Yes, this is a manner of putting a cheery face upon matters, akin to whistling past the graveyard. For people I think are very smart and very well informed keep telling me that the appearance of a slight ineptitude in the White House is not due to misleading reporting, to the inevitable bedding down process of a new administration nor to the liberal war on all that is good and holy. Rather, the appearance comes from a certain level of ineptitude.
But let us step over that inconvenience and consider what is actually being asked for in this current budget proposal:
Great leaders, whether of sports teams, companies or countries, set audacious goals to spur followers on to great accomplishments. But the goal isn’t enough: A leader also needs a credible path to achieve it. And that’s the problem with President Donald Trump’s first budget.
There’s an importance to this setting of goals that we’ll come to:
President Donald Trump faced swift resistance from Democrats and a range of Republicans on Capitol Hill on Tuesday after offering a 10-year plan to balance the federal budget that depends heavily on cuts to government safety-net programs and expectations of big gains in economic growth.
WASHINGTON, DC – MAY 23: Office of Management and Budget Director Mick Mulvaney holds a news conference to discuss the Trump Administration’s proposed FY2017 federal budget in the Brady Press Briefing Room at the White House May 23, 2017 in Washington, DC. Calling it a ‘New Foundation for American Greatness,’ the $4.1 trillion budget for would cut programs for the poor, including health care, food stamps, student loans and disability payments while offering big tax cuts for the wealthy. (Photo by Chip Somodevilla/Getty Images)
The point being, as so many are noting, that this budget proposal asks for everything and a pony. We’re to cut benefits programs. True, as I’ve pointed out, not as much as some are shouting about.
We’re told that Donald Trump’s budget proposal is recommending substantial cuts to the food stamp, or SNAP, program. This is causing the predictable screaming from the usual quarters about how the poor will now have to boil ditchweed in order to avoid starving to death and so on. In fact though the proposals, as much as we’ve seen of them, return the program to about the size it was before the recession. Which seems an entirely reasonable thing to do. As the justification for the expansion during the recession was that very recession. So, once the cause of the expansion is over why shouldn’t we reverse the expansion itself? This is also the appropriate response to what I call the Keynesian Ratchet. Which is that in recession we are told we should increase government spending in order to end the recession. OK–but come the end of said recession no one ever wants to dial back those spending increases. The spending we undertook to get out of our economic woes seem to become just the normal baseline of the government going forwards. And so does Keynesian economics continue to grow the government.
That’s just a boring truism about government spending by the way, there’s nothing specific to Trump or the current day there.
We’re also going to cut taxes by an even larger amount. And this is all going to add up because economic growth. And I’m nearly as big a believer in the power of economic growth to make government sums add up as Art Laffer, Stephen Moore and our boss and host here, Steve Forbes. And I would certainly agree that changing the structure of how we tax ourselves will increase economic growth at no loss of revenue. Less corporate and capital taxation, more consumption, would have that effect just by purely normal and reasonable economic theory alone. But even I’m not quite buying the numbers, paltry as the specifics are, coming out of this budget.
I absolutely and entirely agree with these two from that budget as well:
Reductions in Federal Spending. We must scrutinize every dollar the Federal Government
spends. Just as families decide how to manage limited budgets, we must ensure the Federal
Government spends precious taxpayer dollars only on our highest national priorities, and always in
the most efficient, effective manner.
Regulatory Rollback. We must eliminate every outdated, unnecessary, or ineffective Federal
regulation, and move aggressively to build regulatory frameworks that stimulate—rather than
stagnate—job creation. Even for those regulations we must leave in place, we must strike every
provision that is counterproductive, ineffective, or outdated.
But then why not? We’re not going to find anyone at all who thinks government should just waste money nor have regulation just for the sake of having unnecessary regulation. But it’s still all true that it doesn’t quite add up:
“The assumed effects on growth are just huge and unwarranted,” said William G. Gale, a co-director of the nonpartisan Urban-Brookings Tax Policy Center and a former economic adviser to the first President George Bush.
The Trump administration promises to cut taxes, keep revenues steady and crank out average annual economic growth of 3 percent, but neither the budget nor the tax reforms previously outlined in sketchy form provide enough detail to figure out if that will happen.
However, here’s my point. The President’s Budget doesn’t have to add up and that’s not how I would read this one from Trump either. Note, please, that we’re still assuming that this is all deliberate, not a result of that ineptitude mentioned above. For here’s the actual truth about the American system. The President’s budget plan matters about as much as his fried chicken recipe. The constitutional arrangements are very clear here, it is the House committees which actualy write the budget. The President gets to say what he’d like them to do but they actually do the work, make the decisions. The President’s influence is to bully, cajole, bribe, threaten, them into including what he wants.
So, the budget proposal doesn’t in fact need to add up at all. It’s a wish list. I want you, I would like you guys to, I will push you guys to, doing all of these things. In the knowledge that only some fraction will ever happen and the final result is going to be the most horrible series of compromises.
Which is where who The Donald is comes in. He’s from a business background. One very different from my own and clearly very much larger scale. But that’s how you do a business negotiation. You go in asking for the Sun and the stars–absolutely as much as you can still consistent with getting across the threshold to be allowed to negotiate–and perfectly happily settle only for the Moon at the end. So why not have a budget proposal that asks for everything? You know very well that you cannot up your demands once started but you can always compromise and retreat a little in order to gain agreement.
Which is one possible explanation of this Trump budget proposal. It’s an opening negotiation no more and it’s Trump’s business background that makes it such rather more than those of predecessors. Why not ask for everything when you know you’re only going to get some fraction of what you ask for? And as to it not adding up that doesn’t matter because of the known need to compromise later.