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Report on the President's Preliminary FY18 Budget

Mar 17, 2017

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The President’s preliminary budget cannot really even be called a budget, as it leaves out more information than it contains. But it can be called cold-hearted and irresponsible, as it severely reduces services and programs that are vital to American families. It contradicts itself by emphasizing security, then putting the country at risk by taking a myopic approach to that concept and weakening the security and safety of American families. It is possible to strengthen defense without irresponsibly underfunding important priorities and jeopardizing our economic security, but this budget abandons those needs and leaves families worse off.

Protecting national security requires more than just defense funding.

The President says this budget makes “the safety of our people its number one priority,” but funds only a portion of the things true security demands.

Security spending happens outside the Pentagon, too ― The budget and accompanying 2017 supplemental add billions of dollars for the military, immigration enforcement, and an ineffective border wall, while gutting investments in other initiatives that protect our communities and make our streets safer. Pillars of our security like the activities of the State Department and public health research and response are decimated in this preliminary budget.

The budget builds military hardware but ignores middle-class economic opportunity ― Equally insidious are the cuts the President proposes to those programs that keep the foundation of our security strong: our economy. To compete in today’s global economy, we must have world-class education, transportation, research and development, and health care systems. Unfortunately, the President’s budget fails miserably on all of these fronts.

Diplomacy is vastly undervalued in this budget ― In their letter to House and Senate leaders, more than 120 retired three- and four-star flag and general officers wrote, “We know from our service in uniform that many of the crises our nation faces do not have military solutions alone,” and stressed the importance of the State Department and other development agencies. As Secretary James Mattis said while Commander of U.S. Central Command, “If you don’t fully fund the State Department, then I need to buy more ammunition.” The preliminary budget ignores this advice, and cuts the State Department and the U.S. Agency for International Development by nearly 30 percent.

Non-defense discretionary programs are irresponsibly underfunded.

The budget cuts non-defense discretionary (NDD) spending by $54 billion from the already inadequate austerity-level spending caps. NDD includes homeland security, education, research, veterans’ health care, transportation, and much more. Relative to the size of the economy, non- defense discretionary outlays for 2018 will be 3.1 percent of GDP under the existing cap, matching the lowest levels since this category has been tracked. The President reduces these programs even further, jeopardizing the safety, health, and well-being of American families.

The President promised to boost jobs and innovation, but his budget does the opposite.

  • NIH cuts ― The budget reduces the National Institutes of Health’s (NIH) spending by $6 billion, almost 20 percent. Deep cuts to funding for NIH could delay or even halt cutting- edge medical research, as well as threaten good-paying jobs and American competitiveness.
  • Education cuts ― The budget cuts the Department of Education by more than $9 billion (or 13.5 percent) below the current level primarily by gutting crucial teacher preparation programs, which will harm student achievement. The budget eliminates several important programs, including the Supporting Effective Instruction State Grant Program, Striving Teachers, Teacher Quality Partnership, and many others.
  • Transportation Cuts ― The budget pays lip service to the need for infrastructure investment by citing it as one of the President’s top priorities and promising a proposal in the future. But the budget cuts $2.4 billion (13 percent) from the Department of Transportation. It would: eliminate support for Amtrak’s long-distance trains, likely reducing Amtrak to a regional northeast railroad, with a few additional routes supported by various States; end funding for new transit projects under the Federal Transit Administration’s “New Starts” Capital Investment Program; eliminate the Essential Air Services program, which supports passenger air service to many rural areas; and eliminate TIGER discretionary grants for innovative transportation projects that involve multiple modes and jurisdictions, making them difficult to fund under traditional federal programs.
  • Energy cuts ― The budget guts important job-creating initiatives at the Department of Energy by reducing its non-nuclear weapons budget by 18 percent below the current level. The cuts include eliminating the Advanced Research Projects Agency-Energy, the Title 17 Innovative Technology Loan Guarantee Program, the Advanced Technology Vehicle Manufacturing program, the Weatherization Assistance Program, and the State Energy Program.

    The President promised to revitalize communities, but his budget targets funding designed to do just that.
  • Development cuts ― The President completely eliminates the Community Development Block Grant (CDBG) program. CDBGs are flexible grants that provide resources to local communities for a wide range of unique needs, including Meals on Wheels, housing programs, and community infrastructure improvements. CDBG funds can also leverage additional investment from other sources, multiplying possible benefits for neighborhoods. The $3 billion CDBG program provides annual grants to more than 1,200 cities, states, and other units of local government.

    The President also eliminates funding for local development agencies like the Appalachian Regional Commission, the Delta Regional Authority, and the Northern Border Regional Commission.
  • Elimination of more than 50 programs at the Environmental Protection Agency ― As part of a $2.6 billion (31.4 percent) cut to the Environmental Protection Agency, the budget eliminates funding for specific regional efforts such as the Great Lakes Restoration Initiative, the Chesapeake Bay, and other geographic programs. It also zeroes out funding for Energy Star, Targeted Airshed Grants, the Endocrine Disruptor Screening Program, and infrastructure assistance to Alaska Native Villages and the Mexico Border.
  • Housing cuts ― Instead of promoting and investing in America’s neighborhoods as the President promised, the budget does the exact opposite by eliminating critical programs at the Department of Housing and Urban Development, such as:
    • The HOME Investment Partnerships Program, the largest federal block grant to states and localities to create affordable housing for low-income Americans.
    • The Choice Neighborhoods program, which funds locally driven strategies that bring residents, government, business owners, police, nonprofits, and other stakeholders together to develop unique plans that can transform distressed housing and surrounding neighborhoods.
    • The Self-Help Homeownership Opportunity Program (SHOP), which helps people willing to put in their own sweat and work to achieve the American dream of homeownership by helping develop safe and affordable housing.

Promoting homeownership, creating affordable housing, and revitalizing neighborhoods in need should be a top priority to improve the lives of millions of Americans.

  • Elimination of the Water and Wastewater Loan and Grant program ― The budget suggests rural communities can be served by private-sector financing or “other Federal investments in rural water infrastructure, such as the Environmental Protection Agency’s State Revolving Funds.” The budget notes that eliminating this program saves $498 million, while the EPA’s State Revolving Funds receive an increase of $4 million (less than 0.2 percent). As for private-sector financing, the reason the program exists is to assist very small, financially distressed rural communities that cannot obtain commercial credit on reasonable terms.

Other examples of harmful cuts in the President’s budget:

  • LIHEAP elimination ― The Low-Income Home Energy Assistance Program (LIHEAP) helps low-income households with their monthly energy bills, making sure they stay warm in the winter and cool in the summer. The President’s budget eliminates this program completely, leaving families and their children literally out in the cold. Without this needed assistance, families could face illness or eviction, putting significant strain on other social service programs.
  • Elimination of the McGovern-Dole International Food for Education program ― McGovern-Dole provides for the donation of U.S. agricultural commodities and financial resources in support of maternal, infant, and child nutrition programs in foreign countries. This funding helps reduce the incidence of hunger and malnutrition around the world. From 2014 to 2016, McGovern-Dole funding has supported school feeding programs that have benefitted 9.8 million children. School feeding programs have resulted in a 46 percent increase in girls’ enrollment in school in the highest primary school grade.
  • Additional unspecified reductions for 2017 ― The accompanying supplemental request includes a cut of $18 billion to non-defense discretionary for 2017, but does not specify where any of those cuts will fall. This vague reduction will either further threaten non- defense discretionary funding or fail to materialize, adding to the deficit.

Overall, grants and other programs to states and localities take a big hit. Grants to states and localities for law enforcement, community development, and infrastructure programs are all on the chopping block in the President’s budget. While it may be hard to pinpoint the exact impacts, which will be determined by how states and localities respond, it’s clear that services will be reduced or taxes will need to be raised at the state and local level (see a list of examples of these reductions in Appendix A).

The budget omits more than it includes.

This preliminary budget does not qualify as a budget under the most generous of definitions. It only provides discretionary totals and agency budget authority for the budget year. It does not include deficit and debt projections, mandatory spending proposals, revenue policy, discretionary outlays, or amounts for future years.

Previous preliminary budgets have been brief. This one is missing a lot, even by those standards. The President has promised proposals on tax reform, infrastructure investment, and repealing the Affordable Care Act, but this document does not address those important and potentially costly initiatives.


Appendix A: Examples of Cuts to States and Localities through Federal Grant Programs in the President’s FY18 Budget

Eliminates the Economic Development Administration, which plays a critical role in fostering regional economic development efforts in communities across the nation.

Eliminates over $250 million in National Oceanic and Atmospheric Administration grants and programs supporting coastal and marine management, research, and education — including Sea Grant, which primarily benefits industry and state and local stakeholders.

Eliminates the $2.4 billion Supporting Effective Instruction State Grants program, which improves student academic achievement and expertise of teachers and principals. It increases the number of high-quality teachers and principals in schools. The elimination of these grants will hinder student skills development and success and harm teacher preparation and performance.

“Restructures” HHS preparedness grants that provide key public health, emergency preparedness, and prevention programs, redirecting resources to States.

Eliminates or reduces state and local grant funding by $667 million for programs administered by the Federal Emergency Management Agency (FEMA), specifically the Pre-Disaster Mitigation Grant Program and the Homeland Security Grant Program. Also establishes a 25 percent non-federal cost match for FEMA preparedness grant awards that currently require no cost match.

Eliminates TSA grants to state and local jurisdictions, a program to incentivize local law enforcement patrols.

Eliminates $403 million in health professions and nursing training programs. Eliminates Abandoned Mine Land grants.

Eliminates the $434 million Senior Community Service Employment Program. Decreases federal support for job training and employment service formula grants. Eliminates technical assistance grants from the Office of Disability Employment Policy.

Eliminates the $11 million Occupational Safety and Health Administration’s training grants.

Eliminates the $210 million State Criminal Alien Assistance Program, which compensates local governments for the costs of incarcerating undocumented criminal aliens.

Eliminates TIGER transportation grants.

Eliminates the $210 million Community Development Financial Institutions (CDFI) Fund grants.

Eliminates the HOME Investment Partnerships Program, the largest federal block grant to states and localities to create affordable housing for low-income Americans.

Eliminates the Choice Neighborhoods program, which funds locally driven strategies that bring residents, government, business owners, police, nonprofits, and other stakeholders together to develop unique plans that can transform distressed housing and surrounding neighborhoods.

Eliminates EPA STAR grants as part of a $233 million cut in EPA’s Office of Research and Development. Cuts EPA Categorical Grants by $482 million.

Eliminates EPA’s Targeted Airshed Grants.

Cuts funding for NASA’s Earth science research grants.

Cuts Small Business Administration grant programs by $12 million, including elimination of PRIME technical assistance grants, Regional Innovation Clusters, and Growth Accelerators.

Eliminates the $498 million Water and Wastewater loan and grant program.

Eliminates the $732 million Federal Supplemental Educational Opportunity Grant program.

Eliminates the $4.2 billion for the Low-Income Home Energy Assistance Program (LIHEAP) and Community Services Block Grants (CSBG).

Eliminates the $3 billion Community Development Block Grants.

Eliminates the Bureau of International Labor Affairs grant programs, a cut of at least $60 million.

Eliminates grants for future transit projects through the Federal Transit Administration’s Capital Investment Program (New Starts). Only projects with existing full funding grant agreements would continue to receive funds.


Appendix B: Summary Tables 1-4, provided by the Office of Management and Budget

Appendix C: Terminations and Major Reductions in the President's FY 2018 Budget Blueprint