Opinion

WILFORD: Note To Media — Reductions In The Growth Of Spending Aren’t Budget ‘Cuts’

Rrraum/Shutterstock

Andrew Wilford National Taxpayers' Union Foundation
Font Size:

In the wake of the release of the president’s budget, media outlets quickly seized on changes to entitlements included in the proposal. Numbers like “$845 billion in cuts to Medicare” and “$1.5 trillion in cuts to Medicaid” started popping up in summary articles. These numbers are very misleading, and taxpayers should not be fooled by them.

All of these numbers utilize a common gimmick that spend-happy politicians employ to make budget “cuts” look extreme: calling reductions in the growth of spending a “spending cut.” Take the aforementioned “$845 billion in Medicare cuts” — under the Office of Management and Budget’s baseline (i.e., not factoring in the president’s budget changes), Medicare spending is projected to increase from $582 billion in FY 2018 to a staggering $1.385 trillion in FY 2028. Under the president’s budget, Medicare spending would still increase to $1.251 trillion in FY 2028.

Even factoring in things like inflation and normal growth in spending, Medicare spending is projected to explode over the next ten years. In that context, “$845 billion in cuts” is actually a moderate reduction in the explosive growth of Medicare spending. In fact, even the $845 billion number is misleading, as $269 billion of that $845 billion is redirected into two new grant programs for the Department of Health and Human Services. In effect, the president’s budget slows the massive growth in Medicare spending by $575 billion over ten years.

The numbers being bandied about for Medicaid are somehow even more misleading. The president’s budget would repeal and replace the Affordable Care Act with a proposal from Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) that eliminates the ACA’s premium subsidies and replaces the Medicaid expansion with block grants to states. When factoring in these block grants, the $1.5 trillion number media outlets are referencing gets sliced roughly in half, to $777 billion 10 ten years.

But once again, that doesn’t really mean what it sounds like. Medicaid costs are growing rapidly, partly fueled by the ACA’s Medicaid expansion. Under current law, Medicaid costs are projected to increase from $389 billion in FY 2018 to $664 billion in FY 2028. Under the president’s budget, Medicaid costs will still increase substantially, hitting $585 billion in FY 2028.

The last entitlement that spending addicts are accusing Trump of going after is perhaps the most absurd. The budget proposal grows Social Security spending by $25 billion less than the baseline over the next ten years. For context, a $25 billion “cut” would not make much of a dent in one year of Social Security spending, let alone ten. Over ten years, that’s around a 0.2 percent “cut.”

And that’s not even considering where the president proposes to find that $25 billion. Despite Vox’s claim that “the intent is unambiguous: These are cuts to benefits,” well, they’re not. The president is proposing to find these savings from improved program integrity, or cutting down on waste, fraud and abuse. Unless we count fraud as a Social Security benefit, savings from cracking down on improper payments cuts no one’s Social Security benefits. And unlike some other fanciful claims to hundreds of billions in wasteful spending, identifying $25 billion of waste and abuse to cut is modest and achievable without magical thinking.

None of this is to suggest that the budget is perfect. Given the enormity of our looming entitlement crisis, the budget does not do nearly enough to curb our overspending problem. A 5 percent increase to military spending, with increasing reliance on spending gimmicks like the “Overseas Contingency Operation” fund, is likewise questionable.

However, no one should buy the characterization of the president’s budget as an entitlement slasher. Washington is going to have to get over its tendency to describe reductions in the growth of out-of-control spending as “spending cuts” if our fiscal problems are ever to be resolved.

Andrew Wilford (@PolicyWilford) is a policy analyst with the National Taxpayers Union Foundation, a nonprofit dedicated to fiscal policy analysis and education at all levels of government.


The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.