Trump's Budget Calls for Lower Medicaid Spending, New Infrastructure Money

The $4.7 trillion budget plan that the Trump administration released on Monday calls for new infrastructure spending, and dialing back federal dollars that would go to Medicaid over the coming years.

For state and local governments the plan also includes some familiar proposals for sharp spending cuts—reductions that Congress has largely rejected during the president’s tenure.

“Congress has been ignoring the president’s spending reductions for the last two years,” acting White House Budget Director Russell Vought, said during a press briefing. “We have many, many programs that are wasteful and inefficient that we can no longer afford,” he added.

Complicating the nation’s finances currently are annual budget deficits estimated to be in the $900 billion range this year and a national debt expected to reach levels over the coming decade that have not been seen since the post World War II era.

As in past years, the president’s budget has little chance of being enacted as written.

But it does serve as a statement of the administration’s priorities with the president now in his third year in office, and with Democrats in control of the House after scoring wins in last year’s elections.

U.S. Rep. Nita Lowey, a New York Democrat, chairs the House Appropriations Committee.

“President Trump has somehow managed to produce a budget request even more untethered from reality than his past two,” she said in a statement. Lowey added that the spending proposal “has no chance of garnering the necessary bipartisan support to become law.”

Trump’s latest budget, similar to last year, proposes $200 billion for additional “infrastructure investment” over a ten-year timeframe, starting with about $5 billion of spending slated for fiscal 2020.

Budget documents released Monday say the administration would work with lawmakers to allocate the proposed funds.

The president has talked throughout his time in office about being willing to support a major infrastructure package.

But getting buy-in from lawmakers on where the funding could come from for it has proven to be a roadblock. An infrastructure plan the White House put forward last year and requested money for in its fiscal 2019 budget also called for about $200 billion in federal spending. That plan failed to gain traction in Congress.

Looking to Medicaid, the White House voices support for allowing states to choose between a per-enrollee cap on payments, or a block grant, when it comes to federal funding for the program.

Medicaid provides health insurance coverage for the poor. It is set up now so federal funding is open-ended and fluctuates according to factors like costs for care and enrollment.

The Trump administration’s budget also endorses the idea of repealing an expansion of Medicaid eligibility requirements ushered in under the Affordable Care Act, or Obamacare.

As of mid-February, 37 states, including Washington, D.C. had adopted the Medicaid expansion and 14 had not, according to the Kaiser Family Foundation. Past Medicaid proposals for per-capita caps or block grants have stirred opposition, notably among Democratic governors.

A summary of the Department of Health and Human Services budget estimates that the plan outlined in the president’s proposal would decrease federal spending on Medicaid by nearly $1.5 trillion between fiscal years 2020 and 2029.

But the budget plan would also add $1.2 trillion over that time for "Market-Based Health Care grants," which are central to the proposed revamp of how Medicaid funding flows to states.

The White House this year again called for eliminating two Department of Housing and Urban Development grant programs that are popular with local governments: Community Development Block Grants and the HOME Investment Partnerships program.

Prior proposals to kill the grants have fallen flat on Capitol Hill. Lawmakers have opted instead to up funding for them during the past two years. Together the programs received $4.6 billion in the current fiscal year, about 0.1049 percent of total projected federal outlays.

There are other parts of the budget where the administration’s previous hardline spending positions appear to have softened.

Trump’s first two budget proposals called for nixing Transportation Investment Generating Economic Recovery, or TIGER, grants.

But the competitive grant initiative has since been replaced by the similar Better Utilizing Investments to Leverage Development, or BUILD, program, which the White House requests $1 billion of funding for in the upcoming 2020 fiscal year. That’s $100 million more than Congress allotted in fiscal 2019, and about double the roughly $500 million TIGER grants were afforded at the time Trump took office.

Meanwhile, INFRA grants, which prioritize highway projects and certain rail and port projects designed to improve the movement of freight, would see $2 billion under the president’s plan. That amount is about double the program's authorized funding level.

Of the $4.7 trillion included in Trump's proposal, less than one-quarter, or about $700 billion, would go to “non-defense discretionary” spending. That swath of the budget covers initiatives like CDBG, HOME, BUILD and a host of other programs in areas ranging from education, to rural development, to environmental protection.

The biggest chunks of money in the budget plan go to Social Security ($1.1 trillion), defense ($750 billion), Medicare, which provides health insurance for older Americans ($679 billion), as well as Medicaid, which the White House estimates would require about $418 billion of federal spending in fiscal 2020 under the president’s proposed budget.