Decoding the Trump Budget for Richer and Poorer

Mulvaney budget AP

Budget Director Mick Mulvaney (Andrew Harnik/AP Photo)

The White House released its $4.1 trillion budget for 2018. What does it tell us about President Trump’s priorities? Should the media spend more time focusing on the wealthy Americans who will receive a tax cut or should they focus on the low-income Americans that will lose benefits?

What Happened:

The White House sent its first budget to Congress, titled “A New Foundation for American Greatness.” The budget projects to erase the deficit over ten years and reach a surplus by 2027. The budget aims to increase military spending by 10% and set aside $1.6 billion for the Mexico border wall. The budget aims to cut spending for Medicaid, Social Security disability, education and many additional programs providing benefits to low-income Americans.

The chief architect of the budget is President Trump’s budget director, Mick Mulvaney. Mulvaney was previously a US Representative out of South Carolina. He was a founding member of the House Freedom Caucus (check this link for quick background on that group).

 

The Coverage:

The President’s budget is a chance for the White House to show which programs they want to support and which they want to cut. High ranking members of both political parties asserted that the budget will not pass. Some media outlets have begun delving into the details and report on how unrealistic the budget is. In order for the budget to work, it assumes repealing Obamacare will happen and that the tax code will be overhauled. It also assumes that lowering taxes on the wealthiest taxpayers will result in significantly increasing economic growth.

Mulvaney gave a press conference to release the budget. During that conference, he provided several quotes that have been widely distributed in the press.

“This is, I think the first time in a long time that an administration has written a budget through the eyes of the people who are actually paying taxes,” Mulvaney in the New York Times.

“Can we justify this to the folks who are actually paying for it?” Mulvaney asked the bipartisan panel. “I don’t think people are willing to pay for as much government as they are.” Mulvaney in Fox News.

“We’re no longer going to measure compassion by the number of programs or the number of people on those programs, but by the number of people we help get off those programs,” Mulvaney in the Associated Press.

The New York Times has begun to release articles on the political fallout, particularly among other Republicans who will reject the budget while still pursuing cuts to social programs. They also have a clear breakdown of the proposal’s impact on each government agency.

 

Decoded:

The AP summarized the budget well with its headline: “Trump Budget Keeps Promises: Cut for Poor, More for Military.” News outlets will weight their stories with lean-liberal sources focusing more on the poor suffering and conservative sources focusing on the military benefitting or deficit being reduced. This budget will not pass, but it is a clear indication of what the White House values. Do you support those values and the direction they take us in?

All year, this White House has been very upfront about declaring the media of bias. What they are really saying is, “Why are you covering the bad parts of this policy? Why not the good?”  In the coming days, look to see whether stories contain more details about those impacted negatively by this budget or whether the story devotes more time to balancing the budget, reducing the burden on wealthy taxpayers, or the benefits to the military.

Mulvaney was very upfront that this budget was written with the wealthiest Americans in mind. His belief is that cutting or abolishing government programs will bring us closer to providing opportunity for all Americans. He agrees that people reliant on food stamps or Medicaid will be impacted by this budget.

Do you support Mulvaney’s budget which will cause families losing their ability to pay for food or patients losing health coverage? Then assume, yes, that happens for the next few years. But eventually the wealthiest taxpayers will re-invest their savings into the economy and new jobs will emerge so those same families won’t need to depend on food stamps at all. Does that sound more reasonable? Famil

Or do you weigh the fact that millions of people depend on government services now. They may not want to be poor and require filing for food stamps. They may not want to be sick and require Medicaid. They may wish they had more savings so they could avoid taking out federal loans for school. They may not be able to wait for the US economy to re-align itself.

So morally, would you rather have wealthy taxpayers save money or have low and middle-class families continue to receive the services they need? That’s what this budget is asking. There is no option where wealthy Americans can save and everybody else will immediately have their lives improved.

The last point is that Mulvaney’s big assumption is that cutting taxes on the rich will result in more jobs and economic growth. In an economics classroom, this is a debatable theory. In the real world, this has been tried before and has not worked. In fact, economists would say that providing benefits for the poor is better at improving the economy because that money is more likely to be spent quickly. For example, food stamps generate $1.73 throughout the economy for every $1 spent. This is because people spend their food stamps, more food needs to be produced, shipped, stocked, etc. and workers need to be hired to do each of those things.

This is a topic that will be revisited many times. But in short, wealthy people tend to place their money where it will create a return on investment. Lower income people tend to buy goods. Buying goods clearly creates jobs because those goods need to be manufactured. Investment does not clearly create additional jobs.

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