John Block: Budget

By former USDA Secretary John R. Block

Back in March, President Trump gave us a look at his budget plan. Although without much detail, it made clear to us that one of his highest priorities was to downsize the federal government. And, he would do that by cutting spending. He had already said that he did not intend to touch Social Security or Medicare.

Now, this week, OMB Director Mulvaney has released President Trump’s budget plan. I don’t see very many surprises. It is the Trump plan to “reform the welfare system” and “replace dependency with dignity to work.” We are looking at $3.6 trillion in cuts over 10 years and a balanced budget in 2027.

USDA farm and food programs are in the cross hairs of the attack on spending. The next farm bill, to be completed in 2018, would have to be different. Big savings in food stamps and crop insurance could reach $228 billion over the next 10 years. With new work requirements for those who don’t have children and aren’t disabled that might make some recipients think twice if they really want to work.

We have 44 million people on food stamps – almost as many as at the height of the recent recession. Now, we have near-full employment and the number has not come down very much. OMB Director Mulvaney asks, “Are there folks on food stamps that shouldn’t be?”  The Trump Administration would plan to work with the states to ensure proper enforcement of the requirements.

Trump’s plan does not overlook crop insurance. The crop insurance that farmers pay for to protect against losses is 60% subsidized by the government. That means that a farmer only pays 40% of the cost of the insurance. That level of subsidy is a little hard to defend. Trump wants to put some limits on the crop insurance plan – no more than $40,000 to any one farmer. The argument against that limit is that big farmers would not participate. The White House would limit eligibility for all commodity support programs to only farmers earning less than $500,000 adjusted gross income. That would save a lot of money.

Keep in mind that this is the President’s budget. Most Presidential budgets are “dead on arrival.” The Congress writes the budget and the spending bills. However, Presidential budgets can have some influence. Trump is a negotiator. I agree that the food programs and farm programs need to be reworked.

Although President Trump says Social Security and Medicare are off limits, there is a lot of money there. I think some reform is justified. When Social Security was started, life expectancy was 65; now it is almost 80.

Stay tuned.

I was on the farm last week. Corn and beans are in the ground.