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Congressional Budget Office Casts Doubt on Trump Spending Plan Congressional Budget Office Casts Doubt on Trump Spending Plan
(about 1 hour later)
WASHINGTON — President Trump had promised that his mix of tax cuts, deregulation and reductions in wasteful spending would spur economic growth and cure America’s ailing fiscal health. On Thursday, an independent government analysis of those proposals effectively said, “Not so much.”WASHINGTON — President Trump had promised that his mix of tax cuts, deregulation and reductions in wasteful spending would spur economic growth and cure America’s ailing fiscal health. On Thursday, an independent government analysis of those proposals effectively said, “Not so much.”
The Congressional Budget Office cast Mr. Trump’s inaugural budget as overly optimistic, expressing doubt about his promises to balance the federal budget. The budget projected that by 2027, the economy would achieve a small budget surplus. But according to the budget office, the deficit would remain at $720 billion, or 2.6 percent of gross domestic product.The Congressional Budget Office cast Mr. Trump’s inaugural budget as overly optimistic, expressing doubt about his promises to balance the federal budget. The budget projected that by 2027, the economy would achieve a small budget surplus. But according to the budget office, the deficit would remain at $720 billion, or 2.6 percent of gross domestic product.
The assessment comes after the Trump administration was criticized in May for releasing a budget that economists said relied on overly rosy growth estimates. It was also panned for using questionable math and offering minimal detail about the president’s tax plan, a central component in Mr. Trump’s plans for improving the economy.The assessment comes after the Trump administration was criticized in May for releasing a budget that economists said relied on overly rosy growth estimates. It was also panned for using questionable math and offering minimal detail about the president’s tax plan, a central component in Mr. Trump’s plans for improving the economy.
One of the biggest reasons the Trump budget fell short is that the budget office did not agree that its proposals would generate as much economic growth as the White House has suggested. It said that the average gross domestic product growth over 10 years is currently 1.8, and that under Mr. Trump’s plan it would be 1.9 percent — far lower than the 3 percent the administration assumes.One of the biggest reasons the Trump budget fell short is that the budget office did not agree that its proposals would generate as much economic growth as the White House has suggested. It said that the average gross domestic product growth over 10 years is currently 1.8, and that under Mr. Trump’s plan it would be 1.9 percent — far lower than the 3 percent the administration assumes.
The lack of specifics in Mr. Trump’s plans was also a problem for the Congressional Budget Office. It said that in many cases where Mr. Trump’s policy initiatives lacked details, its analysts had to use place-holder figures.The lack of specifics in Mr. Trump’s plans was also a problem for the Congressional Budget Office. It said that in many cases where Mr. Trump’s policy initiatives lacked details, its analysts had to use place-holder figures.
The $4.1 trillion budget for 2018 that the White House proposed recommended a large increase in spending on the military and on border security. By assuming rapidly accelerating economic growth, Mr. Trump’s economic team was able to make the budget balance without making changes to Social Security’s retirement program or Medicare, the two biggest drivers of America’s debt. The $4.1 trillion budget for 2018 that the White House proposed recommended a large increase in spending on the military and on border security. By assuming rapidly accelerating economic growth, Mr. Trump’s economic team was able to make the budget balance without making changes to Social Security’s retirement program or Medicare, the two biggest drivers of America’s federal government debt.
Tepid economic growth and an aging population have raised concerns about the future of those programs. The Trump administration said Thursday that the financial outlook for Medicare’s Hospital Insurance Trust Fund had slightly improved in the last year but that Social Security still faced serious long-term financial problems.
The Medicare trust fund will be depleted in 2029, the administration said. Last year the government said that the trust fund would be exhausted in 2028.
In a companion report, federal officials said the Social Security Trust Funds for old-age benefits and disability insurance could be depleted in 2034. Last year’s report also said that the combined trust funds would be depleted in 2034, but that tax collections would still be sufficient to pay about three-quarters of promised benefits for a half-century more.
More than 60 million people get money from Social Security, Medicare or both. The two programs account for about 40 percent of all federal spending.
The Congressional Budget Office has been under fire from Republicans who claim it has provided faulty number crunching for the party’s proposed health legislation.The Congressional Budget Office has been under fire from Republicans who claim it has provided faulty number crunching for the party’s proposed health legislation.
Mick Mulvaney, the White House budget director, has called for the office’s influence to be diminished and said recently that its time had come and gone. This week, the White House even released a video on its official Twitter account that assailed the credibility of the office. “The Congressional Budget Office’s numbers don’t add up,” it claimed.Mick Mulvaney, the White House budget director, has called for the office’s influence to be diminished and said recently that its time had come and gone. This week, the White House even released a video on its official Twitter account that assailed the credibility of the office. “The Congressional Budget Office’s numbers don’t add up,” it claimed.
On Thursday, the White House’s Office of Management and Budget found parts of the budget office’s work worthy of praise.On Thursday, the White House’s Office of Management and Budget found parts of the budget office’s work worthy of praise.
“We are thrilled that C.B.O. confirms that the president’s proposed budget resulted in the largest deficit reduction they have ever scored,” said Meghan Burris, a spokeswoman for the White House budget office. “C.B.O. agrees that this is the largest deficit reduction package in American history.”“We are thrilled that C.B.O. confirms that the president’s proposed budget resulted in the largest deficit reduction they have ever scored,” said Meghan Burris, a spokeswoman for the White House budget office. “C.B.O. agrees that this is the largest deficit reduction package in American history.”
Over a decade, the Congressional Budget Office said, Mr. Trump’s budget proposals would reduce the projected $10.1 trillion deficit by $3.3 trillion, not the $5.6 trillion that the White House has projected.Over a decade, the Congressional Budget Office said, Mr. Trump’s budget proposals would reduce the projected $10.1 trillion deficit by $3.3 trillion, not the $5.6 trillion that the White House has projected.
It remains unclear what impact Mr. Trump’s proposals will have on the deficit if they are adopted. A Tax Policy Center report released on Wednesday based on what is known about his tax plan said that it could reduce federal tax revenue as much as $7.8 trillion over a decade.It remains unclear what impact Mr. Trump’s proposals will have on the deficit if they are adopted. A Tax Policy Center report released on Wednesday based on what is known about his tax plan said that it could reduce federal tax revenue as much as $7.8 trillion over a decade.
Some fiscal hawks have not been impressed. After the budget office released its report on Thursday, they said Mr. Trump would have to address Social Security and Medicare spending and rely on more realistic economic projections to fulfill his campaign pledge to restore fiscal sanity.Some fiscal hawks have not been impressed. After the budget office released its report on Thursday, they said Mr. Trump would have to address Social Security and Medicare spending and rely on more realistic economic projections to fulfill his campaign pledge to restore fiscal sanity.
“C.B.O.’s analysis shows the president’s claim of a balanced budget is built on a house of cards, reinforced by economic growth rates that are far outside of the mainstream consensus and would be unprecedented given today’s demographic realities,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan advocacy organization.“C.B.O.’s analysis shows the president’s claim of a balanced budget is built on a house of cards, reinforced by economic growth rates that are far outside of the mainstream consensus and would be unprecedented given today’s demographic realities,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan advocacy organization.