How the Trump Budget Undermines Economic Security for Working Families
By: American Progress
With an administration chock full of self-serving millionaires and billionaires, it comes as little surprise that President Donald Trump’s proposed budget would be an enormous windfall for the wealthiest Americans. But the degree to which it privileges the 1 percent at the expense of nearly everyone else—breaking Trump’s campaign promises to restore prosperity to everyday Americans—is staggering. Notably, by calling for cuts to Social Security, the budget violates one of Trump’s most significant promises.
Indeed, his proposed repeal of the estate tax alone—a tax that only affects the wealthiest 0.2 percent of estates—would cost the same as feeding more than 6 million seniors for a year through Meals on Wheels, a program facing deep cuts under the Trump budget.
And that is just one of several massive giveaways to the wealthy that President Trump calls for in this budget proposal while slashing critical investments in education, infrastructure, jobs, and more that make it possible for workers and families to get ahead. Here are seven ways that President Trump’s budget proposal threatens to do them serious damage.
Eliminates jobs while leaving the nation’s transportation infrastructure to crumble
Despite promises to reinvest in the nation’s infrastructure, President Trump’s proposed budget calls for the immediate elimination of the Transportation Investment Generating Economic Recovery (TIGER) grant and Amtrak long-distance routes programs. Furthermore, the budget cuts the Federal Transit Administration’s New Starts program, which provides significant funding to transit authorities for the construction of major new bus and rail projects, by $1.2 billion compared to the fiscal year 2017 omnibus. The budget would eliminate the New Starts program altogether once current grant agreements have been completed. Additionally, the budget would eliminate all discretionary funding for the Essential Air Service program, which helps rural communities connect with the national air system.
The budget seeks to reduce core highway and transit formula program spending from the Highway Trust Fund by $96 billion for FY 2021–FY 2027. In FY 2027 alone, this funding would be cut by $20.3 billion, possibly resulting in more than 250,000 lost jobs. Those job losses are broken down for each state here.
Finally, the budget continues the smoke and mirrors plan to subsidize Wall Street investors under the banner of infrastructure. Specifically, the budget states that any additional funding for infrastructure “will be focused on incentivizing additional non-Federal investments.” This budget would take money away from state and local governments by cutting the Highway Trust Fund and give it to elite Wall Street equity investors in the form of tax breaks. Rather than investing in America, this budget would help to ensure outsized corporate profits at the expense of working Americans who would foot the bill through higher tolls, water bills, and other user fees. Simply stated, this budget is a betrayal of the communities that believed President Trump’s hallow rhetoric about rebuilding America.
Eliminates scores of K-12 teaching jobs
President Trump’s budget threatens funds that could pay the salaries of more than 35,000 teachers and would take critical resources away from school districts across the United States by zeroing out the $2.1 billion Supporting Effective Instruction State Grants program, or Title II-A of the Every Student Succeeds Act. These cuts are part of a larger $9.2 billion cut to the U.S. Department of Education—an overall reduction of 13.6 percent.
The Supporting Effective Instruction State Grants program is the major source of federal funds for recruitment, training, support, and compensation of the education workforce. President Trump’s proposed elimination of this critical program would not only translate into job loss for teachers, it could also increase class sizes, especially in the regions of the country that already face teacher shortages.
Estimates of how many teacher salaries in each state are threatened as a result of eliminating the Supporting Effective Instruction State Grants program are available here.
Suppresses entrepreneurship and innovation through cuts to small businesses
President Trump’s talking points may claim he supports small businesses, but his budget would slash funding that supports small-business development. For example, his budget would eliminate the Economic Development Administration, which provides assistance to economically distressed communities to create economic growth. One of its key programs supports regional innovation through the Regional Innovation Program, which helps entrepreneurs start and build businesses.
President Trump rationalizes these cuts by claiming that the services are “better provided by the private sector,” but the private sector has failed to provide equitable access to capital. African American-, Hispanic-, and female-headed households are all less likely to own a business than households headed by single white males. Meanwhile, Trump’s proposed budget would only make it harder for these would-be entrepreneurs to access capital: It proposes entirely eliminating the Minority Business Development Agency, which helped create and retain almost 27,000 jobs in FY 2015, including more than 13,000 for African American entrepreneurs and more than 8,000 for Hispanic American entrepreneurs.
Increases utility bills for struggling families
In a particularly callous move, President Trump’s budget proposes to eliminate the Low-Income Home Energy Assistance Program (LIHEAP) in its entirety, which would leave an estimated 6.7 million low-income families without the financial assistance they need to pay their energy bills. Rural households are projected to lose $500 in annual assistance, and urban households are project to incur a loss of $450. Notably, 9 in 10 households that get help from LIHEAP have at least one member who is a child, elderly, or disabled. Without help from this critical program, households struggling to pay their energy bills would either be unable to keep their homes heated or cooled or be forced to sacrifice other necessities, such as food, to keep temperatures safe at home.
This is not just a matter of dollars and cents. Overheated—or underheated—homes can lead to temperature-induced illnesses and, in some cases, even death. Estimates are available here for how many households in each state would be affected by eliminating LIHEAP.
President Trump also proposes eliminating the U.S. Department of Energy’s Weatherization Assistance Program, which enables low-income families to make needed home energy upgrades, including critical energy- and cost-saving improvements such as insulation and heating and air conditioning systems. These weatherization efforts upgrade roughly 40,000 homes every year, which creates 8,500 jobs and saves households an average of $283 on their utility bills annually.
Weakens college access and affordability
President Trump’s budget includes devastating student aid cuts that would make it harder for millions of students and families to afford college, either plunging them deeper into debt or barring access to higher education altogether. Specifically, President Trump’s budget would freeze the maximum Pell Grant at its current level of $5,920 per year for the next 10 years. Pell Grants help nearly 8 million low-income students attend college.
Today, the Pell Grant covers just 30 percent of the total cost of attending a four-year public college. If tuition trends continue and the Pell Grant remains frozen at its current award, the maximum Pell would cover just 23 percent of tuition by 2026. To see how this would make higher education less affordable in each state, click here.
On top of that, the Trump budget would cut $3.9 billion from the surplus of the Pell Grants program. While this move would not result in immediate cuts for students, it would weaken the long-term stability of the program and result in fewer awards in the future.
The budget would continue a proposal enacted in the bipartisan 2017 congressional budget that allows students who take additional coursework in a year to get another part of a Pell Grant award—a provision more commonly known as year-round Pell. But it would pay for it by raiding an additional $3.1 billion over 10 years from mandatory Pell funding.
The Trump budget also proposes eliminating subsidized loans for new undergraduate borrowers, starting in July 2018. Subsidized loans do not accumulate interest for borrowers with financial aid while they are in school or under certain other circumstances. In 2015-16, more than 6 million students borrowed more than $23 billion in subsidized loans; most of these students also received Pell Grants for low-income students.
According to the Office of Management and Budget, eliminating subsidized loans entirely would shift $39 billion in costs to students over 10 years. In individual terms, borrowers who took out the maximum of $23,000 in these loans during their time in school would pay 20 percent more per month, and more than $5,200 more over the life of their loan, without this interest benefit. Estimates for the amount of subsidized loans borrowed in each congressional district are available here.
Makes it harder for workers to gain the skills they need to get ahead
Despite his campaign promises to support workers, President Trump’s budget proposes a 43 percent cut from FY 2015 levels to key Workforce Innovation and Opportunity Act (WIOA) programs. This could cause 571,000 workers to lose access to critical job training, career development, and job search assistance services that served 1.2 million people in 2015, the most recent year for which participation data are available.
As part of Trump’s cuts, grants to the WIOA programs that largely serve youths who are unemployed and not in school–two-thirds of whom are black or Hispanic–would be cut by 37 percent. As a result, 33,000 youths could lose access to critical supportive services, training, and paid work experiences that prepare them for both college and career. State by state breakdowns of the impact of WIOA cuts are available here.
Through these cuts, President Trump’s budget also implicitly subverts one of the most promising avenues for worker retraining: apprenticeship. Despite recently endorsing the goal of creating 5 million new apprenticeships and proposing new funding for apprenticeships, his budget cuts would dismantle key pillars of the nation’s apprenticeship system by making deep cuts to WIOA.
Cuts taxes for the wealthy at the expense of working families
At the same time that President Trump’s budget would jeopardize jobs and economic security for everyday Americans, it would also offer an enormous windfall to the wealthy and corporations in the form of tax cuts. These tax cuts are similar to those he proposed during his campaign, which were estimated to cost $6.2 trillion in the first 10 years after enactment and another $8.9 trillion in the second decade. More than three-quarters of these tax cuts would accrue to the top 20 percent of taxpayers, and roughly half would go to the top 1 percent.
Tax cuts of this magnitude would inevitably force cuts to programs such as Social Security, Medicare, and Medicaid—vital programs that middle-class and lower-income Americans depend upon for economic security.
The proposed repeal of the estate tax symbolizes the fundamental unfairness of the Trump budget. This policy alone would cost $174 billion over 10 years as part of Trump’s tax plan. And since the first $5,490,000 of assets are exempt from estate taxes in 2017—an exemption that doubles for married couples—only about 0.2 percent of estates pay any estate tax. At the same time, the Trump budget would cut federal funding for Meals on Wheels, which provides meals for elderly, disabled, and homebound individuals at a cost of just $2,765 per person annually. In 2019, the $17.2 billion cost of Trump’s estate tax repeal could feed roughly 6.2 million individuals for a year via the Meals on Wheels program.
Contrary to what proponents of trickle-down economics claim, tax cuts for the wealthy fail to stimulate the economy. Studies of past federal tax cuts show no correlation between tax cuts and economic growth. State experience is no different. In 2012, California voters approved a measure to raise taxes on millionaires, while Kansas’ governor signed a series of measures to reduce the state’s income and sales tax rates. California’s economy grew 3.1 percent in 2014 and 4.1 percent in 2015, while Kansas saw much more sluggish growth––1.2 percent in 2014 and only 0.2 percent in 2015. Today, Kansas is in dire fiscal straits.
Conclusion
In his inaugural speech, President Trump promised to lift up the “forgotten men and women” who have been left behind. But his budget proposal proves that his priorities lie with his millionaire and billionaire friends—at the expense of the very people for whom he claims to fight.
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Reposted from CAP.
