President Donald Trump delivered on his promise to upend Capitol Hill by unveiling a budget last month with several large changes to the status quo that even some Republicans in Congress were uncomfortable with parts of it. The one certainty is that the proposal won’t pass as is. Presidential budgets are largely political documents while Congress takes care of the budget-making. Still, Trump’s proposal does shed light on the administration’s thinking behind its priorities and signals what policies and programs may be on the chopping block and which one’s he’s targeting for expansion.
The budget contained few policy surprises—it largely expanded upon the outline Trump submitted earlier this year. For fiscal 2018, he proposes diverting more than $54 billion from various federal agencies to boost defense spending. Over 10 years, his budget would cut $260 billion in expected discretionary spending. In total, Trump’s proposal would cut federal spending by more than $3.6 trillion over the next decade.
There is an increase in proposed funding of public infrastructure. Trump has long promised a $1 trillion investment in our nation’s infrastructure and his budget documents contains some clues about that vision over the next decade. He proposes spreading $200 billion in federal investment out over 10 years, starting with $5 billion in 2018, ramping up to $50 billion by 2021, then gradually sinking back to $5 billion.
That investment, Trump hopes, will be more than matched by incentivized private spending. “Simply providing more Federal funding for infrastructure is not the solution,” the budget says. “Rather, we will work to fix underlying incentives, procedures, and policies to spur better, and more efficient, infrastructure decisions and outcomes, across a range of sectors, including surface transportation, airports, waterways, ports, drinking and waste water, broadband and key Federal facilities.”
In addition to the federal government incentivizing private investment through expedited projects and eliminating or significantly revising cumbersome regulations, Trump’s vision opens up more opportunities for P3s (public private partnerships). The administration proposes expanding Private Activity Bonds (PABs) by lifting the current $15 billion cap and expanding eligibility to non-Federal projects. It also will explore expanding TIFIA, which helps finance surface transportation projects through direct loans, loan guarantees, and lines of credit. One dollar of TIFIA subsidy leverages roughly $40 in project value, according to the budget. By that estimate, the administration believes if the amount of TIFIA subsidy was increased to $1 billion annually for 10 years, that could leverage up to $140 billion in credit assistance, and approximately $424 billion in total investment.
A supplemental document elaborates on the administration’s larger view of transportation funding. Referring to the federal government as a “costly middleman,” Trump believes states and localities should shoulder more of the burden in coordinating funding. “Put simply,” it says, “the Administration will be exploring whether this arrangement still makes sense, or whether transferring additional responsibilities to the States is appropriate.”
That notion of transferring responsibilities to states and local governments permeates throughout the budget and is the main justification the administration uses for proposing significant cuts in federal aid to them. While the transportation section could be a positive, the overall proposal has many in the state and local sector worried about the strain it would place on their own budgets if even a portion of it passed Congress. U.S. Conference of Mayors CEO Tom Cochran, for example, said mayors across the country were "deeply troubled by President Trump’s brazen attack on the very people he promised to protect."
One of the biggest concerns is Medicaid, which accounts for about one-third of state spending. Trump’s budget assumes full passage of the House-passed version of the American Health Care Act, which cuts $839 billion from Medicaid and pulls funding from Planned Parenthood. Trump’s budget cuts another $610 billion from Medicaid over 10 years. The changes will ultimately result in cuts of up to 25 percent in what states receive in Medicaid funding, forcing them to choose between reducing medical coverage for the poor or footing the bill themselves.
Trump also proposes states pick up part of the cost of massive federal programs, which would also leave states with hard choices. He proposes requiring states to eventually pay for one-quarter of the $66 billion annual federal food stamp program. He also wants to cut FEMA grant funding by $767 million and make states pick up one-quarter of the cost for certain grants.
For localities, some of their biggest concerns revolve around Trump’s proposed elimination of the $3 billion Community Development Block Grants program (CDBG). The budget document says the federal government has spent more than “$150 billion on CDBG since its inception in 1974, but the program has not demonstrated results.” It also points out that decreasing appropriations “combined with an increasing number of localities qualifying for CDBG allocations has reduced the size of the individual grants over time, making CDBG less impactful.” Advocates say those criticisms are reasons to reform it – not eliminate it.