The Budget Relies on Unrealistic Growth to Offset Spending Cuts
The budget proposed by President Donald Trump would cut thousands of jobs, one estimate shows, and will serve to weaken the economy in the long run.
The Trump budget has been rather optimistic in its numbers, and often presented them without much evidence. For instance, despite the Tax Policy Center estimating that revenue cuts would cost about $6.0 trillion, the budget itself holds that it will be revenue-neutral and that economic growth will quickly hit three percent. The numbers, however, hardly support the claim of even revenues.
One estimate from the Economic Policy Institute believes that Trump’s austerity-based plan will in fact harm the economy and jobs by cutting off funding from the government. The Economic Policy Institute believes that the budget’s spending cuts could equal as many as 177,000 job losses in 2018, 357,000 in 2019 and 1.4 million in 2020. The estimate stops its projections there, but goes on to say that things would most likely only worsen as time progresses.
The main line of thinking behind those numbers is that the budget spending reduction would ultimately starve the economy while other tools, like the U.S. Federal Reserve’s ability to spur growth by lowering interest rates, are not nearly robust enough to help make up the difference.
While the budget sees cuts across the board for many federal programs including Medicaid and Social Services, the one saving grace that the administration is touting is that it will be a job-positive budget.
This recent estimate from the Economic Policy Institute presents a far grimmer picture, instead painting a future where jobs are lost alongside those government programs that provide for lower-income households and millions of Americans.
The increasing cuts over the lifetime of this proposal alongside the drag on the economy that austerity and job loss would cause could in fact lead to a slow-growing GDP, the opposite of the intended effect of this budget proposal.
Trump ran as a pro-jobs, pro-lower-income president, but between the cuts to many social service programs that provide for the working class and the austerity measures that some believe will cost hundreds of thousands of jobs, this new budget proposal could severely impact millions of Americans moving forward.
The budget has yet to pass the House and Senate, although both parts of Congress are controlled by the president’s party.
“Trump budget proposal is a potential jobs-killer, imposing a major fiscal drag that would radically slow job growth in coming years,” Economic Policy Institute, May 23, 2017.