President Trump’s budget proposal hurts people, communities, Minnesota

President Donald Trump’s budget proposal hurts our nation’s families, communities, and state and local finances. It undermines basic tenets of the American Dream by taking supports away from people climbing into the middle class, gives tax cuts to the already wealthy, and relies on faulty economic assumptions about economic growth and deficit reduction. Low-income families, people with disabilities, students, and seniors would all bear the brunt of Trump’s budget cuts.

The budget released today would cut about $2.5 trillion in the next decade from what’s called entitlement spending, much of which will come from services that support people who need health insurance, are hungry, or are living with disabilities. For example, Trump’s budget includes harsh cuts that will cause millions of Americans to lose their health coverage. Trump proposes major cuts to Medicaid, which over 1 million Minnesotans currently rely on for health care coverage when they get the flu, break an arm, or need to treat their diabetes. The president’s budget proposal would cut Medicaid by $610 billion over 10 years and shift funding responsibilities to states. These cuts are on top of the harmful changes proposed in the American Health Care Act, which passed in the U.S. House earlier this month. In total, this represents over $1.8 trillion in cuts over 10 years to Medicaid and subsidies from the Affordable Care Act that help low- and middle-income people afford health insurance.

Trump’s budget also undermines the government’s ability to fight hunger through the Supplemental Nutritional Assistance Program (SNAP), also known as food stamps. His proposal cuts SNAP by over $190 billion over the next 10 years. The budget assumes states would pick up some of the cost to ensure that low-income Americans don’t go hungry, including almost 455,000 Minnesotans. Forty-five percent of Minnesota households receiving SNAP benefits include children, and over one-quarter include a senior or someone living with a disability.

Trump’s budget also includes unprecedented cuts to the non-defense discretionary (NDD) portion of the budget, cutting it by $54 billion in Fiscal Year 2018. It eliminates energy assistance for low-income people, cuts job training, and harms many other services that build vibrant communities and a strong economy. (This is done while increasing funding for defense by $54 billion.) Under Trump’s budget, NDD funding would be slashed even further over the next decade, by $1.6 trillion.

Non-defense discretionary funding is already at low levels. And Trump’s proposed budget would bring NDD spending in the coming fiscal year to its lowest level as a share of the economy in six decades. By 2027, NDD would be at its lowest level as a share of the economy since President Herbert Hoover’s administration.

The Trump budget would also dramatically harm essential state services. About 30 percent of the state of Minnesota’s funding comes from the federal government. Federal grants to state and local governments are already at historically low levels, and with both huge reductions in federal funding and multiple proposals for states to take on more funding in areas that are currently shared, poses an extremely serious threat to services that assist families, children and the elderly all across Minnesota.

The president’s proposal also includes huge tax cuts that would benefit the already wealthy. The budget eliminates the estate tax, which plays an important role in creating a level playing field among taxpayers. The estate tax applies to the estates of the wealthiest 0.2 percent of Americans, and only a handful of small businesses or farmers in the entire country will owe any estate tax. At the same time, Trump’s budget cuts the Earned Income Tax Credit and the Child Tax Credit, which reduce taxes for struggling families.

Also troubling is that this budget relies on unrealistic economic assumptions, which hide the real impact of the budget. The budget assumes that his proposals will spur dramatic economic growth rates that most economists find implausible and reduce the federal deficit. For example, Trump’s budget assumes that his $5 trillion in tax cuts will have no negative impact on federal government revenues, when in fact they would increase the deficit.

The president’s budget proposal is deeply troubling and would create profound hardship for people in Minnesota while giving large tax breaks to the wealthy. The president’s budget proposal is just the starting point in the federal budget process. Next, Congress will develop their budget outline, and they will ultimately pass the next federal budget, which may or may not look like Trump’s proposal. Congress should soundly reject the proposals introduced today and the principles behind it.

-Clark Biegler

About Clark Goldenrod

Clark Goldenrod is the Minnesota Budget Project's policy analyst.
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