A House Budget Committee hearing held on Tuesday to discuss the recently proposed federal budget quickly turned into a debate about spending.
President Donald Trump’s budget, released on Monday, demonstrated his goal of cutting spending overall. Fiscal conservatives quickly praised the budget for cutting trillions of dollars in federal spending, yet critics warned it would cause severe damage by cutting important domestic programs.
The House Budget Committee hearing made that divide superbly clear.
“Over the past two years, President Trump has unleashed the American economy through his pro-growth agenda,” Office of Management and Budget Acting Director Russell Vought (shown above left) said during the hearing. “But these great achievements will be challenging to maintain if we do not get our fiscal house in order.”
Annual deficits are continuing to rise and will exceed one trillion annually in the coming years if not addressed, said Vought.
Interest payments on the national debt are expected to exceed military spending in 2024, he also said. This, after the national debt nearly doubled under the previous administration; it’s now more than $22 trillion.
“This level of debt is unsustainable and threatens the prosperity and economic freedom of future generations,” Vought said on Tuesday. “Yet each time this president has called for fiscal restraint and spending reform, he has been ignored. Instead, those opposed to decreasing Washington’s spending have called for large tax increases as a means to reduce deficits.”
The Budget for a Better America includes various spending items for the next fiscal year at a total of $4.7 trillion. The budget proposal calls for $2.7 trillion in spending cuts for various federal agencies and programs. It includes some increased spending fo areas such as defense and border security.
“Now this third budget proposal offers more of the same,” House Budget Committee Chairman John Yarmuth (D-Ky.) said. “It is a recipe for American decline and relies on a patchwork of gimmicks, fantasy projections and extreme cuts that forfeit any responsibility for the well-being of the American people and our nation,” he added. “What this administration is saying to our constituents is that the federal government will no longer have a role in making sure we remain an opportunity-based society. That the American dream is out of reach.”
The proposal includes a nine percent cut in non-defense discretionary funds in 2020 alone, said Yarmuth. Over the next decade it would slash non-defense discretionary funds by more than a trillion dollars. In his view, that would cripple the economy and national security by not fully investing in education, public health, and other critical areas.
“I think I join most Americans who are tired of hearing big numbers and tired of hearing deficits,” Rep. Ralph Norman (R-S.C.) said at the same hearing. “They know something is not right and they want it done now. And while I would like to have seen more cuts in this budget, at least it is a start.”
“There is still much work to do to put our spending back on a sustainable path. The president in his budget takes steps in the right direction.”
The Congressional Budget Office warned back in April 2018 that the likelihood of a fiscal crisis would increase if the debt is not addressed. Investors could become unwilling to finance federal borrowing unless they were compensated with very high interest rates, it also warned.
Rep. Steve Womack (R-Ark.) argued the country is already in a fiscal crisis.
“It may not seem like one — the markets haven’t responded yet — but I sense there is some smoldering going on that could lead to a potential raging fire regarding the deficit and debt,” Womack said. “We cannot continue down this path. We have to lead by example by making tough choices necessary to reverse course … There is still much work to do to put our spending back on a sustainable path. The president in his budget takes steps in the right direction.”
Democrats have often seen higher taxes as a way to address deficit issues. They mostly say the wealthy need to pay “their fair share.” Vought warned higher taxes will hurt people by impeding the economy while also ignoring the actual problem.
“Contrary to fearful predictions of the passage of the historic tax reform, revenues are increasing and aligned with 50-year averages,” said Vought. “The problem is not that Americans are taxed too little — it’s that Washington spends too much.”
The Tax Cuts and Jobs Act lowered taxes for most individuals and families while also cutting rates for many businesses when it was passed in December 2017. Democrats called out the law for increasing the deficit by roughly $1.8 trillion.
Vought echoed earlier points by predicting tax reform should lead to enough economic growth to offset those losses over time.
Rep. Ro Khanna (D-Calif.) was among the committee members who expressed concern about Medicare spending. The budget proposal aims to save $845 billion from the program over the next decade.
Vought argued those reductions aren’t the result of cuts but rather cost-saving initiatives, such as those that address prescription drug prices.
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