The President’s Skinny Budget: What’s It All About?

The President Proposes

On March 16, the president offered his “skinny budget.” Nicknamed “skinny” by the White House, the March 16 budget was released to offer an overview of the budget the president will finally submit to Congress in late April.

Unfortunately, this budget does not present a very pretty picture. If adopted it would decimate many federal programs that are critical to the ongoing activities of most regional councils. It would also decimate many federal programs that are critical to the health and well-being of lower income and poor Americans.

Now, most of us are familiar with the programs proposed for elimination that have received wide coverage like Meals on Wheels, the Corporation for Public Broadcasting, the National Endowment for the Humanities, and the National Endowment for the Arts. We have also heard that the budget, if adopted, would do significant harm to a wide range of programs. But what we have heard very little about is the impact this budget will have on cities, counties, and regional councils.

This blog will provide information on programs slated for elimination and what that may mean for cities, counties, and regional councils. To this end I will offer some macro- and micro-level impacts – impacts that will be felt across the board and locally – to explain why this budget is ultimately bad for cities and counties and the people who live there, as well as the regional councils that address the governmental and human needs of the regions they serve.

Some Likely Macro Impacts

A survey of 285 economists released earlier this month by the National Association for Business Economics shows that they believe the president’s tax plan and spending proposals will add to the national debt and widen the federal budget deficit. Such an outcome could result in higher interest rates and slower economic growth. Higher interest rates would make it more costly for cities and counties to borrow, reducing the likelihood that cities and counties will make major capital investments.

Democrats and Republicans, liberals and conservatives, are in disagreement over the president’s budget. One theme that has emerged is that the proposed cuts could place in danger millions of working class and lower income Americans who need programs like the Low Income Home Energy Assistance Program (LIHEAP) to heat their homes, weatherization to make their homes more energy efficient, or the Social Services Block Grant to fund important and necessary programs for seniors. Cuts of these sorts are likely to place the burden on cities and counties to provide these services and meet these needs, thereby forcing local governments to redirect their spending toward activities the federal government traditionally supported.

Long-Term Questions

There are long-term questions that must be answered as well. What would these cuts mean in the long run for the agencies, local governments, and regions that often depend on federal grants? Would the federal government be able to continue to play the role that it has in the past if it is no longer able to carry out the functions it is mandated to perform? And how would this impact local governments and regions? Would states and localities be forced to raise their taxes in order to meet their residents’ needs when the federal government abdicates that responsibility?

president's skinny budget

Federal agencies on the non-defense discretionary funds side of the ledger have already been cut to the bone. As the chart shows, since 2011 when the Budget Control Act was adopted, funding for every non-defense discretionary federal agency has been reduced, some by as much as 15 to 30 percent. We know that these cuts have already had a substantial impact on cities, counties, and regions. By reducing the amount of federal assistance available, the responsibility was transferred to local governments and regions. Under the president’s budget additional cuts would be enacted for fiscal year 2018 funding for every federal agency – that would result in a loss of up to 40 or 50 percent of the funds available in 2011.

Many of the grants that cities, counties, and regions have come to rely on would evaporate; local governments could be forced to raise taxes or turn to their states to fund what were once federal initiatives; and the federal government could literally be forced to abdicate its mandated functions and responsibilities.

House Appropriations Committee chair Rodney Frelinghuysen (R-NJ), who has expressed his opposition to the president’s budget, has said that each federal department or agency has been charged by Congress to carry out certain functions. It is Congress’ responsibility to fund those departments and agencies so that they can do the job we instructed them to do. He also noted that “we’ve reduced our discretionary spending over the last seven to eight years an incredible amount,” and added that many of the programs slated to be cut or eliminated “keep America open for business.”

Individual Programs Up for Elimination

Of significant concern, of course, are the individual programs funded through the various agencies and department that cities, counties, and regions benefit from.

Transportation and Housing and Urban Development appropriations stand out as two of the most problematic for regional councils given the work that they do. Both departments would sustain significant overall cuts (13 and 15 percent, respectively), and face the elimination of several important programs.

Transportation programs that would be eliminated include TIGER Discretionary Grants, Essential Air Services, Transportation Security Administration grants to states and localities, and federal support for Amtrak’s long distance train services.

Housing and Urban Development programs that would be eliminated include the Community Development Block Grant, HOME Investment Partnerships Program, Choice Neighborhoods, and Self-Help Homeownership Program.

The Departments of Transportation and Housing and Urban Development, however, are not alone. Altogether, 20 independent agencies and 42 programs would be eliminated, including numerous human services programs.

For example, the Department of Health and Human Services would be cut by 23 percent, and LIHEAP and the Community Services Block Grant would be eliminated altogether. The Labor Department would be cut by 21 percent and programs that would be eliminated include the Senior Community Service Employment Program and possibly the Workforce Innovation and Opportunity Act, which the “skinny” budget does not address but has been slated for elimination by such organizations as the Heritage Foundation.

The Commerce Department would be cut by 16 percent and with those cuts would come the elimination of the Economic Development Administration and other business programs. The Department of Agriculture, which would be cut by 29 percent, would see the elimination of the Water and Waste Disposal Loan and Grant Program and the Rural Business and Cooperative Service’s discretionary programs.

The Environmental Protection Agency’s appropriation would be cut by 31 percent, and programs that would be cut substantially or eliminated include Superfund, categorical grant funds to states and localities, funding for regional water programs, geographically-based funding, restoration initiatives, climate change programs, and 50 other programs.

Finally, the Department of Energy would see the smallest cuts among non-defense discretionary programs at only 5.6 percent. Nonetheless, weatherization programs, programs to support advanced technology vehicles, and loans to local governments to support the use of new energy technology would be eliminated.

So Where Does This Leave Us? 

There is never certainty in Washington. As I write this blog, it appears increasingly unlikely that the American Health Care Act  will pass the House on Thursday, March 23. And yet at the last minute, enough members of Congress could be influenced to make the impossible possible. This lack of certainty makes it so difficult to know if the congressional majority will ultimately adopt the proposed budget. Some in the House and Senate have called it dead on arrival, while others have embraced the proposal and called for its adoption. But as one economist told NPR a few weeks ago, Donald Trump is the “master of the deal.” What he may be doing is simply going for the extreme with the full knowledge that the final budget will fall somewhere in the middle and be far better than anything he could have expected had he been more moderate from the start.

The author would like to thank the National Association of Counties and the Coalition for Human Needs for much of the information that appears in this blog, and the Center for Budget and Policy Priorities for the graph which appears above.