By John Lawrence
The Safety Net Will Soon be in Shreds
The Trump administration will take over in a couple weeks. Essential benefits for tens of millions of low-and moderate-income Americans are in danger of being phased out or canceled immediately. These include the Affordable Care Act, the Medicaid health-insurance program for the poor and further reduction of already squeezed funding for scores of other important programs serving the most vulnerable Americans such as rental vouchers for low-income families, programs to fight homelessness, job training, funding for poor school districts, Head Start for young children and Pell grants to help low-income students afford college.
Republicans are all about cutting non-defense discretionary spending, and that means any program that helps the poor and middle class. After Trump showers tax cuts on the rich and corporations, the Republican Congress will attempt to balance the budget on the backs of the poor. It’s what they’ve been trying to do for years, but Obama stood in their way. Now they have a green light. In the House GOP’s most recent budget plan, 62 percent of a stunning $6 trillion in budget cuts over 10 years would come from programs to help the poor.
Tax cuts for the rich with a pittance of a tax cut for the middle class while adding to the military budget will most likely not only run the country into the ground but will also cut the legs out from under the homed poor making the hard streets of San Diego and America teem with homeless including children and elderly. Rent assistance will be gone; Supplemental Nutrition Assistance Program (SNAP – food stamps) will be gone. The Supplemental Security Income (SSI) program for the elderly and disabled poor will be gone.
The Affordable Care Act Will Be the First to Go
To achieve their goals, Republican leaders plan to push through two major reconciliation bills in 2017. The first would repeal the Affordable Care Act’s coverage expansions which would double the number of uninsured Americans from 29 million to 59 million and leave the United States with a higher uninsured rate than before the ACA. The second reconciliation bill would cut Medicaid, SNAP and other programs. There’s nothing the Democrats in Congress can do about these “reconciliation” bills since Republicans control all the levers of power in Washington. They can use a fast-track budget process called “reconciliation” to ram through an agenda without needing a single vote from the other party. Due to reconciliation, the filibuster won’t work. And Obama won’t be there to stop them. Trump will sign anything his Republican buddies recommend into law.
A Republican trick is to give the states block grants to fund these programs with inadequate pots of money and then let the states (especially red states) do the dirty work of restricting eligibility and cutting funding. You want another bowl of porridge, Tiny Tim? The money is just not there. Why don’t you get a job? The money has all been spent on the rich by giving them tax cuts. A shrinking of health, food and cash assistance under Medicaid, food stamps and SSI would take critical benefits away from tens of millions of struggling low-income families and children. Those children will be left behind in school and many of them will likely end up in jail where the Corrections Corporation of America will profit from their incarceration.
Trump’s OMB Pick a Conservative Budget Hawk
Trump’s pick for Office of Management and Budget, Rep. Mick Mulvaney, a South Carolina Republican is a hard line conservative who will most likely shepherd budget cuts for programs that benefit the poor through the Oval Office. After all Trump promised them jobs not benefits! Let’s see how many jobs he actually delivers. Tiny Tim and Grandma will have to go to work. Mulvaney is a fiscal hawk. He never met a budget program that helped the poor that he didn’t want to slash. After he was elected to Congress he played a key role in the 2011 showdown between President Obama and House Republicans that ended in the passage of strict budget caps.
The Washington Post reported:
“We are going to do great things for the American people with Mick Mulvaney leading the Office of Management and Budget,” Trump said in a statement. “Right now we are nearly $20 trillion in debt, but Mick is a very high-energy leader with deep convictions for how to responsibly manage our nation’s finances and save our country from drowning in red ink.
“With Mick at the head of OMB, my administration is going to make smart choices about America’s budget, bring new accountability to our federal government, and renew the American taxpayer’s trust in how their money is spent,” he added.
This OMB is responsible for producing the federal budget, overseeing and evaluating executive branch agencies and otherwise advising the president on fiscal matters. It’s a position with tremendous, far-reaching power, even if the public doesn’t pay much attention to it. Mulvaney has repeatedly voted against his own party because he thought they weren’t conservative enough. That pretty much means he wants to get rid of any and all programs which benefit the poor.
Trump wants a $7 trillion tax cut and a half trillion infrastructure program. This will explode budget deficits. So how does this square with Mulvaney’s fiscal conservatism? It doesn’t. It’s a fundamental contradiction of the Trump administration. But it will certainly play out as Mulvaney tries to squeeze every penny out of any program to help the poor. The poor have no lobbyists supporting them, and they usually don’t vote. Every Republican constituency does. The corporatists, the pharmaceutical companies, the military – they need not worry. Their bank accounts will flourish.
Trump Suggested the US Could Default on its Debt (and get away with it)
Trump has been exceedingly casual about America’s debt obligations even going so far as suggesting that the US could default on its debt and that would be no big deal. In a NBC interview in May, he suggested that his experience in offloading private debt would translate nicely to federal obligations. That is, he’d simply persuade the country’s creditors to accept less than full payment. However, if the US seriously considered defaulting, it would upset the world’s whole financial system since US Treasuries are the linchpin thereof. The whole shebang is predicated on the inviolability of US Treasuries. Suggesting that the US should screw around with them would produce chaos and panic in financial markets throughout the world and produce a crisis unlike any ever seen before.
The US has $19 trillion in debt, and Trump thinks he can make a deal with US creditors to take a haircut and not be paid back 100 cents on the dollar? Good luck with that. US Treasuries are the foundation upon which the world’s financial system is based. Other countries have Sovereign Wealth Funds composed in large part of US Treasuries. The US has only a Sovereign Debt Fund because after all, we’re exceptional. We can run up debt with no consequences. Aren’t we the protectors of the Free World? Defaulting on US debt or even running up a lot more, Trump style, will turn the US into just another Banana Republic. And the poor will continue to suffer.
Trump and his OMB pick may clash big time. What will happen then? Will cooler heads prevail? Stay tuned.