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POLICY UPDATE: White House Releases FY 2018 Budget Requests

May 24, 2017

The Trump Administration released its full 2018 budget proposal yesterday. The two-thousand-page document provides seriously disturbing specifics elaborating on the budget ‘preview’ released earlier this year. In short, this proposal reduces or eliminates federal support for almost any domestic program (and some international aid) that is important for the people, communities, and causes served by nonprofit organizations across our sector. It includes cuts to almost all safety net programs, including the Earned Income Tax Credit, as well as to housing, education, job training, arts and culture, science, public health and the environment. In addition, it passes significant new cost burdens on to the states, including major cuts to Medicaid over and above those in the House-passed health care legislation, and cuts to the SNAP food assistance program including a shift of $100 billion in cost to the states over ten years. 
 
How should we react to this?
 
The president’s proposal has already been characterized as the most draconian budget proposal in modern times, and politicians in both parties have already pointed out the proposal is likely dead on arrival in Congress. But bear in mind that many of its ideas are consistent with proposals put forward in recent years by congressional leaders. An uprising of opposition focused on the proposal’s extreme nature easily may make adoption of anything less destructive look politically acceptable. 
 
Clearly, we must ‘raise our game’ in educating and influencing the public and policy-makers. But those efforts must avoid two traps. First, don’t think in terms of protecting only one narrow program for your nonprofit – even if successful, your interests will quickly become ‘collateral damage’ as other programs and state and local finances are deteriorating. But second, and even more important, don’t focus too much on just this specific budget proposal. You and we could easily kill the ‘strawman’ only to be left with an alternative that is “only” 75% as destructive. 
 
Instead, our advocacy must positively and effectively promote the value that these important federal investments, protections, and programs represent for our communities and the quality of life across the country. The Trump budget proposal (and its likely quick demise) will be only the beginning of a critical struggle this year over the long-term direction of national policy.


Below is a summary created yesterday by the National Council of Nonprofits and a series of analyses from the Center on Budget and Policy Priorities.


Heather Iliff, President & CEO

Henry Bogdan, Director of Public Policy

White House Releases FY 2018 Budget Requests (from the National Council of Nonprofits)

The White House today made the first full move in the multi-step annual federal budget process by releasing a $4.1 trillion budget blueprint for Fiscal Year 2018 that begins on October 1. Every President’s budget is essentially a wish-list of spending and policy priorities sent to Congress for the remaining steps – approval of a budget resolution that sets spending levels, passage of 12 appropriations bills, and enactment of a budget reconciliation bill that can address hard-to-pass measures such as health care reform and a comprehensive tax overhaul.

 

As with all White House budget blueprints, it begins with a ten-year scope before focusing on the next Fiscal Year. Broadly, the Trump budget proposal asserts that, if enacted by Congress, federal spending would be cut by $4.5 trillion over a decade and the deficit would go down by $5.6 trillion over that period, potentially producing a slight surplus in 2027. It assumes increasing revenues — even with cuts in tax rates — of $1 trillion. On the spending side, the blueprint calls for increasing defense spending by $500 billion and reducing nondefense discretionary spending, the bucket that funds many programs performed by nonprofits, by $1.5 trillion over the next decade. These cuts include $274 billion in cuts over 10 years to means-tested anti-poverty programs, including food stamps, student loans, and other anti-poverty programs.

 

The budget proposal claims to reach a balanced budget by 2027 through a number of assumptions. It assumes steady inflation of two percent, an unemployment rate of 4.8 percent, and a growth rate in the gross domestic product of three percent, a rate that economists on the left and right say is overly-optimistic. The Federal Reserve projects the economy will grow at a 1.8 percent annual rate in the coming years, and the Congressional Budget Office projects 1.9 percent growth. Read the Budget Message to Congress, Budget Summary, Major Savings and Reforms, and Appendices.

 

As the budget was being prepared for delivery to Congress, numerous former and current policymakers expressed doubts about how much of the President’s plan would be enacted into law. According to the New York Times, David A. Stockman, a former budget director under President Ronald Reagan, said, “This budget is dead before arrival, so he might as well be out of town,” referring to the President’s international travels this week. Current Representative and former House Appropriations Committee Chairman Hal Rogers (R-KY) told the Wall Street Journal, “It’ll face a tough sled over here.” According to the Washington Post, Representative Mark Meadows (R-NC), chairman of the very conservative House Freedom Caucus, said “Meals on Wheels, even for some of us who are considered to be fiscal hawks, may be a bridge too far,” speaking of proposed cuts to nutrition programs. Finally, Senate Budget Committee Chairman Mike Enzi (R-WY) put today’s news in perspective: “I hope that people don’t panic over the president’s — any president’s — budget. They’re just suggestions.”

FY 2018 Budget Proposal Details

The Office of Management and Budget released nearly 2,000 pages of materials today and it will take weeks to sort through all of the winners and losers in the President’s plans. Staffers for 24 appropriations subcommittees in Congress are poring over the details as you read this, making notes on what will and won’t fly with Representatives and Senators. Here is a first look:

 

Proposed Spending Increases

  • Defense: As announced in March, the budget proposes a $54 billion increase in defense spending in 2018. Current law sets defense and nondefense spending at roughly the same level each year, so to secure the extra defense spending, the President proposes to take $54 billion away from many domestic programs.
  • Border: The President requests $4.4 billion in new border security and enforcement funding. This includes an additional $2.6 billion for new border infrastructure and surveillance technology and $1.5 billion for deportations and detention.
  • Paid Family Leave: The budget proposal asks for an increase in mandatory spending of $19 billion during the next decade to establish a paid family leave program. The proposal, if approved by Congress, calls for six weeks of paid family leave for all new parents, including those who adopt.
  • School Choice: The funding proposed for the Education Department would shift an additional $1.4 billion to school choice initiatives, including a $168 million increase for charter schools, and $250 million for a new private school choice program.

 

Proposed Spending Cuts

  • Medicaid: The Trump budget would offer states the option of agreeing to a cap in funding based on how many people are enrolled in Medicaid, the state-federal program that provides health care to low-income Americans, or accept a “block grant” structure that gives them more flexibility in how to spend the dollars. Either way, the budget proposes to cut $800 billion over 10 years.
  • SNAP: The White House is proposing to cut $193 billion from the Supplemental Nutrition Assistance Program, commonly known as food stamps, over the next decade by phasing in a requirement that states match federal funding for the program. Some are speculating that this approach would put more pressure on the states to limit eligibility for food stamps and to impose work requirements. See Feeding America statement.
  • TANF: The plan proposes cutting $21 billion through changes to the Temporary Assistance for Needy Families program, which allocates grant funding to states to help assist individuals who are either pregnant or caring for a minor child
  • Low-Income Tax Credits: The Administration hopes to reduce spending on the Earned Income Tax Credit and Child Tax Credit by $40 billion, in part by requiring proof that recipients are authorized to work in the United States.
  • IRS: The blueprint would reduce the Internal Revenue Service budget to close to fiscal 2008 levels, a 4.1 percent drop from the enacted level in fiscal 2017. The budget anticipates about 5,400 job cuts out of a total workforce of 77,000, amounting to about seven percent of IRS employees.
  • Student Loans: Of great interest to nonprofit employees and employers, the budget proposes cutting $143 billion from student-loan programs through elimination of subsidized student loans and public service loan forgiveness which help low- and moderate-income students afford college. The budget also proposes creating a single income-driven student loan repayment plan and relocating some mandatory Pell funding to support year-round discretionary Pell Grants.
  • Targeted for Elimination: The budget proposal calls for zero or “orderly closeout” funding for numerous programs and line items that support the work of charitable nonprofits. Here is a partial list:
    • Block Grants targeted for elimination
      • Community Development Formula Grants (HUD Appendix p. 556)
      • Community Services Block Grants (HHS Appendix p. 463)
      • Social Services Block Grant (HHS Appendix p. 462)
    • Corporation for National and Community Service (no new grant funds, Appendix p. 1133-34) See Voices for National Services statement
    • Corporation for Public Broadcasting ($30 million, Appendix p. 1137)
    • Institute of Museum and Library Service ($23 million, Appendix p. 1175) See American Alliance of Museums statement
    • Legal Services Corporation ($33 million, Appendix p. 1179)
    • National Endowment for the Arts ($29 million, Appendix p. 1191-1193)
    • National Endowment for the Humanities ($42.3 million, Appendix p. 1193-94)