Tuesday, February 11, 2020

Trump budget calls for steep cuts to many programs that benefit rural areas

President Trump's proposed $4.89 trillion budget for Fiscal Year 2021 won't get passed as-is, especially in the Democrat-led House, but it's instructive to see what his priorities are as he attempts to woo rural voters for his reelection campaign. Here are some of the details with rural resonance:

The proposed budget "once again calls for steep cuts to federal spending that supports rural communities," Bryce Oates reports for The Daily Yonder. That includes an 8 percent cut in the U.S. Department of Agriculture's discretionary budget—a $2 billion cut that mostly targets nutrition and food security programs, though farming, conservation and rural economic development programs are also cut.

Specifically, Trump proposes cutting funding for the Economic Research Service by 35%, from this year's $84 million to $62 million. The Rural Business and Cooperative Programs would lose 97% of funding, from $94 million to $3 million. The budget would also eliminate the USDA Single Family Housing Direct Loans program, funded this year at $90 million, and would provide the Farm and Ranch Stress Assistance Network only $2 million for local farm financial stress counseling—$8 million less than the 2018 Farm Bill's minimum, Oates reports.

"The budget proposes $44 million in distance learning and telemedicine grants, with 20% dedicated to projects that 'combat the opioid crisis and keep rural communities safe,''' Oates reports. "It provides $614 million in funding for water and wastewater grants and loans, $5.5 billion in electric loans, and $690 million in telecommunications loans, $2.5 billion for community facility direct loans and $500 million for guaranteed loans. The budget also provides $1.5 billion for business and industry guaranteed loans, a $500 million increase over current levels paid for by increased lending fees."

The budget calls for spending reductions over the next decade by cutting spending on school meal programs for the poor, large cuts to the Supplemental Nutrition Assistance Program through work requirements, more than $9 billion in cuts to farm conservation programs, and increasing user fees for food safety inspections, Oates reports.

The Department of Education would lose nearly 8%, or $5.6 billion, under the budget. Trump proposes cutting student loan spending by $170 billion and ending subsidized loans, in which the government covers interest for borrowers who are still in school or experiencing economic hardship. "It would also reduce the number of repayment options for borrowers and nix the popular, if challenged, public service loan forgiveness program," Annie Nova reports for CNBC. Losing the forgiveness program could make it harder for rural areas to attract doctors and teachers.

The budget aims to reduce Social Security spending by $75 billion over the next decade. Some of the savings would come from terminating more people from the Social Security Disability Insurance program. And "$10 billion of this reduction comes from reducing the amount of retroactive benefits someone can receive after they’ve been found to be disabled," Elena Botella reports for Forbes.

The budget isn't clear where much of the proposed Social Security savings over the next decade will come from. Over the next 10 years, $47 billion in savings is meant to come from an Office of Management and Budget proposal to "test new approaches to labor force participation," which essentially amounts to experimenting with policy until they save money, Botella reports.

Trump hopes to cut Medicare spending by 7%, or $756 billion, over the next decade. "Part of this reduction in spending comes from initiatives that the White House says are intended to reduce Medicare fraud," Botella reports. "For example, they've proposed requiring patients and doctors to ask for prior authorization from Medicare before certain procedures could be performed. And the budget hopes to lower Medicare spending through changes that would encourage more seniors to see nurse practitioners or physician’s assistants as their primary care providers. Medicaid spending would be cut by 16% over the next 10 years, possibly by shifting program funding to block grants.

The administration also wants to "cut down on reimbursement rates to healthcare providers, reducing how much doctors, hospitals, and hospices are paid for providing healthcare," Botella reports. The administration "highlights specific instances where they believe reimbursement rates for doctors are excessive: for example, they cite the fact that doctor’s offices owned by hospitals are often paid more for performing the same procedures than independent physicians."

The budget seeks to save $135 billion over the next decade by enacting comprehensive drug pricing reform. "The Trump budget does not include specific policies to reduce costs, but rather states the administration is supportive of capping out-of-pocket pharmacy drug costs for Medicare recipients, and improving incentives to reduce costs," Andrea Noble reports for Route Fifty.

The budget also eliminates the Department of Housing and Urban Development's HOME Investment Partnerships Program, which provided $1.3 billion in grants last year to 600 state and local governments to help pay for affordable housing for the poor, Noble reports. For the third year in a row, Trump has proposed eliminating most USDA rural affordable housing programs and many of its HUD programs, though the budget aims to fund some efforts to repair existing affordable properties, according to the Housing Assistance Council, a nonprofit that offers low-cost rural housing development loans.

The proposed budget would cut overall domestic federal spending by 5% and forecasts $4.6 trillion in deficit reduction over the next decade as long as the economy continues growing at around 3% per year, Jeff Mason and Richard Cowan report for Reuters.

However, the Congressional Budget Office projects the economy will grow 2.2% in the current fiscal year and will grow less than 2.0% per year afterward. "While Trump campaigned on a promise of eventually eliminating the country’s huge debt, each year of his plan projects significant budget deficits that actually would add to the $22 trillion debt," Mason and Cowan report.

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