James S. Brady Press Briefing Room
1:02 P.M. EST
MR. DEERE: Good afternoon everyone. Thanks for being here. I’m going to just remind you that it is an off-camera briefing, but it is on the record from the Acting OMB Director. So, with that, I will turn it over to our Acting OMB Director Russ Vought.
Q Can we use the audio?
MR. DEERE: Yes, you can use the audio.
ACTING OMB DIRECTOR VOUGHT: Thanks, Judd. Good afternoon. I’m here to release the President’s Fiscal Year 2021 Budget: A Budget for America’s Future. This is a budget that reflects and builds upon the pro-growth economic policies of this President, which have unleashed one of the most powerful economies in American history. Unemployment is down across the board. People are coming back into the workforce. Wages are rising.
This budget continues these economic policies and once again provides a path for enduring economic expansion by tackling the very real problem of deficits in our nation’s debt. The plan offered today proposes to balance the budget within 15 years by proposing more deficit reduction — $4.6 trillion — more than any President in history.
Under this budget, trillion dollar deficits as far as the eye can see — with debt, as a percentage of GDP, currently at 81 percent and growing to 100 percent within 10 years — will be reduced to $261 billion in 2030, with a surplus in 2035. Debt, as a percentage of GDP, will drop to 66 [percent] by the end of the 10-year window.
But this budget is not a green eyeshades budget. It funds national priorities that this administration believes are vital for the security and prosperity of the American people.
Let me give you a few examples. $741 billion is provided for the defense of this country. This amount is coming after budgets of $700 billion, $716 billion, $738 billion in prior years. Modernization of our nuclear weapons stockpile itself will receive a nearly 20 percent increase from last fiscal year.
At the same time, this budget also reflects, at a high level, an assumption that our overseas operations will require less funding as the President works to end endless wars. The budget also makes substantial investments in border security and immigration enforcement. It ensures that every high school has a high-quality career and technical education program; funds NASA’s return to the Moon by ’24, as a platform for Mars thereafter; grows VA medical care by 13 percent to fully fund the MISSION act; includes substantial resources for the fight against opioids; and proposes a $1 trillion infrastructure package to rebuild our roads and bridges.
This budget will keep our communities safe and secure. It will also help the promises — it will also keep the promises that the President Trump has made to the American people to protect Social Security and Medicare for seniors. This President is a “Promises Made, Promises Kept” kind of President, and this budget is no different.
Despite what you hear from the other side, Medicare will grow at 6 percent under this budget. The budget does propose good government reforms to lower drug prices, to root out improper payments, and to address wasteful and inefficient spending. For instance, this budget proposes to remove from Medicare certain programs, such as uncompensated care in graduate medical education that are draining the Medicare trust fund and benefit more than just seniors. These costs would still be funded outside of Medicare, but with reforms to moderate their growth.
Similarly, this budget proposes payment neutrality for the same service being performed at different locations so a CAT scan that costs the same at an outpatient hospital as it does in a physician’s office.
Reducing the cost of healthcare is not a cut. Medicaid will grow more than 3 percent on average, which is much higher than the rate of inflation. Medicaid had $57 billion in improper payments last year and HHS lacks the tools to recoup most of these. This budget would provide such authority, while giving states the option of a block grant or a per capita payment.
Only in Washington, D.C., does one look at a budget that grows every year and say it’s a cut. The budget proposes other commonsense mandatory savers, such as a universal work requirement for Medicaid, TANF housing, and food stamps. This will ensure that we are helping to lift able-bodied adults off of a cycle of dependency and onto a ladder of economic opportunity.
In terms of discretionary spending, this budget will propose substantial reductions, similar to previous budgets. While budgeting at the defense cap under current law, this budget proposes a 5 percent cut to nondefense spending. While some agencies, like the VA and DHS and NASA, will see increases, many others will be asked to eliminate waste and inefficient programs. Foreign aid will be cut by 21 percent, for example.
Before I turn to your questions, I want to anticipate what I’m sure will be one of your first questions: Isn’t Congress going to ignore this budget? And to that I would just say that they have certainly ignored this President’s savings proposals for the first three years. That may very well continue this year, but it would be unfortunate.
But this budget continues to be a statement from this President and his administration that we stand with families and businesses across the country who have to balance their budgets. Washington, D.C., does not stand with them, and for too long has operated under a different principle of recklessly spending other people’s money. That has to change, and hopefully this budget leads to it.
With that, I’ll answer your questions.
Q Could I talk about — just (inaudible) assumptions in Q4. Did you factor anything — any — from coronavirus and/or changes in monetary policy?
ACTING DIRECTOR VOUGHT: We don’t have any assumptions with regard to coronavirus. The economic assumption for this year is 2.8 [percent] so we don’t feel like we’re going to be able to get up to 3 percent, but we do think we’ll be on the other side of things like the GM strike; hopefully on the other side, at some point, of the Boeing situation. And our view is that, at this point, coronavirus is not something that is going to have ripple effects. That’s still at this point.
Q And monetary policy stays the same, or did you build any of that into your assumptions?
ACTING DIRECTOR VOUGHT: We did not. We continue to have similar monetary policy as we experience right now. In terms of interest payments, interest rates, we have more of a Blue Chip forecast than we have in years past, projecting a 2.2 percent increase in fiscal year 2021. It does increase each year, until it gets back up to 3.2 percent at the end of the window. I saw some reporting that it just freezes it; that’s not true. It does increase, but it’s down to a much more realistic level for right now.
Q Yes, sir. Thank you. You mention the 21 percent cut in foreign aid. Could you talk a little bit about the thinking that went into that, especially in light of it’s not only members of Congress of both parties who oppose that, but also generals and diplomats who say that money you put into diplomacy prevents you from having to spend to put boots on the ground in different countries?
ACTING DIRECTOR VOUGHT: Yeah. And I saw some of those comments today as I was looking through some of the news reporting on it. And we just disagree. The President disagrees with the idea that we should continue to have such robust levels of funding in the foreign aid category. We’re still going to be spending about $40 billion in foreign aid, so it’s a — still it’s a substantial amount.
We’re still going to be at a very high level compared to the rest of world, in terms of what we provide. Humanitarian assistance is still, under this budget, with carry-over funding, going to be the second highest that the U.S. has ever provided to the world. So there is substantial amount of foreign aid, even at the 21 percent cut within the program.
But look, we believe that, at the end of the day, it’s time to rethink how we do foreign aid in this country. That we need to move beyond the reality of spending money for the Bob Dylan statue in Mozambique or the NASA space camp in Pakistan or the professional cricket league in Afghanistan. We have to begin to make choices when we have the level of deficits right now that we’re experiencing.
Q Russ, the Democrats are charging that the cuts or, as you were calling them, “savings” on Medicaid, Medicare, and some of these other welfare programs basically contradict what the President said in his State of the Union Address when he said that he would protect Americans’ healthcare. How do you respond to that?
ACTING DIRECTOR VOUGHT: Yeah, we would totally disagree with the comments from the Democrats. As I said, Medicare will go up, every year, 6 percent. Medicaid is going to go up, on average, 3 percent.
e do have reforms that, in our minds, the Democrats have said they support, such as $135 billion in savings for prescription drugs — to lower the cost of prescription drugs. That is something that we want to work with the Democrats on this year. And, in fact, this budget provides a little less specificity in the area of this issue because we realize there is a House bill and a Senate bill and we want — ultimately want to get a bill to the President’s desk.
We reject the current House Democrat proposal, but we think there is a lot of life as it pertains to Senator Grassley’s proposal, and we want to work and get a deal to the President’s desk.
Q Yeah. Is there any concern — well, did you take into consideration that by cutting foreign aid, increasing the defense budget, and the nuclear arsenal — is there any concern that we’re going to headlong go into an arms race? And was there any consideration of when you put together the budget? And what’s a “green eyeshade” budget, just to enlighten me?
ACTING DIRECTOR VOUGHT: Look, I think that, in terms of the commitments that we’ve made to the defense budget, this reflects where the President is in terms of making sure that even though we bring down, over time, our commitments with regard to ending endless wars, as he’s been very clear — as a policy goal, running on, and continuing to have that concern as the President — we want to make sure that our defenses never deteriorate to the point that we have seen in the past. And so we have ongoing high levels of military rebuild.
In terms of “green eyeshades” budget, I just want to — this is continues to be a budget that funds priorities where the President supports spending money. He supports spending money on infrastructure. He supports spending money fighting opioids. He supports spending money in places like NASA, which will have a 12 percent increase to — as a major down payment to keep us on track to getting to the Moon in 2024.
So this is not an area where we’ve gone through every account and figured — well, we have gone through every account, but we have not gone through every account in the sense of getting to the point where everything is getting a haircut. We are trying to fund what his priorities are, what his campaign commitments are, and finding savings and inefficiencies where we possibly can.
Q Just to follow up, though: Are you concerned about a nuclear arms race by increasing the amount of money that we spend on nuclear weapons?
ACTING DIRECTOR VOUGHT: No, no, no, no. The President is very concerned about making sure our nuclear arsenal is modernized. We do this, as a country — it seems like every 30 years or so there is a major modernization effort. This President believes it’s vital to keep the stockpile up to date and that that’s an effective deterrent to the rest of the world.
Q Russ, thank you. You call them “savings.” The Democrats call them “cuts” to Medicare and Medicaid. Specifically, what are the numbers as to the level of decrease over the 10-year window for each: Medicare and Medicaid?
ACTING DIRECTOR VOUGHT: Yeah. I’ll just give you examples. So the drug pricing reform is $135 billion in savings. The two things I mentioned in the testimony — taking uncompensated care and graduate medical education outside of the Medicare trust fund and allowing them to grow, but not drawing down the Medicare trust fund — is about $140 billion.
I’ve talked about site neutrality to make sure that a CAT scan that costs $118 in a physician’s location and costs $230 at an outpatient hospital costs the same thing to taxpayers and, in the Medicare program, doesn’t lead to people choosing where they refer a patient for the purposes of reimbursement. That is $266 billion.
So, look, we have a good number of savings and reforms. And we continue to believe that when you have a level that’s going up each and every year that is not a cut to the American people.
Q I was just looking at the chart. I was hoping you could just give us one number from Medicaid and one number from Medicare. When you add it all up, what are — what is it for Medicare and Medicaid?
ACTING DIRECTOR VOUGHT: Sure. Medicare will grow every year by 6 percent. Medicaid will grow by 3 percent. I want to continue to show you the specifics, because I think that’s where the truth is with regard to the context of what we’re proposing.
Q Just to follow up on Jeff’s question before, part of your answer to Jeff was that in making the case that there weren’t real cuts in Medicare wasn’t the amount of spending on Medicare will go up. Does that mean it’s the administration’s position going forward? And as long as spending on, say, Medicare and Social Security is higher than the previous year, the program has not been cut, no matter what has happened in terms of where it compared to the baseline?
ACTING DIRECTOR VOUGHT: I think it’s a combination of things. That’s certainly one aspect of it and how we define a cut, but I also think it’s: What are the actual policies that you’re proposing?
There is nothing that touches Social Security or Medicare beneficiaries in these budgets. We have reforms, as it pertains to on the payment side, where you’re — you’re buying and reimbursing for healthcare costs that has to be allocated and it shows a savings in a budget. It will show a savings in a budget if the Democrats actually did a budget. So our view is a combination of those things.
Q On the $1 trillion infrastructure package, how is it paid for?
ACTING DIRECTOR VOUGHT: Sure. It is paid for with the number of mandatory savings that we have included in the budget. So we do two things: We have an eight-year reauthorization of the highway program at Barrasso levels. The President mentioned that bill in the State of the Union. We also provide a $200 billion amount for things on top of the current highway program, because we think it’s important that there are nationally significant projects that need to be done that we have the ability to — in addition to the current formula program.
So a combination of the two: $800 billion from the reauthorization and $200 billion from the increase set aside. And then the pay-fors — both for the new $200 billion and the amount to which the trust fund doesn’t have tax revenues coming in — we do not pay for it with any kind of revenue increase, but we offer substantial mandatory savers for Congress to work with us to pass this part of any bill.
Q And just one follow-up.
ACTING DIRECTOR VOUGHT: Sure.
Q Well, some influential groups in town, such as the Chamber and AFL-CIO, are behind increasing gradually the gasoline tax because they believe it’s the most likely possibility to a solution. Why not go that route?
ACTING DIRECTOR VOUGHT: The President doesn’t want to do anything right now that could have any impact on economic growth. There’s no tax increases in this budget, and we are proposing to have offsets on the spending side.
Q Can you quantify and explain why there are cuts to affordable housing, food stamps, and student loans?
ACTING DIRECTOR VOUGHT: RUSS So let’s take food stamps for — and go in order. Food stamps has the work requirement that is a substantial driver of the savings in the food stamp program. And we continue to propose the harvest box to save — you got 100 billion — $100 monthly benefit. Half of it is going to continue to go to your electronic benefit transfer, and half of it is going to be going to a package of shelf-stable foods that states will be able to work and be innovative with regard to the delivery model.
But there’s a perfect example of the fact that we have substantial savings in the food stamp program — $182 billion over 10 years. And we don’t believe that will lead to anyone getting a cut of any sort. It’s just getting people out of the cycle of dependency and on to the ladder of economic opportunity.
Q So we asked — so you were going to —
ACTING DIRECTOR VOUGHT: Student loans. Happy to do student loans.
Q Student loans and affordable housing.
ACTING DIRECTOR VOUGHT: Student loans is $170 billion in savings. We are able to rationalize the many different loan forgiveness programs into one loan forgiveness program to have debt relief after 15 years of students paying for, as a percentage of their monthly income. And then after 30 years, graduate students would have debt relief. So again, we believe that very real beneficiaries will see a benefit from the federal government making this reform.
In terms of housing reform, we preserve homelessness assistant grants at $2.8 billion. We do propose reforms to the program as funded at the Department of Homeland — of Housing and Urban Development. This is becoming almost a mandatory program in how much it’s escalating. We preserve everyone that’s currently on these programs, but we do try to institute elements of welfare reform to allow someone to stay on the program, even though their income might have increased.
Q Does this budget seek to defund Planned Parenthood?
ACTING DIRECTOR VOUGHT: We have provisions, not specifically, but we have provisions in the bill, or in the budget, that provide — that do not allow taxpayer resources to go to clinics that perform abortion. So that could include Planned Parenthood, but they’re also moving themselves out of the discretionary grants now as a result of the regulations.
Q I want to ask you about economic assumptions for GDP over the next few years. They’re so different than the Congressional Budget Office’s assumptions for GDP. So the CBO — CBO estimates that, in this year, GDP growth will be 2.2 percent, next year it would be 1.9 percent, and would average 1.7 percent through 2030, which is so far apart from your assumptions. Why are you so far apart?
ACTING DIRECTOR VOUGHT: It’s not a surprise that we are different than CBO. CBO often is playing catch-up. So if you look at the last four years of the Obama administration, the Obama economic policies included $653 billion in tax increase. And CBO never projected that it would lead to $3 trillion in revenue loss as a result of what they term “technical changes.” They don’t say “dynamic,” they just say “technical changes.” And yet, their economic policies led to the floor just completely going in the direction of a major $3 trillion revenue loss.
Let’s take our record: Since this President has been in office, the CBO has never called it “dynamic.” They just keep revising their economic assumptions to have technical changes. And we’ve now had $1.4 trillion in additional revenues that CBO never projected in the first place because of the types of growth rates that we’re talking about.
So, look, in general, we’ve had more accurate numbers, compared to previous administrations, in the year-to-year levels that we’ve forecast. And when it comes to the out-years, this is a post-policy budget. It assumes — and we’re very upfront about it — it assumes an infrastructure package. It assumes getting a handle on our spending. It assumes people getting off of welfare and getting back into the labor force and increasing the labor force participation rate.
So, again, as why we feel comfortable projecting 3 percent: because it’s our fiscal plan based on the policies that we proposed.
Q Can I ask you about one of your assumptions that you just mentioned? The infrastructure spending — that assumption has been made every year, so far, of the Trump administration. Every year, there’s this feeling, “This is the year we’re going to get an infrastructure spending plan done.” This is an election year. Why are you so confident that an infrastructure spending plan agreement can be reached this year or next year or the following year when you haven’t been able to reach one in the prior years?
ACTING DIRECTOR VOUGHT: Well, we don’t assume, for the economic assumptions, that it has to be done this year. In fact, I mentioned that our economic growth rate is 2.8 percent this year. We do think it can happen and should happen in the years ahead. And, I think, of all the things that we’ve proposed in the budget, you would say: What has bipartisan support? Infrastructure spending.
Hopefully it could happen in an election year. If it doesn’t happen in an election year, there’s no reason why it can’t happen in a second term if the American people give the President another four years. So to be honest with you, I don’t think we feel any skepticism. That’s one of the policies that we could not get bipartisan support for.
Q Just for clarity, your projection for this year was 2.8 percent — right? — economic growth. The President, in 2017, said that we would see 3, 4, 5, likely even 6 percent growth. Was that overly ambitious by President Trump to anticipate we would see that over the course of a couple of years?
ACTING DIRECTOR VOUGHT: I think that optimism and the ingenuity and the opportunity that can be unleashed in the economy is reflected in a 3 percent economic growth assumption that —
Q Not over three — the 4 and 5 percent he projected, you would concede we’re likely not to reach 4 or 5 percent this year as he projected?
ACTING DIRECTOR VOUGHT: That’s what we — we propose 3 percent in this budget. We believe that there is a lot that can be done in the economy if we remove the shackles of Washington, D.C. And I think the President has long been optimistic on that front because he believes in the American people.
Q Thank you.
Q So, fourth year in the administration. You’ve done this before. What are the major shifts with this budget, specifically compared to what you did, let’s say, last year or two years ago?
ACTING DIRECTOR VOUGHT: It’s very similar to years past, particularly last year’s budget and the years before.
One of the major shifts that’s already been reported on is Yucca Mountain; that is a change. There is the presence of a view that we need to end this belief that a permanent site is going to be housed at Yucca Mountain if the state where it exists is not supportive of it politically. And so we’re proposing to consider alternatives. We’re proposing interim storage. These are all things that we want to consider to get the site — the waste off of sites across the country. But in terms of Yucca, that is a change.
The NASA budget is a higher level, and that reflects the initial cost of getting to the Moon and then to Mars and beyond. So — and there’s also a block grant for the education spending that takes about 30 different programs and consolidates them into a $19.4 billion education block grant. That is a new proposal. It is basically at the enacted level from fiscal year ’20. Once you subtract programs that we’ve long proposed to eliminate — like the 21st Century Learning Center program, which you look at the people who are on the program and they don’t really actually increase their proficiency in math or reading.