The Corner

Are the Trump Team’s Budget Plans Headed for Trouble?

The Hill reports that the Trump Team is preparing a budget that sounds like it could please those of us who have been complaining about the growth in the size and scope of the federal government over the last four presidential terms.

The changes they propose are dramatic. The departments of Commerce and Energy would see major reductions in funding, with programs under their jurisdiction either being eliminated or transferred to other agencies. The departments of Transportation, Justice and State would see significant cuts and program eliminations. The Corporation for Public Broadcasting would be privatized, while the National Endowment for the Arts and National Endowment for the Humanities would be eliminated entirely. Overall, the blueprint being used by Trump’s team would reduce federal spending by $10.5 trillion over 10 years.

It’s the average of $1 trillion in spending cuts a year that got my attention. The article says that the cuts “hew closely” to those proposed in the Heritage Foundation’s budget blueprint published in July. The report, while too hawkish for my tastes, proposes solid reforms that would help put the country on steadier financial footing. The cuts would also be consistent with the philosophy of the incoming OMB director, Representative Mick Mulvaney (R., S.C.), of whom I hold a favorable view.

But here is my confusion. Even if it’s just a proposal to spend less than what the Congressional Budget Office forecasts in its current baseline, there is no getting around the need to include savings from entitlement programs, which the Heritage plan proposes. On the campaign trail, however, Trump promised that he would not touch entitlements.

If the president isn’t on board, the math doesn’t add up.

Last year, the cost to taxpayers for the three largest entitlement programs (Social Security, Medicare, and Medicaid) was $1.9 trillion. Total discretionary spending, which includes the Pentagon’s budget, was about 1.2 trillion. Just under half of that figure is defense spending, which the President Trump says he wants to increase. So even if the administration succeeded in eliminating all non-defense discretionary spending (about $600 billion), it wouldn’t be nearly enough. Then there’s Trump’s undefined intention to boost infrastructure spending, which Vice President Mike Pence recently told the U.S. Conference of Mayors is “going to be big.” And while President Trump still says he wants to repeal Obamacare, he now says he wants to offer “insurance for everybody,” under the new plan. How much will that cost?

It gets worse, though, as it’s clear that Trump’s choices to lead the affected agencies clearly aren’t on board. (I would be shocked if Trump himself has a clue about the alleged cuts discussed in the article.) Take, for example, the Department of Commerce (a.k.a., the Department of Cronyism), which The Hill says would be targeted for cuts. But Trump’s choice for Commerce is Wilbur Ross. As the Washington Examiner’s Tim Carney has clearly documented, the man is a true believer in industrial policy and is an admirer of China’s five-year plans.

Carney writes:

Wilbur Ross, President-elect Trump’s pick for Commerce Secretary, doesn’t merely espouse government planning of the economy, he lobbies for it and profits from it.

“One of the problems in our country,” Ross said in 2010, “is we don’t have an industrial policy.” By “industrial policy,” Ross meant federal laws that steer resources to certain sectors for certain activities.

Ross, in a CNBC interview in the summer of 2010, expressed his admiration for China’s five-year plans, the ones originated by Communist revolutionary Mao Zedong. “Is that something we should do here, Wilbur?” journalist Andy Serwer asked.

“Yes,” Ross responded, before lamenting our lack of an “industrial policy.”

This is a man who thought president Obama was too laissez-faire when it came to directing resources to the green-energy sector and who made a fortune with the help of crony government policies. Want to bet he won’t be okay with deep cuts to his department and will demand more resources for the U.S. to get its own shiny five-year plan?

Not to be outdone is the man chosen by Trump to head the Department of Energy, former Texas governor Rick Perry. The delicious irony of The Hill article is that it was released on the same day that Perry begin his Senate confirmation hearings. If Trump really wants cuts at Energy, Perry certainly didn’t get the memo:

“My past statements made over five years ago about abolishing the Department of Energy do not reflect my current thinking,” Perry said at his confirmation hearing Thursday to be secretary of Energy. “In fact, after being briefed on so many of the vital functions of the Department of Energy, I regret recommending its elimination.”

In fact, when questioned about the alleged cuts, Perry attempted to put it in the “fake news” category:

“I think all of us, having been in the business we’ve been in for the years that we have, know that there are always a lot of statements. Sometimes, just because it’s on the internet, it’s not true,” Perry told Sen. Debbie Stabenow (D-Mich.) regarding her concerns about cuts to programs that are important to her state. “I can’t answer whether that’s true or not,” Perry continued, adding that he has a “commitment to make sound science, economic science, connected together.”

Perry later joked with Sen. Mazie Hirono (D-Hawaii) about the news report, connecting it to the time in 2011 when he forgot that he wanted to eliminate the DOE. “Well, senator, maybe they’ll have the same experience I had and forget that they said that,” he said of the Trump officials who are planning the cuts, eliciting laughs.

Yeah, that’s a real knee-slapper. Not really, actually. It is hard to figure out what anyone stands for, as reflected by yesterday’s conflicting news.

Veronique de Rugy — Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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