Trump budget proposal hints at Medicare reform?

The upcoming FY2019 budget cycle may be a fait accompli, thanks to a broad agreement last week between Congress and the White House, but the appropriations themselves are still open for debate. With Congress working on an omnibus spending plan to complete the FY2018 budget, the Trump administration released its own spending plan for the next cycle today. It contains almost the full ask on the table for the border wall, but also hints at a reversal on a previous pledge:

The $4.4 trillion budget plan, which is viewed by Congress as little more than a suggestion, will likely draw criticism from conservatives who worry that Republicans are embracing deficit spending.

The proposal for fiscal year 2019 includes $200 billion for infrastructure spending and more than $23 billion for border security and immigration enforcement. It also provides for $716 billion in spending on military programs and for maintaining the U.S. nuclear arsenal.

In a bid to show conservatives that the administration is embracing some fiscal discipline, the plan recommends cuts in non-military spending that would lower the federal budget deficit by $3 trillion over 10 years.

Criticism from conservatives seems so passé after last week’s deal to add $300 billion or more to the borrowing over the next two years. This proposal sends other signals, the Washington Post reports, undermining Republican efforts to close out deficits by the end of the decade. Trump has thrown in the towel on fiscal discipline entirely, especially on a campaign promise to eliminate annual deficits by the end of a second term:

President Trump on Monday will offer a budget plan that falls far short of eliminating the government’s deficit over 10 years, conceding that huge tax cuts and new spending increases make this goal unattainable, three people familiar with the proposal said.

Eliminating the budget deficit over 10 years has been a North Star for the Republican Party for several decades, and GOP lawmakers took the government to the brink of default in 2011 when they demanded a vote on a amendment to the Constitution that would prohibit the federal government from spending more than it takes in.

House Speaker Paul Ryan (R-Wisc.), when he used to chair the House Budget Committee, routinely proposed tax and spending outlines that would eliminate the deficit over 10 years, even though critics said his changes would lead to a severe curtailment in government programs.

Let’s get real. Republicans as a party appear to be serious about eliminating deficits when they have little to no control over spending. We went through this in 2002-2006 as well, when promises of fiscal discipline got forgotten — sometimes for good reasons (unexpected wars) and sometimes not (Medicare Part D and a short-lived prescription entitlement program). In that period, Republicans seemed much more interested in using their spending power to build relationships with lobbyists for political power. Remember the K Street Project and the “permanent majority”? Good times, good times.

But has Trump really thrown in the towel on fiscal discipline? Hope springs eternal, and while the numbers don’t lie, they may not tell the entire story either. Bloomberg’s Laura Litvan points out a big hint that the president may be thinking about Medicare entitlement reform, or at least some entry-level reductions:

It’s one thing to propose such things. It’s another entirely to fight for them. Medicare is a mandatory-spending program, which means any major cutbacks would not just involve an appropriations process but also new legislation to change the underlying statutes. How likely will it be in an election year for the GOP to open up even a limited reform of Medicare? For that matter, how likely will Democrats be to go along with discretionary cuts after winning big on increases in last week’s deal?

Basically, this is just a sop to fiscal conservatives, offering some measure of rhetoric to keep them from bolting altogether, at least for a little while. Perhaps we’ll get another chance at these issues for the FY2020 budget, but don’t bet on it. Neither the GOP nor the White House are serious about deficit reduction, let alone entitlement reform.