Mandatory Spending: Cuts Target Health, Welfare, Student Loans
The White House wants Congress to trim some $1.66 trillion from so-called mandatory spending over a decade, or programs that run on autopilot without being subject to the annual appropriations process. These programs include the major cost-drivers in the federal budget, including Social Security and health care benefits for elderly and low-income individuals.
Under the Trump administration's fiscal 2019 budget request, Social Security would barely be touched, but overall mandatory spending would drop by almost 5 percent relative to current law over the next decade. While cutting other programs, the administration would plow nearly $200 billion in mandatory spending into an infrastructure initiative that was a central tenet of President Donald Trump's presidential campaign, and another $19 billion into a paid parental leave program championed by Trump's daughter Ivanka.
Health care programs come in for the greatest scrutiny, as expected, including the largest chunk of savings from repealing and replacing the 2010 health care law (PL 111-148, PL 111-152) — $675 billion, according to the budget documents. That is a net figure that incorporates some $1.4 trillion in reductions to Medicaid, repeal of exchange subsidies after two years and $1.2 trillion in spending increases in the form of "market-based" grants to states. Overall, the White House budget bills the reduction in funding for the Medicaid-eligible population as only $199 billion over 10 years.
In Medicare, the OMB budget documents show a reduction of $554 billion over 10 years, a steep increase from the previous year's budget, about 10 times greater than the token reductions in the fiscal 2018 budget request. Specified cuts include reductions in reimbursements to post-acute care providers, graduate medical eduction programs, hospitals providing uncompensated care and hospital-owned physician offices. The White House also appears to claim large savings, though unspecified, gained through efforts to curb Medicare payments for prescription drugs, including providing the federal government with authority to negotiate Part D prices and assuming an inflation limit for reimbursements for Part B drugs prescribed by physicians.
The steep cuts to Medicare, would seem to run contrary to Trump's campaign pledge not to touch the program; Medicaid also was supposed to be spared the ax, though Trump's budget in fiscal 2018 broke that promise previously. “Save Medicare, Medicaid and Social Security without cuts. Have to do it,” Trump said when announcing his campaign on June 16, 2015.
Social Security would see token reductions of $25 billion over 10 years, mostly through administrative savings, a relative rounding error in a program projected to spend $13.7 trillion over the next decade.
Overall mandatory spending outside of the "big three" programs — Social Security, Medicare and Medicaid — would face $513 billion in cuts over 10 years, or 7 percent. The White House is asking Congress to reform the postal service for a savings of $39.5 billion, make numerous changes to crop insurance programs for $26 billion in reductions, “streamline conservation programs” to reduce spending by $13 billion, create a “single income driven student loan repayment plan” for a savings of $128.4 billion and overhaul the Supplemental Nutrition Assistance Program by $213.5 billion during the next 10 years. Changes to Supplemental Security Income benefits and Disability Insurance would net another $72 billion in savings. Similar proposals were included in last year's budget request.