Safety Net Programs, Local Grants on Chopping Block in Trump Budget

The $4.89 trillion budget proposal released Monday by the White House would slash domestic spending by 5%, with cuts in social safety net programs and the elimination of several grant programs that provide billions of dollars each year to states.

Cuts to safety net programs would be made in part by adding work requirements to Medicaid and the food stamp program. Over the next decade, cuts to health care programs as part of President Trump’s “health reform vision” promise savings of $844 billion. Changes to reduce spending on welfare programs, such as food stamps and Temporary Assistance for Needy Families, would save $292 billion over the next decade.

Office of Management and Budget Acting Director Russell Vought said the budget carries out President Trump’s promise not to cut Social Security or Medicaid coverage pointing to reforms such as work requirements that result in savings.  

“This is an important way that is not a cut but gets people off of the cycle of dependency and on the ladder of economic opportunity,” Vought told CNBC on Monday. “It is an important reform that works for the beneficiaries and saves taxpayer money.”

As part of the health care changes, the budget plan calls for enacting comprehensive drug pricing reform, which could save $135 billion over a decade. The Trump budget does not include specific policies to reduce costs, but rather states the administration is supportive  of capping out-of-pocket pharmacy drug costs for Medicare recipients, and improving incentives to reduce costs.  

Trump’s budget proposal outlines his priorities as he seeks reelection this year, but would require approval from Congress and has little chance of being enacted as written. The plan to cut domestic programs will likely follow the road map the administration laid out in previous years, which went nowhere. Democrats, who control the U.S. House of Representatives, wasted no time criticizing the new plan.

“The budget is a statement of values and once again the President is showing just how little he values the good health, financial security and well-being of hard-working American families,” said House Speaker Nancy Pelosi. “Year after year, President Trump’s budgets have sought to inflict devastating cuts to critical lifelines that millions of Americans rely on.”

The proposal would lower non-defense spending below the level Congress and the president agreed to in a two-year budget deal last summer, spurning further critiques from Democratic lawmakers.

“The President’s latest budget is a disastrous repeat of the misplaced priorities and callous cuts he has pursued unsuccessfully in past requests,” said House Appropriations Committee Chairwoman Nita Lowey. “It is unfortunate that instead of using his budget to build on the historic investments in last year’s budget deal, the president doubled down on partisan talking points that have no chance of becoming law.”

Also included in the crosshairs for cuts in Trump’s budget were grant programs that dole out billions of dollars to state and local governments. Several programs would be eliminated completely while others would be significantly scaled back.

The Department of Housing and Urban Development’s HOME Investment Partnerships Program, which provided $1.3 billion last year in grants to 600 state and local governments to help pay for affordable housing for low-income households, would be eliminated.

“State and local governments are better positioned to comprehensively address the array of unique market challenges, local policies, and impediments that lead to housing affordability problems,” states a budget document on proposed savings and reforms.

Also eliminated under the proposal would be the popular Community Development Block Grants program, which provided $3.4 billion to 1,250 state and local governments last year to support economic development activities like blight removal, housing rehabilitation and infrastructure improvements. Budget documents refer to the program as “outdated” and said cities can provide the funding themselves or rely on philanthropic funding to pay for such development needs.

The Department of Health and Human Services’ Social Services Block Grant, which is used to help pay for child protective services, foster care and case management, would also be discontinued because of a “lack of strong performance measures,” the budget document states.  

Proposed reductions to other grant programs that benefit state and local governments include:

• Cutting the Justice Department’s COPS hiring program, which are used by local police departments to pay salaries of new police officers, from $236 million to $99 million.
• Cutting funding for Environmental Protection Agency grants that states can use to comply with federal environmental law (Clean Air Act, Clean Water Act, and Safe Drinking Water Act) from $1 billion to $605 million.
• Elimination of grants to Appalachian states for economic development projects done in conjunction with reclamation of abandoned coal mines.
• Cutting EPA funding for ecosystem protection in watershed regions from $510 million to $331 million, and ending protection funding in all but three regions, the Great Lakes, South Florida and Chesapeake Bay.