The ten-penny plan

The White House proposes eye-watering budget cuts

It doesn’t expect the budget to get far in Congress


DURING his campaign for the White House, Donald Trump touted a “penny plan” for government spending. This meant cutting the part of the budget that funds day-to-day operations—ie, excluding Social Security, health care, debt interest or defence—by 1% a year.

Critics said such cuts were unachievable. Department budgets are already beneath their historical average as a share of the economy. They would have to shrink by nearly a third over a decade, after accounting for inflation, to satisfy the penny plan.

That has not deterred Mr Trump. On February 27th the White House announced its headline budget numbers, ahead of a more detailed plan due to appear soon. In his first year in office, Mr Trump is proposing to cut so-called “non-defence discretionary” spending not by 1%, but by more than 10%, relative to current law. The $54bn (0.3% of GDP) this would free up would flow to the defence Budget.

Cue incredulity. The part of the budget Mr Trump would cut, which funds things like education, housing and national parks, has already fallen by over 10% in real terms since 2010. Strict spending limits in the Budget Control Act of 2011, sometimes called the “sequester”, caused the dive. These kicked in automatically after Congress failed to pass a more palatable plan to bring down deficits.

The sequester was supposed to be so severe that lawmakers would have to strike a deal to avoid it.

Cutting budgets by a further 10% would be painful. The White House wants the State Department and foreign-aid budgets to bear much of the burden. But these make up only a small proportion of the federal budget: about $57bn in total (see chart).



The sequester also cut defence spending deeply, which is why hawks like Senator John McCain have been questioning America’s military preparedness. Barack Obama’s last budget proposed a boost to defence spending about two-thirds as big as Mr Trump’s (see chart). A recent paper by Mr McCain argues that an additional $54bn is needed on top of Mr Obama’s figure—for a total boost of $91bn, compared with the sequester.
 
Congress can usually write budgets with a simple majority in both houses. But amending the sequester may require 60 votes in the Senate, and hence bipartisan co-operation. (This happened in 2013 and 2015.) Democrats will never support cuts on the scale Mr Trump seems to want. Plenty of Republicans, too, worry about cuts to the State Department. Mick Mulvaney, Mr Trump’s budget chief, says that he is under no illusions about the budget’s prospects in Congress, recalling that Republicans paid little attention to Mr Obama’s proposals. The budget, he says, was not written for Congress, but for the people.

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