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Tomorrow night, at 9 PM, President Trump will address Congress. It’s his duty to present the state of the union which as, fiscally, looks bleak. The CBO is projecting whopping debt increases over the next ten years. If Trump addresses anything, it should be debt spending and the budget. I think he will at least brush over the subjects, each intertwined with the other.

His budget blueprint goes to Congress on March 13st. Here’s a little of what we know now:

President Donald Trump’s first budget proposal will look to increase defense and security spending by $54 billion and cut roughly the same amount from non-defense programs, the White House said Monday.

The budget blueprint, which was sent to government agencies Monday, would increase defense spending to $603 billion and decrease non-defense discretionary spending to $462 billion, Office of Management and Budget Director Mick Mulvaney said.

The Last Refuge outlined some of Trump’s proposals:

As we have discussed numerous times, President Trump is going to propose a $10 trillion spending cut over ten years – or $1 trillion per year. This is entirely reasonable considering the scale and scope of government.

Baseline for understanding – The entire U.S. Gross Domestic Product (GDP) is roughly $20 trillion. The total of all current income taxes is roughly $4 trillion, or 1/5th of GDP.

President Trump’s economic plan is predicting an earnest rate of economic growth of 4%. We feel this is the minimal achievable in FY 2018, but all projections say at least 4% GDP growth is anticipated. Four percent of growth equals an additional $1 trillion added to GDP. The tax revenue from the GDP growth is $400 billion/per year (1/5th of $1 trillion). Or $4 trillion over the 10-year projection.

Yes, entitlements equal approximately $2.5 trillion; and yes, the current budget is approximately $4 trillion. However, this is a false term because the SS/Med expenditure is constantly being refreshed by an additional $2.5 trillion in Social Security/Medicare taxes received that are beyond the individual income tax rate.

Think of it this way – If you have $4 to spend at the grocery store (your budget), but the bus ride to the store costs $2.50, you could say the bus ride equals two-thirds of your budget. However, if I gave you the bus fare in addition to your $4 budget, you are not spending your budget on bus fare. This is the way SS/Medicare is handled in the budget.

Just like when we went through the “sequester cut Armageddon” narrative of 2012, the media relentlessly push this ridiculous fake term in order to make it appear the discretionary budget is much smaller than it is.

Simple common sense math you can do in your head, shows you how fake the term is. If the budget was actually $4 trillion, and entitlements came from that budget equaled $2.5 trillion (two-thirds) it would be impossible to cut $1 trillion out. Again, it’s common sense.

♦ President Trump is proposing a 10% first year increase in defense spending. That equals approximately $54 billion more for defense. If you look at the income from projected GDP growth (4% = $400 billion), you can see how easily that expenditure is covered.

♦ President Trump is proposing significant wholesale cuts to all other departments including Dept of State and EPA. The U.S. State Department has over 70,000 employees, that alone is ridiculous. Easily the DoS can eliminate 20% of staff, and find efficiencies well beyond those numbers.

Essentially, President Trump’s proposed outline is a decrease of 10% per department. Easily attainable, especially when you consider these departments have been operating at around 3% rates of growth due to nine years of base-line budget growth without a federal budget in place.

You only need to look back to 2006 to see federal spending was under $3 trillion. Fiscal year 2008 was the last year we had a federal budget in place. Every year since then has been continuing resolutions, omnibus spending, debt ceiling increases and base-line budget growth (spend 3% more) based on prior year expenditures.

President Trump is the first President in 30 years to actually propose a budget that reduces spending in whole numbers from the prior year.

This, if it happened, would be a good start. It would eliminate most new debt spending (if D.C. can stay out of illegal wars and let banks fail). It would, if it happens. That’s asking a lot in Washington, where they haven’t been able to put together a solid budget for a decade.

What this would not do is pay down any of the $20 Trillion federal debt (on books). And Congress, the CBO, and the Treasury Secretary formerly known as Goldman Sachs all expect the debt ceiling to be raised this Spring, dramatically. If there’s going to be no new debt, why raise it at all?

pres_budg_total_spending_pie

Plenty to work with/on. This is what the fools cobbled together last year for the present, 2017. Enough wasted money to colonize Mars. National Priorities.

The answer is that Trump can propose all he likes but the decisions lie with Congress. Their track record has been … what’s the word … hellish. Still, Trump seems to actually believe in what he says (rare) and seems willing to fight for it (rarer).

Between now and the Summer we are in for perhaps the greatest budget battle of the 21st Century.

And, again, this is all just a start. One day, sooner or later (and probably sooner), those “untouchable” entitlements will have to be addressed. The debt (on and off books) must be dealt with. We must finally stop being the world’s simultaneous policeman and bully. And we really need honest money.

Will trump get us there? Probably not though he is doing as admirable job as any could. If he needs an axe, I have one to lend. Or, give me one year and dictatorial powers and all these issues would be resolved. 2006 levels? I’d aim for 1786.No Tweets from me either.

We’ll start to get an idea tomorrow night. I’ll sharpen the axe this evening.

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