It will restore the Clinton-Gingrich welfare reforms that made it more profitable to work than not work.
the measure of budget success for the Trump administration is not how much federal assistance is given out, but how many people leave government dependency and join the private labor force as full-fledged workers.
.. the best of government intentions have actually backfired by reducing incentives to work and earn.
.. The expansion of food stamps, welfare, health-insurance subsidies, unemployment assistance, and disability assistance have led to unintended consequences and perverse after-tax incentives, such that it pays more to stay on assistance then to go to work. At the working-poor margin, taking a job may rob you of Obamacare subsidies. So better off not to work.
.. Mulligan estimated that the marginal tax rate — the extra taxes paid and subsidies foregone as the result of working — had increased from 40 percent to 48 percent.
.. increase federal Medicaid spending from $378 billion today to $524 billion in 2027. That ain’t a cut either. It’s an increase.
.. Adding up each and every new year between now and 2027, the federal government will spend about $55 trillion. Do we think that’s enough? And the Trump budget would curb that by about 7 percent, or roughly $4 trillion. That’s all that’s happening.
A Freedom Caucus Republican says the foundation of the Trump budget is ‘a lie’
He called the assumption at odds with the historical record — pointing out that the current economic expansion of 94 months has already long outstripped the average American economic expansion: “But what you presume in this budget is not only will we not have a recession — though we’re in the third-longest economic expansion in history — but it’s going to keep going for another 214 months. It’s not only unprecedented; I would think that to be unreasonable.
.. “It would require either radically opening immigration or a radical change to demographics as we are having 10,000 baby boomers retiring each day,” Sanford said. “If you look at productivity growth, it would require numbers, again, that we haven’t seen since the golden days of 1958 to 1967 — in the final wave of electrification, consumer appliances and the completion of the highway system — to achieve what we’re seeing. Even if we went to 1990 numbers, we would only see one-quarter of what is necessary to achieve 3 percent growth.”
.. Mulvaney said. “We should stop and think how absurd that is to think that 3 percent growth in an American economy is to some people an absurd assumption. It used to be normal. Ten years ago it was normal. In fact, it’s been normal for the history of the country.”
.. Mulvaney added: “By the way, if you don’t, the budget will never balance. If you assume 1.9 percent growth, my guess is you’ll never see a balanced budget again. So we refuse to accept that that’s the new normal in this country.
Trump’s Bob Kerrey Budget
Without entitlement reform, everything else gets squeezed.
think of it as the vindication of Bob Kerrey. The former Nebraska Senator and a few other brave Democrats warned repeatedly in the 1990s that failing to reform entitlements would eventually squeeze other progressive programs. Well, here we are.
.. There is no way the U.S. can afford its entitlement commitments without 3% growth, much less balance the budget.
.. But that merely takes defense up to 3.2% of GDP, before declining to 2.3% in 2027. This is hardly Ronald Reagan’s defense buildup—which peaked at 6% in 1986—reflecting how entitlements now eat up so much more of the federal fisc.
..The White House also wants to reform programs that have ballooned during the Obama years and effectively become a guaranteed national income. The budget cuts $193 billion over 10 years from food stamps, mainly by letting states impose a work requirement; $72 billion from the Social Security Disability Insurance program; and $12.5 billion by requiring a Social Security number to receive the earned-income tax credit or child tax credits.
Trump Is More Optimistic Than Reagan, and That’s Not Good
His budget assumes 3% growth and includes a basic math error.
President Trump has outdone Ronald Reagan in at least one respect: unrealistically rosy forecasts for economic growth. In 1981, President Reagan’s first budget predicted growth well above the consensus of private forecasters, in a bid to justify large tax cuts and increased defense spending. When the promised growth did not materialize, the deficit and debt ballooned.
Now Mr. Trump is leading the economy down a primrose path that is even more unrealistic.
.. There are two components to economic growth: adding more workers and increasing their productivity. Faster growth in the 1980s was the result of the former, an expanding workforce driven by two irreproducible demographic factors: the baby boomers’ entering their prime working years, and women’s continuing influx into the workforce.
.. Today the baby boomers are hitting retirement. As a result, Reagan-era productivity gains of 1.6% a year would now generate economic growth of only 1.7%.
.. driving growth up to or above 3%. But it is not very likely. My simulations, based on historical data, suggest a 1 in 25 chance of hitting this target over the next decade.
.. the budget effectively double-counts the tax cut’s economic effect—using it once to pay for the tax cut itself and a second time to boost revenue by $2.2 trillion, so as to show a lower projected path for the deficit.