President Trump's budget request, set to be released Tuesday, will reportedly seek to balance the federal government's budget in 10 years with a mix of significant spending cuts and more favorable assumptions about economic growth.
The budget document for fiscal year 2018 will not include reforms to Social Security or Medicare, according to a report from the Wall Street Journal, marking a departure from recent budgets offered by congressional Republicans.
The president's budget is a request to Congress. It will not determine actual government spending or taxation, which is implemented through laws written by Congress. Instead, the president's budget provides an overview of the administration's favored approach for managing the government's finances.
Administration officials suggest that their preference would be to cut spending on government programs, while hoping for a return to the rates of economic growth that prevailed in the 1990s, a possibility that outside economists think is unlikely.
"The way we balanced the budget in the '90s was we had spending restraint and [gross domestic product] growth caught up, and government revenues caught up as the GDP growth came up, too," Office of Management and Budget Director Mick Mulvaney said Wednesday in a speech to the conservative Federalist Society. "That's what we're trying to get to."
The plan will reportedly count on annual GDP growth rising to 3 percent, adjusted for inflation, a goal that the administration has repeatedly set out. In comparison, the Congressional Budget Office, Congress's nonpartisan in-house group of budget experts, sees growth slowing to 1.6 percent in the years 2019 and 2020, and then rising a bit to 1.9 percent through 2027. The difference between the administration's assumptions and those of the budget office would amount to trillions in revenue, making it easier to balance the budget. Democrats are likely to criticize the administration for overly-optimistic projections.
Testifying Thursday before the Banking Committee, Treasury Secretary Steven Mnuchin defended the premise that the administration's plans could stoke much higher growth. "The time we had a surplus under Clinton and Secretary Rubin was where the economy grew incredibly, which nobody expected," he said, referring to his predecessor Robert Rubin. "They couldn't have predicted that type of revenue."
The administration has claimed that it can accelerate economic growth through tax reform, regulatory reform, renegotiating trade deals and more.
The other part of reaching a balanced budget would be spending cuts. In March, the White House called for a major reduction in spending to most agencies, and redirecting those funds to the Pentagon. Members of both parties responded that the cuts were not realistic.
Although Trump's budget will not seek to reduce spending through Social Security and Medicare, which are two of the biggest drivers of federal spending in the years ahead as the population ages, it will aim for cuts to Medicaid and other programs for which people qualify based on low income.
On the campaign trail, Trump pledged not to cut Social Security, Medicare, or Medicaid.
Speaker of the House Paul Ryan rose to prominence in the Republican Party in part by advocating stabilizing the federal government's budgets with reforms to Medicare and Medicaid that would lower spending.