President Donald Trump’s just-released 2020 budget proposal would put pressure on Social Security and Medicare, Alicia Munnell, director of the Center for Retirement Research at Boston College, told ThinkAdvisor in an email on Monday.
“Any budget that extends long-term deficits by extending the 2017 tax cut creates pressure on Social Security and Medicare down the road,” said Munnell, a former member of the President’s Council of Economic Advisers from 1995 to 1997 and assistant secretary of the Treasury for economic policy from 1993 to 1995.
Moreover, she said, “the proposed cuts aimed at nondefense discretionary spending are unrealistic and if enacted would hurt the vulnerable.”
Munnell explained in her comments to ThinkAdvisor that “proponents of cutting back on Social Security and Medicare generally preclude the option of raising taxes and instead conclude we ‘can’t afford’ the current level of benefits in the social insurance programs.”
As noted by the Committee for a Responsible Federal Budget, the Trump administration budget calls for “significant reductions in spending, the largest source being $1.1 trillion of cuts to nondefense discretionary spending.”
The budget also proposes about $660 billion in savings from repealing and replacing the Affordable Care Act; $645 billion in other health care savings (mostly Medicare reforms); $330 billion from reductions in and reforms to safety net programs; $205 billion in higher education reforms; and over $100 billion from modifying health and retirement benefits for federal employees, the committee explains.
Meanwhile, the committee adds that many of the spending cuts are “unrealistic.” For instance, “the budget assumes nondefense discretionary spending will fall 9% between 2019 and 2020, and 26% by the end of the decade — despite inflation increasing overall prices by 26%,” the committee states in its blog post. “Lawmakers are far more likely to consider a deal to extend the high discretionary spending levels set by last year’s Bipartisan Budget Act of 2018 — though we would urge them to set responsible and realistic discretionary spending levels.”
Trump’s budget also calls for spending increases, “including about $1 trillion in defense spending through increases to Overseas Contingency Operations funds and base defense spending after 2021, as well as $200 billion of infrastructure and a variety of other initiatives,” the committee notes.
The partial Trump budget proposes “a number of tax and spending policies that it estimates would reduce debt from 78% of GDP today to 71% of GDP by 2029,” the committee wrote. “The budget also projects real economic growth will average about 3% per year over the next decade, more than a percentage point above what most other public and private forecasters predict.”