Trump’s Budget Deal With Democrats Will Only Worsen Our Fiscal Situation

COMMENTARY Budget and Spending

Trump’s Budget Deal With Democrats Will Only Worsen Our Fiscal Situation

Sep 7, 2017 3 min read
Justin Bogie

Former Senior Policy Analyst in Fiscal Affairs

Justin Bogie was a senior policy analyst in fiscal affairs at The Heritage Foundation.
President Donald Trump struck a deal with Democratic congressional leaders to attach a debt ceiling increase to Hurricane Harvey relief funding. PAT BENIC/UPI/Newscom

Late Wednesday night, the Senate released the text of legislation that would provide disaster relief funding and other federal aid for Hurricane Harvey and other 2017 disasters, suspend the debt limit, and extend the National Flood Insurance Program and government funding into December.

The latest budget deal forged by President Donald Trump and key Senate Democrats is a failure on numerous levels. It takes advantage of a natural disaster to increase domestic spending and the federal debt limit—both of which are unrelated issues.

It also fails to prioritize national defense spending and continues to spend money on inefficient and outdated domestic programs.

Congress should reject this deal and go back to the drawing board.

One of the main reasons this package is being rushed through Congress is its promise of aid for victims of Hurricane Harvey. Helping those directly impacted by the storm is a top national priority.

Of the $7.85 billion appropriated for the Harvey response, $7.4 billion would go directly to recovery efforts led by Federal Emergency Management Agency. The remaining $450 million would go to the Small Business Administration’s Disaster Loan Program. This program is a misguided government subsidy that is poorly managed and falls outside the proper scope of federal activity.

On top of the money provided for Hurricane Harvey, the bill calls for an additional $7.4 billion in funding for the Department of Housing and Urban Development’s Community Development Block Grant program for those areas “most affected by 2017 disasters.”

Like the Small Business Administration loan program, this program gives Housing and Urban Development broad grant authority to determine who receives benefits. The program has been in place since the 1970s at a cost of over $100 billion to taxpayers.

The Community Development Block Grant program is not well-targeted to low-income communities and is not transparent, making it difficult to assess whether the program is meeting its stated goals.

Moreover, this type of economic assistance is inappropriate for federal government involvement. It certainly falls outside of what justly qualifies as federal emergency spending for disaster relief.

Related to Hurricane Harvey, the bill would extend the National Flood Insurance Program for three months.

The flood insurance program is set to expire at the end of September and is drowning in debt, owing taxpayers almost $25 billion to date. It is ineffective and encourages development in flood prone areas, which worsens the impact of natural disasters.

An extension of the National Flood Insurance Program should be accompanied by reforms that would initiate a phaseout of this monopoly in favor of the private market.

The deal would also extend the federal debt limit into early December. The current limit was reinstated in March, but the Treasury has been using “extraordinary measures” to continue to pay the government’s bills and avoid default.

Combining a debt ceiling increase with Harvey aid and other competing issues is an “opportunistic trick.” Congress can provide targeted disaster response funding without an irresponsible hike in the debt limit.

A debt ceiling increase, as well as broader government funding issues, should be fully debated by congress with full transparency. Instead, Congress is kicking the can down the road again and avoiding real spending reforms.

On the broader federal budget side, the latest deal would continue funding through Dec. 8 at the current year level of $1.07 trillion. This is $5 billion higher than the 2018 Budget Control Act cap level. It fails to prioritize the country’s neglected national defense system and to address lingering readiness issues.

A standard spending bill should not be tied to a “must pass” disaster relief bill. It should be thoroughly debated by Congress through an open and transparent amendment process.

While a short-term continuing resolution is better than another Obama-Boehner type deal, Congress should, at most, stick to the fiscal year 2018 Budget Control Act cap and find ways to reduce spending.

Congress must seek a solution that breaks the current law’s firewall between defense and nondefense spending and increases national defense to an appropriate level within the overall budget constraints.

The latest budget deal represents more of the same from Washington that the American people have gown sick of.

Congress and the administration are using the victims of a disaster to push their own agenda through—once again avoiding the serious and necessary discussions over bloated federal spending and the unsustainable national debt.

This piece originally appeared in The Daily Signal