Trump budget pick seeks entitlement cuts as urgent step on debt

(Bloomberg) — President Donald Trump’s pick for budget director, Mick Mulvaney, said Tuesday the nearly $20 trillion national debt needs to be “addressed sooner rather than later” and that he would push Trump to break his campaign promises and cut Social Security and Medicare.

Mulvaney, a Republican congressman from South Carolina, told senators at his two confirmation hearings that he would “tell the truth” to Trump about the need for entitlement program changes. He said without doing something soon, the Medicare and Social Security trust funds could go bankrupt — while also maintaining he wouldn’t advocate cutting benefits to current beneficiaries. He said the U.S. needed to shrink the almost $20 trillion national debt, which he compared to an ordinary American family owing more than a quarter of a million dollars on credit cards.

“Families know what that would mean for them,” Mulvaney said Tuesday in Washington as he faces a pair of Senate committees over his nomination to run the Office of Management and Budget. “It is time for government to learn the same lesson.”

OMB helps the president manage the federal budget.

OMB also oversees regulation impact and paperwork burden review programs that may affect just much time and effort complying with federal requirements really takes.

As a congressman, Mulvaney has voted against debt ceiling increases and criticized House Speaker Paul Ryan’s budgets for spending too much. If he’s installed in the post — and given the leeway to negotiate his way — the next debt-limit debate could include a fight over whether future spending should be cut to offset money spent in decades past. The debt limit returns in March, so those discussions aren’t far away.

Mulvaney said Tuesday it would be “undesirable” to get to a situation where he would need to consider how the federal government would grapple with hitting the debt ceiling. But, Mulvaney said, he does support prioritizing payments should the nation need to do so.

Senate Budget Chairman Mike Enzi, a Wyoming Republican, hailed Mulvaney as a “vigilant budget hawk” who would help quickly address the nation’s “staggering $20 trillion debt burden.”

“Congress needs an OMB director we can work with to put our nation on the right fiscal path,” Enzi said.

But Senator Bernie Sanders, the Vermont independent who challenged Hillary Clinton for the Democratic presidential nominee in 2016, said Mulvaney’s budget philosophy was “exactly opposite” of Trump’s campaign vow not to cut Social Security, Medicare or Medicaid.

“The opinions and views of Mr. Mulvaney are way out of touch of what the American people want,” Sanders said.

Mulvaney told the Senate Homeland Security and Governmental Affairs panel that he supports slowly raising the Social Security retirement age, thinks that all Medicare benefits should be means-tested and thinks that 10 percent or $100 billion in annual agency spending may be rooted out as waste.

“If we do nothing then by the time I retire there will be an across-the-board 22 percent cut to benefits,” Mulvaney, 49, said.

The trustees for Social Security and Medicare say that Social Security’s trust funds won’t be depleted until 2034 and Medicare’s hospital insurance (Part A) trust fund is good until 2028, well after Trump leaves office.

Mick Mulvaney says Social Security and Medicare are on the verge of bankruptcy. (Photo: iStock)

Nanny tax

Sanders, the ranking member on the Budget Committee, also criticized Mulvaney after he disclosed that he didn’t pay more than $15,000 in taxes for a household employee, noting a similar issue had derailed former Sen. Tom Daschle’s 2008 nomination to head the U.S. Department of Health and Human Services.

Mulvaney said he hired the nanny shortly after having triplets in 2000 and mistakenly didn’t consider her a household employee for tax purposes.

“When they came home, we hired someone to help my wife take care of the children,” Mulvaney said. “In my mind she was a babysitter: She did not live with us, she did not spend the night there, she did not cook, she did not clean, she did not educate the children. She helped my wife with the kids.”

Mulvaney said that since being nominated he has filed the necessary tax paperwork and paid the taxes and will pay any penalties or interest on what was owed.

Earned honestly

Mulvaney was part of the wave of fiscal-conservative Tea Party members elected in 2010 and has been one of the most pugilistic advocates for cutting government spending. He is one of eight Trump nominees that Senate Minority Leader Chuck Schumer has placed in “the most troubling” column. More than 50 groups have sent letters to Capitol Hill urging members of Congress to reject Mulvaney’s nomination, arguing he’s too extreme.

Pentagon spending

Some of the toughest questioning came from Armed Services Chairman John McCain, who accused him of voting to hurt the military by opposing the use of war funding to funnel money to the Pentagon, and for shutting down the government in 2013.

He accused Mulvaney of making a “crazy” decision by voting to withdraw troops from Afghanistan.

Mulvaney said he will advise Trump to increase the budget cap on defense spending to be paid for by corresponding cuts to non-defense spending.

After the hearing, when asked whether he will vote for Mulvaney, McCain said, “I haven’t decided.”

On the possibility of future shutdowns, Mulvaney said he doesn’t expect to advise Trump to govern “by crisis.”

Mulvaney is a founding member of the House Freedom Caucus, hardline Republicans who have opposed compromising with Democrats to keep the government operating during budget disputes. He helped lead the 2013 effort that resulted in a government shutdown over Obamacare funding.

“I will be loyal to the facts, and to the American people whom I serve,” he said.

At odds

Mulvaney’s long-held position that new spending must be offset with equal cuts elsewhere could put him at odds with the president when it comes time to make good on Trump’s campaign promise to invest $1 trillion in roads, bridges and other infrastructure. He was on the losing side of a push to ensure spending on Hurricane Sandy relief was matched with reductions in other parts of the government.

Mulvaney has voted for unsuccessful proposals that sought to cut spending deeply enough to bring the federal budget into balance within a five-year window. Those proposals by the Republican Study Committee, a faction of fiscal conservatives, included raising the Social Security full-benefits age to 70 and changing the measure of inflation to reduce the retirement program’s payouts.

On the campaign trail, Trump promised he wouldn’t cut Social Security. But Mulvaney suggested that his nomination was an indication Trump planned to govern differently.

“I have to imagine that the president knew what he was getting when he asked me to fill this role,” he said.

The most recent version of the group’s budget proposal would have given an extra $38 billion to the military while reducing domestic spending by $100 billion, in part by eliminating the National Endowment for the Arts and the Kennedy Center and ending funding for the Washington area’s metro transit system.

While a majority of congressional Republicans supported using a war-funding account for regular military needs, Mulvaney worked with Maryland Democrat Chris Van Hollen to demand that all routine Pentagon purchases stay within legal spending caps. Mulvaney’s opposition to that cap-skirting maneuver could become another pressure point, given Trump’s promise to beef up troop levels and weaponry.

Congress is expecting the administration to send an emergency military spending request in the next few weeks. Mulvaney said he would support Trump’s proposed increase in defense spending, but would advise against using emergency funding.