How President Trump’s Proposed Budget Is Bad for Californians and for the Economy

President Trump this morning officially released his full budget proposal for federal fiscal year 2018, which starts on October 1, 2017. In the coming days and weeks, the California Budget & Policy Center team will dig further into the details, but even from an initial look it’s very clear that the President’s proposed budget threatens the economic and social well-being of millions of low- and middle-income Californians. What’s more, by shifting huge costs and responsibilities to California and other state governments, this budget represents a historic break with the compact among federal, state, and local governments to work together to invest in communities, generate economic growth, and help those most in need to make ends meet and access opportunity.

Here are just some of the key ways that the President’s proposed budget would take California and our nation in the wrong direction:

  • Slashing food assistance. The President proposes deep cuts to the Supplemental Nutrition Assistance Program (SNAP), which is the nation’s primary program to reduce hunger and help struggling families put food on the table. Over the next 10 years, President Trump’s spending plan would cut funding for SNAP — known as CalFresh in California — by more than one-quarter, by tightening eligibility and requiring states to contribute up to 25 percent of the cost of benefits. In addition to putting an enormous strain on the state budget, these funding cuts would negatively affect millions of Californians, including children, seniors, and people with disabilities.
  • Eliminating or shrinking nondefense discretionary programs that support affordable housing and human services — cuts worth hundreds of millions of dollars for California. These cuts include housing and human services programs that were targeted for elimination in the Trump Administration’s earlier “skinny budget,” representing the loss of more than $700 million annually to California for affordable housing and anti-poverty assistance. Newly detailed cuts include eliminating emergency food and shelter grants that provide nearly $20 million each year to address homelessness and hunger in California; reducing support for rental assistance programs that help nearly 980,000 Californians with low incomes afford safe homes; and eliminating the federal Housing Trust Fund, which provided $10 million to increase affordable housing in California this year.
  • Cutting an additional $610 billion from Medicaid over the next 10 years, partly as a result of unspecified changes that states would be allowed to implement. This reduction would be on top of the more than $800 billion that would be cut from Medicaid if Republicans succeed in 1) phasing out the recent eligibility expansion and 2) radically restructuring federal financing for the program, as envisioned in the bill passed by House Republicans on May 4. The Medicaid cuts assumed in the Trump budget would put coverage and benefits at risk for the more than 13 million Californians — including children, people with disabilities, and older adults — who rely on Medi-Cal to meet their health care needs.
  • Reducing federal funding for the Children’s Health Insurance Program (CHIP), which supports health care services for more than 1 million children enrolled in Medi-Cal. The President proposes to extend CHIP funding through federal fiscal year 2019 while implementing several policy changes that would reduce federal support for the program. For example, the federal CHIP matching rate would be cut by 23 percentage points compared to current law, which in California would reduce the federal share of CHIP costs from 88 percent to 65 percent beginning on October 1, 2017.
  • Denying the Child Tax Credit (CTC) to millions of California children – including US citizens – living in mixed-status immigrant families, making it more difficult for hard-working immigrant families who pay billions of dollars in state and local taxes to meet their children’s basic needs. This proposal would have an outsize impact in California given that the state is home to more than 2 million undocumented immigrants, of whom around one-third are likely parents of US citizen children. The proposed budget also suggests that it would prevent people who do not have Social Security Numbers (SSNs) that are valid for employment from benefiting from the federal Earned Income Tax Credit (EITC), even though this vital, poverty-cutting tax credit is only available to working families if every single person listed on the tax form has a SSN that is valid for work.
  • Cutting TANF welfare-to-work block grants by one-tenth, or about $370 million for California. The Temporary Assistance for Needy Families (TANF) federal block grant supports California’s CalWORKs welfare-to-work program, which provides cash support, child care, and help securing jobs for more than a million very low-income individuals each month, nearly 80 percent of them children. TANF funds also support other services in California including student financial aid, child welfare services, and community-based services for individuals with developmental disabilities.
  • Making it harder for low-income seniors and people with disabilities to pay for basic necessities. The President’s proposal cuts Supplemental Security Income (the federal portion of SSI/SSP grants) by about $9 billion between 2018 and 2027. Such a massive cut would be devastating given that these grants already are inadequate. The maximum SSI/SSP grant for individuals has remained below the official federal poverty line for eight consecutive years and currently isn’t even enough to cover rent for a studio apartment in many parts of the state.
  • Dealing a further blow to people with disabilities through SSDI cuts. The President proposes to cut Social Security Disability Insurance (SSDI) by nearly $64 billion between 2018 and 2027. SSDI is an essential part of Social Security that provides economic security to workers and their families when a worker becomes disabled before retirement age. SSDI is an earned benefit that offers vital protection to about 683,000 Californians. Only workers with a substantial work history and a severe, medically diagnosed disability that prevents work can qualify.
  • Eliminating several K-12 education programs, which in the current year provide at least $400 million for California schools. The President proposes to end: Supporting Effective Instruction State Grants (also known as “Title II, Part A”), which provide California schools $252 million in part to increase the number of educators and advance their effectiveness; the 21st Century Community Learning Centers program, which provides California schools $114 million to support before- and after-school as well as summer school programs; and Student Support and Academic Enrichment grants, which provide California schools $58 million to improve school conditions and the use of technology to increase academic achievement and digital literacy.
  • Heavily tilting a set of tax breaks to corporations and the very well off.  The President proposes massive tax cuts that would go primarily to corporations and wealthy households and, further, would cost trillions of dollars over the next decade, if honestly measured. Tax cuts of this magnitude, combined with unprecedented spending reductions, make the President’s assumptions about economic growth as well as the budget’s impacts on deficits and the federal debt widely unrealistic.

By making it harder for low- and middle-income Californians to afford the basics and weakening education and other pathways to opportunity and advancement, the President’s proposed budget threatens to impede California’s economic growth not only in the near future but also over the long-term — which would in turn put a drag on the national economy.

The California Budget & Policy Center will be releasing further analyses on the Trump budget and related issues in the coming weeks. Be sure to sign up for our email updates and follow us on Twitter and Facebook to get all the latest.

— The Staff of the Budget Center