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What the budget fight really means.

May 24, 2017

Well, we have a full budget request for FY 2018 from the White House. Technically it’s President Trump’s first budget that is all his.

As is customary, the statutory requirement that it be submitted between January 1 and February 1 is normally waived for the first year of a new administration. Since the Director of the Office of Management and Budget, Mick Mulvaney, wasn’t confirmed until February 16, February 1 was obviously out of the question, as it is for most new administrations.

This budget is heavily tilted toward Trump’s domestic agenda of growing the economy and increasing jobs, the two things that still top most people’s priority list.

In a larger sense, it’s a metaphor for his success or failure, since it lays the financial groundwork for the success of his entire agenda.

Immediately upon its issuance, both the House and Senate signaled that it was DOA.  Finito, forget it, ain’t gonna happen.

The left started ordering more grave markers for the people that are going “to be killed” if this budget goes through at least mostly intact.

The right is no better. They have their own vision of Doomsday, and it is going to be detonated by this budget.

What else is new?

Every White House budget request is DOA, at least as written. It’s a request, not a royal proclamation. All it is supposed to do is provide insight into the President’s spending, and to some extent governing strategy.

As budget requests always do, this one will get sliced, diced and massaged until all parties finally agree to pass something that no one really backs 100%, but everyone can live with.

That’s how it’s supposed to work anyway. This one will have tougher sledding than most, as witnessed by the political hysteria it has created.

First, the name on the signature line is Donald Trump. That guarantees that whatever is in it, most of Congress, Republican as well as Democrat, will want to reverse it 180 degrees.

Second, in order for it to work, it requires that a lot of programs are turned on their heads.

The ACA, i.e. Obamacare, taxes and subsidies must disappear as they now exist.

Tax reform that helps spark business and consumer spending has to happen.

Tax incentives to cajole U.S. businesses into bringing their money and semi-skilled, middle class jobs back from overseas must pass.

Chronically unemployed, welfare dependent but able-bodied Americans must go back to work.

For that to happen, there have to be jobs out there that they can do without going back to school for four years first.

Welfare checks and Federal benefits must not rival or exceed wages as a source of income for any but the truly needy.

And that’s just the big stuff..

There are dozens more assumptions that have to fall into place for the numbers to work out in actual practice.

Not the least of those is the assumption that the House and later, Senate  members have the budget as one of their top priorities, rather than getting re-elected.

Spending bills are the responsibility of the House of Representatives, per the Origination Clause, meaning that Paul Ryan is responsible for incorporating the main goals of the Trump budget, or as much of it as he can, into the final budget.

Since Ryan is not exactly a thoroughgoing Trump fan, it’s difficult to say how hard he will fight to defend anything in the President’s budget.

And of course there is that little matter of the 2018 elections.

No matter how well the President’s budget eventually scores in theory,  senators and representatives will run either for or against it, as they deem necessary to achieve re-election.

Every politician knows that goodies bring voters to the polls, and in today’s environment, that means “free” money.

Analysis by reasonably unbiased experts show that all this budget does is slow the rate of annual increases in most welfare and entitlement programs.  By extension, that means that there won’t be room to add millions more to the programs it proposes to reform, or to create new ones such as free college tuition.

Budgets are political time bombs, and this one is no different.

If implemented as written, the budget would essentially hold spending down as a percentage of GDP, but relies heavily on increasing revenue through economic growth  to do so.

More people working means more people paying taxes.

More people working and not dependent on the government for their next meal or a roof over their heads means less control over the electorate.

That doesn’t bode well for any politician, they know it, and they know how to counteract it.

This budget does have one fatal flaw.  It assumes that politicians care about allowing the populace to achieve a modicum of independence from the Federal government.

All Congress has to do is block all or most of the Trump economic growth strategies, and the whole ten-year plan goes blooey.

For instance, if companies don’t come back to the U.S. the jobs won’t materialize, but if you bring the wrong mix of jobs back then there aren’t enough bodies to fill them.

If you accept the formula that the Bureau of Labor Statistics uses, the actual unemployment rate was 8.6 percent in April 2017. Full employment is generally considered to be between 3 and 4 percent.  That’s the point at which employers are struggling to find people to work for them at ANY wage. That’s when you start to see fast food jobs advertised at ten dollars an hour, as happened just before the recent recession.

That means there is still a little wiggle room  to put people back to work, but not much.

The laws of supply and demand work in the labor market too. Get too many jobs and too few bodies to fill them, and you get people outsourcing again, just to find the people they need.

Get too few jobs and the people no longer on welfare really do starve.

Many, if not all of the people currently not working are often considered unemployable, not by the government but by the employers, who often require a four-year degree even for jobs like sales or clerical staff that were formerly considered just a step above entry level.

All this economic stuff controls everything else.

Cutting taxes means the difference has to be made up both by reducing spending and increasing the number of people paying taxes.

And that’s just examining one little piece of the puzzle.

For the President’s budget to work, or at least have a shot at working, all the pieces of the puzzle have to fall into place. Given the political climate, that’s not likely.

Politicians know how to game the system.

If you reduce the number of people on the government dole, and the jobs aren’t there, it’s an instant liberal win.

If it does work and the middle class begins to rebuild, it’s an instant leftie loss. They can’t afford for the people to win.

And there you have it. Instant budget gridlock.

And here we sit, where we have always been. Caught in the political nutcracker.

And you wonder why people hate Congress and politicians in general?

From → op-ed

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