President Trump’s Proposed Budget Could Bankrupt Cities and Towns

Bankruptcy

President Trump’s Proposed Budget Could Bankrupt Cities and Towns

On May 23, 2017, the Donald Trump administration sent its budget proposal to U.S. Congress. The budget, which White House Budget Director Mick Mulvaney says should be called “A Taxpayer First Budget,” is aimed at respecting taxpayers, balancing the budget, and returning the country to sustainable three percent annual economic growth. But many believe that the proposed tax cuts could bankrupt already-fragile U.S. cities and towns.

For 2018, the budget proposes spending that is on par with last year’s spending, at $4.1 trillion. The budget includes increased spending to fund President Trump’s campaign promises, including a 10% increase for the military and increased money for veterans. More than half of the increase in border security funds will be directed toward the construction of a wall along the country’s southern border.

The budget also includes $3.6 trillion in spending cuts over the next 10 years. Some of the domestic programs facing huge cuts include those in science and research, the arts, and social welfare. While Social Security remains untouched, the austerity measures make deep cuts or eliminate programs that invest in cities and create jobs, including the Community Development Block Grants (CDBG), Transportation Investment Generating Economic Recovery (TIGER) grants for transportation projects, and the HOME Investment Partnership Program.

CDBG, TIGER, and the HOME Investment Partnership Program allow communities to invest in public safety, economic development, and infrastructure. Those programs create private-sector jobs in the United States.

There is widespread concern that small American cities will be hurt the most under the current budget proposal, as they will have more difficulty compensating for the budget cuts. That’s because many states limit the amount of additional revenue that cities can raise, which could lead to an increasingly large number of municipal bankruptcies for smaller cities.

Commenting on the proposed budget cuts, Matt Zone, President of the National League of Cities noted, “The administration’s budget proposal would be devastating to cities and towns. No community in America would be better off with this budget, and it could bankrupt smaller cities and towns. It does nothing to create jobs in our communities, and violates the president’s core campaign promise to lift up Americans in communities across the nation.” (Source: Ibid.)

On the campaign trail, Trump proposed major tax cuts and pledged to boost the U.S. economy, which struggled under President Barack Obama. Even though Republicans control Congress and the federal purse strings, it is unlikely that the budget will be approved in its current form.

Source:

Budget of the U.S. Government: A New Foundation For American Greatness: Fiscal Year 2018,” The White House, May 23, 2017.

Trump’s Proposed Budget Could Bankrupt Cities and Towns,” National League of Cities, May 23, 2017.

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