President Trump on Wednesday made what sounded like a dramatic announcement when he asked his Cabinet to come up with 5 percent cuts at their respective agencies. But in reality, the cuts he's talking about would only pertain to a narrow sliver of the budget and wouldn't do much to address rising deficits.
Though Trump himself left some ambiguity over whether military spending would be included in the cuts, he did suggest that perhaps one or two agencies would be exempt. But at a private dinner last night, economic adviser Larry Kudlow said he was speaking about non-defense discretionary spending.
In 2018, according to the July update from the White House Office of Management and Budget, non-defense discretionary spending only accounted for just $660 billion, or less than one-sixth of the $4.2 trillion budget. Cut that category by 5 percent, and you'd only end up with $33 billion in savings. While that's real money, no doubt, it's small relative to the budget deficit, which reached nearly $800 billion this year, and which the OMB projected would exceed $1.1 trillion in 2019.
This is demonstrated visually by the following chart. The massive red section, accounting for 62 percent of the federal budget, is mandatory spending, most of which is Social Security, Medicare, and Medicaid. The small yellow sliver, or less than 1 percent, represents the amount that could theoretically be cut if Trump's cabinet follows through on his request and the cuts are implemented.
For fiscal conservatives, are some cuts better than no cuts? Sure. But one reading just the headlines might be getting the impression that Trump, the take-charge business executive, is demanding efficiency from government and tackling the nation's long-term debt problem. In reality, by protecting large entitlements from reform, he is kicking the can further down the road, just as all those all talk, no action politicians that came before him.