When Is A Budget Not A Budget?

Kabuki plays are known for their showmanship – elaborate costumes and extravagant acting – and for their predetermined outcomes. We saw Act One of such a drama last week when President Trump sent to congress his $4.7 trillion budget for the 2020 fiscal year, which begins on October 1st of this year. Congress then starred in a predictable Act Two by declaring the budget DOA – dead on arrival, “a gut-punch to the middle class … devastating…” emoted senate minority leader Chuck Schumer, who had rehearsed his lines before the budget had been written.

The inevitable Act Three will introduce a theatrical device of still another nation, sturm und drang, with each side accusing the other of bringing the nation to the brink of bankruptcy, and another government shutdown threatened. The final Act, as predictable as the other three, will be a negotiated compromise.

Trump proposes to spend 7.7% more than he asked for last year. A comparison of this year’s funding with Trump’s proposals for fiscal 2020, excerpted from The Washington Post, that the big winners are Homeland Security, Defense and Veterans Affairs. The big losers: EPA, State and USAID, Transportation, Housing and Urban Development, Agriculture and Interior. Specific programs that will lose funding include student loans, climate research, and reimbursements to hospitals to cover the costs of unreimbursed care.

To redeem his campaign promise not to reduce Medicare and Social Security benefits, the President confined his cuts in spending on those programs to the elimination of peripheral items such as tuition for medical school students.

In sum, the President announces that he wants to spend more on defending and securing the nation, and less on traditional safety net and programs favored by those on the programs favored center-left of American politics. As for the far left, socialism in Trump’s view, their beggars’ bowls are rattled in vain.

Oh, yes. Trump set Democrats to serious gnashing of teeth by requesting $8.6 billion for his wall on the Mexican border.

Why would the President, who is not lacking for media attention, bother to seek a starring role in the opening round of this play? Answer: sometimes a budget is not a budget, or at least not only a budget. Sometimes it is a campaign platform, and a device for widening the divisions in the opposing party.

Trump knows this budget will reassure his core that he is in there fighting to redeem his campaign promises. As for balancing the budget and eliminating the national debt, well, some promises are best forgotten. The projected annual deficit remains around $1 trillion until 2023 and then declines, but the red ink continues to flow until 2029, the last year for which the budget contains a projection. Since deficits in the trillions are difficult for ordinary people to imagine, since deficit hawks are an extinct species, and since the Democrats are in no position to pose as skinflints, this will be seen by the Trump core as a minor problem.

Minor, that is, compared with the differences with the Democrats, highlighted by this budget. In a quickly erased portion of a statement announcing their environmental policy — the Green New Deal — Democrats called for “economic security for those unable and unwilling to work,” a phrase that brought so much criticism down on the heads of its authors that it has since been changed to a promise of financial support for “all Americans”, not very different in effect from the original more honest one.

Trump, by contrast, is appealing to middle-class voters with his proposal that recipients of food stamps, Medicaid and federal housing support must show that they are working or training in order to look for a job.

Trump is not only using this budget to draw differences with Democrats. He is using it to widen the fractures within the Democratic Party. The Democratic Socialist wing of the Party, with the telegenic Ocasio-Cortez, confident in her bizarre view of how the economy works, leading the charge, is making the most noise. But it is the moderate newcomers who enabled the Democrats to gain control of the House by defeating Republicans in suburban districts that had gone for Trump in 2016. These winners fear that a radical agenda will cause voters to return to their original allegiance to the President, whose popularity rating, although low, is in line with those of Presidents Reagan and Obama at this stage of their first terms.

Worse still for the moderates, they are faced with an unenviable choice. They can adopt the policies insisted upon by Ocasio-Cortez and the Democratic Socialists, and support spending trillions on emissions reduction, financed by printing money to cover a deficit even higher than the gargantuan one built into the Trump budget. In which case the President’s campaign against the reluctant Ocasio-Cortez acolytes in districts that he carried in 2018, and in which his policies on deregulation, court appointments and immigration still have considerable appeal, will be especially effective.

Much criticism has been focused on the budget’s assumption that the economy will grow at an annual rate of 3%. But it is possible, not probable but possible, that Trump-sponsored changes in the tax code and the rolling back of the Obama regulatory excesses have raised the potential growth rate of the economy. In any event, with the jobs market booming, unemployment at record low levels for Hispanics and African Americans, wages rising especially for the lowest paid, and inflation quiescent, 56% of voters are giving Trump high marks for economic management. The economy is not ground on which the Democrats can confidently expect to wage a winning war.

Nor can the Democrats easily attack Trump’s trillion-dollar budget deficits. As Robert Samuelson puts it in a recent column in The Washington Post, not exactly a Trump organ, “Anyone who thinks the Democrats are more responsible [than Trump] hasn’t been paying attention. It’s imperative to deal with the costs of retirees and health care, which are the largest part of the budget. Democrats have refused…. And now Democrats back proposals (Medicare-for-all, guaranteed jobs, free college) that will raise spending even more.”

Trump’s budget might be DOA in Congress. But it is a very-much-alive campaign ploy. Democrats will be hard-pressed to defend denying the military Trump’s proposed increase while at the same time urging the President to get tougher on Russia and North Korea. And whatever they decide to do on domestic spending will offend one or the other side of their left vs. moderate divide.

Score one for the President.