October 20, 2017
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White House budget wouldn’t eliminate deficit or do much to grow economy, CBO says

By Damian Paletta and Max Ehrenfreund, The Washington Post
Olivier Douliery | TNS | BDN
Olivier Douliery | TNS | BDN
Office of Management and Budget Director Mick Mulvaney speaks during a press briefing about President Donald Trump's 2018 budget proposal that includes boosts for military and spending cuts on safety-net programs for poor at the White House in Washington, D.C., May 23, 2017.

The Congressional Budget Office said Thursday that President Donald Trump’s first budget plan would not eliminate the deficit over 10 years or grow the economy at all by 2021, casting doubt on the administration’s controversial economic assumptions that were supposed to bolster key parts of the White House’s agenda over the next year.

CBO projected that the sweeping spending reductions on anti-poverty programs, housing, environmental protection, and a number of other initiatives that the White House wants to cull back still would not be enough to eliminate the deficit by 2027.

In 2027, the deficit would be $720 billion under the White House’s budget, CBO said. The White House asserted the government would actually have a budget surplus in 2027 if its policies were enacted, bringing in more money through revenue than it spent. That’s a more than $700 billion gap in just one year between the CBO and White House.

This contrasts sharply with the White House’s internal estimates, which argued that cutting taxes would create an economic boom that solved many of the country’s budget problems.

The office’s projections came with a significant caveat, saying the lack of detail the White House has provided about its plans — primarily its plan to overhaul the tax code — made it virtually impossible for the agency to determine what the economic impact of these ideas would be. The White House has put out only a sparse, one-page blueprint for overhauling the tax code, but it offered few details beyond saying that the changes would add trillions of dollars in new revenue to the budget because there would be so much future economic growth.

“Because the details of many of the proposed policies are not available at this time, CBO cannot provide an analysis of the budgetary feedback that would result from those effects,” the agency wrote.

If CBO, which is run by a Republican appointee, rejects this idea now, it could serve as a warning to the White House and other Republicans who were planning on making an identical argument when they advance their formal tax plan by September.

Still, the CBO said the White House’s plan would essentially cut government spending by $4.2 trillion over 10 years, a very large sum.

The CBO is a government agency that assesses the cost and impact of legislation.

Trump came into office promising sweeping budget changes. He wanted to slash the size of government, roll back hundreds of regulations, reduce the size of the federal workforce, and grow the military. A key component of his plan, though, would eliminate the budget deficit over 10 years. The “deficit” is the annual gap between spending and revenue, and annual deficits add to the government’s nearly $20 trillion federal debt.

But his budget writers also had major challenges in writing the budget. Trump instructed them that they could not cut benefits for Medicare or Social Security retirement, two of the largest parts of the budget. That forced Office of Management and Budget Director Mick Mulvaney to concentrate spending elsewhere, and anti-poverty programs were among those to take the largest cuts.

The White House’s budget proposal was released in May and sets government spending levels for the year that begins Oct. 1. It essentially makes recommendations to Congress, which is responsible for drawing up the budget and appropriating funds to use. Congress often uses the White House’s budget proposal as a set of guidelines.

 


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