget offers policy recommendations that would alter this baseline, reducing future growth. For other programs, such as SNAP, the Trump budget projects actual spending to be lower in 10 years (you can find more detailed charts on this here).
While entitlement programs would face reductions and many federal agencies would see their budgets reduced, there are a few increases built into the budget. The Department of Defense, the Department of Homeland Security, and the Department of Veterans’ Affairs would receive increases.
It should be remembered, however, that this budget proposal will not necessarily have any real effect. As we wrote in a previous blog post:
"Even after the president submits his budget, this does not mean that his spending plan will go into effect. Under the federal budget procedure, the president submits a budget, but Congress must pass its own budget resolution. The congressional budget resolution may or may not incorporate what the president wants to see happen. Each chamber passes its own resolution, and these two versions must be reconciled by the two chambers."
The president’s budget is more like a vision of where he thinks federal spending should proceed over the next decade. It does not mean that spending will actually follow along those lines. Congress has the power to determine funding levels for both discretionary programs (like defense) and make policy changes for entitlement programs (like Medicaid). Only action by the legislative branch can alter the direction of federal spending.
What do you think of the president’s budget proposal? Do you like that he has called for a reduction in these programs? Or do you see his priorities as being too draconian for the poor?