August 21, 2017
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Economist Joseph Stiglitz: Trump's Budget Takes a Sledgehammer to What Remains of the "American Dream"

By Amy Goodman | Video Interview


The Trump administration unveiled its $4.1 trillion budget Tuesday. The plan includes massive cuts to social programs, while calling for historic increases in military spending. The budget proposes slashing $800 billion from Medicaid, nearly $200 billion from nutritional assistance programs, such as food stamps and Meals on Wheels, and more than $72 billion from disability benefits. The plan would also completely eliminate some student loan programs. It would ban undocumented immigrants from receiving support through some programs for families with children, including the child care tax credit. The budget also calls for an historic 10 percent increase in military spending and another $2.6 billion to further militarize the U.S.-Mexico border, including $1.6 billion to build Trump's border wall. For more, we speak with Nobel Prize-winning economist Joseph Stiglitz.

 

TRANSCRIPT

AMY GOODMAN: On Tuesday, the Trump administration unveiled its $4.1 trillion budget. The plan includes massive cuts to social programs, while calling for historic increases in military spending. The budget proposes slashing $800 billion from Medicaid, nearly $200 billion from nutritional assistance programs, such as food stamps and Meals on Wheels, and more than $72 billion from disability benefits. The plan would also completely eliminate some student loan programs. It would ban undocumented immigrants from receiving support through some programs for families with children, including the child care tax credit. On Tuesday, Senator Bernie Sanders of Vermont slammed Trump's budget.

 

SEN. BERNIE SANDERS: This is a budget which says that if you are a member of the Trump family, you may receive a tax break of up to $4 billion, but if you are a child of a working-class family, you could well lose the health insurance you currently have through the Children's Health Insurance Program and massive cuts to Medicaid. At a time when we remain the only major country on Earth not to guarantee healthcare to all, this budget makes a bad situation worse in terms of healthcare. In other words, this is a budget that provides massive tax breaks for billionaires and corporate CEOs, and massive cuts to programs that tens of millions of struggling Americans depend upon.

When Donald Trump campaigned for president, he told the American people that he would be a different type of Republican, that he would take on the political and economic establishment, that he would stand up for working people, that he understood the pain that families all across this country were experiencing. Well, sadly, this budget exposes all of that verbiage for what it really was: just cheap and dishonest campaign rhetoric that was meant to get votes, nothing more than that.

 

AMY GOODMAN: That was Senator Bernie Sanders of Vermont. The ACLU, NAACP and Planned Parenthood have all come out criticizing the budget. Some conservatives are also criticizing the budget. Republican Congressman Mark Meadows of North Carolina told The New York Times, "Meals on Wheels, even for some of us who are considered to be fiscal hawks, may be a bridge too far," unquote.

The budget also calls for an historic 10 percent increase in military spending and another $2.6 billion to further militarize the U.S.-Mexico border, including $1.6 billion to build Trump's border wall. In a rare proposed benefit for families, the budget allocates $19 billion for six weeks of paid parental leave for new families -- a project that's been spearheaded by his daughter and senior White House adviser, Ivanka Trump. The budget projects 3 percent economic growth, which economists say is widely unrealistic.

Unlike previous presidents, Trump is unveiling his proposed budget while he's abroad. David Stockman, former budget director for President Ronald Reagan, said, quote, "This budget is dead before arrival, so he might as well be out of town," unquote.

Well, for more, we go to Joe Stiglitz, Nobel Prize-winning economist, Columbia University professor, chief economist for the Roosevelt Institute. He's the author of numerous books, most recently, The Euro: How a Common Currency Threatens the Future of Europe.

Joseph Stiglitz, welcome to Democracy Now!

JOSEPH STIGLITZ: Nice to be here.

AMY GOODMAN: Can you respond to the budget that's just been revealed?

JOSEPH STIGLITZ: It's like everything else: It's made up. You could say it's a collection of lies put together. It doesn't make any economic sense. I don't think anybody who's looked at it has -- can fathom the economics. I mean, you mentioned one thing, the 3 percent growth rate, which is the largest deviation in estimate relative to the CBO on record. You know, when I was chairman of the Council of Economic Advisers, we wanted to be responsible, and we always were conservative and were very careful, getting the views of everybody, wanted to make sure that our numbers were reasonable. He's made no pretense to be reasonable.

In fact, what's striking is, while he assumes that there's going to be more growth, if you look at the budget, it's designed to reduce growth. He cuts out support for science, for R&D, which is the basis of productivity growth. He cuts out support for job retraining, so when people leave one job, they can be trained for the next job. He cuts out support for Pell grants, so those who have low income can get the education so they can live up to their potential. All these are things that actually lower economic growth. So I would say this is not a growth budget, this is a no-growth budget.

And then he has the numbers, you know, the gall to have things like -- you know, just mind-bending. He says he's going to -- elsewhere, he said he's going to eliminate the estate tax. And his budget says that he's going to raise several hundred billion dollars' more money from an estate tax that is zeroed out. Now, you can make a statement that if we lowered the estate tax a little bit, maybe people will be induced to die more, and maybe we'll get more revenue. You could make that kind of statement. But one thing you don't need a Ph.D. is, zero times any number is zero. So if you have a zero estate tax, no matter how many people are dying and how wealthy they are, you're going to get zero revenue.

And remember, what he's doing, he's cutting out the estate tax that benefits 0.2 percent of the economy -- of our society. You know, you have to have an estate of more than 10 million, if you're a married couple, in order to pay anything on the estate tax. And meanwhile, he's cutting benefits for ordinary Americans -- education, health, as you mentioned, food, nutrition. It's not just the system of social protection that we've created, but even the bottom safety net that is -- catches people when they're in trouble.

AMY GOODMAN: Let's go to Donald Trump two years ago, speaking -- this is May 21st, 2015 -- to the right-wing outlet The Daily Signal.

 

DONALD TRUMP: I'm not going to cut Social Security like every other Republican, and I'm not going to cut Medicare or Medicaid. Every other Republican is going to cut. And even if they wouldn't, they don't know what to do, because they don't know where the money is. I do.

 

AMY GOODMAN: So, he has said, when he was campaigning -- actually, he was campaigning against other Republicans when he made the point, "I'm not going to cut Medicare, Medicaid or Social Security." I mean, we had endless choices of clips to choose from. Joe Stiglitz?

JOSEPH STIGLITZ: He lied. He is cutting Medicaid, the largest cut to Medicaid, even beyond what was in his repeal and replace, that didn't get very far. These are even bigger Medicaid cuts. In terms of so Social Security, one important part of Social Security is disability payments.

AMY GOODMAN: SSDI.

JOSEPH STIGLITZ: And, you know, that's really important. People do get to say, well, they have auto accidents, they get sick, they get cancer -- you know, all kinds of things that make them unable to work.

AMY GOODMAN: They get hurt at work.

JOSEPH STIGLITZ: They can't work. And he's cutting that. It's an important part of our Social Security, of security that people -- we provide, as a society, as a basic system of social protection. He's cutting back on those expenditures. So, all I can say is, you look at that clip, and what he's doing today is just the opposite.

AMY GOODMAN: So you're talking about cutting -- I mean, already the proposed budget from the House was massive when it came to cuts, something like $880 billion in Medicaid cuts. He's suggesting $616 more billion -- $616 billion more, which would basically gut Medicaid.

JOSEPH STIGLITZ: That's right. And remember, it's not just for poor people. It's a major problem for our elderly, who have to go into old age homes, hospice, you know, all -- so, it is an extraordinarily important program. Another way of seeing the massiveness of these cuts is that, if you look at what we call a non-defense discretionary -- that is to say, you take out Social Security, you take out Medicare, and you take out military -- he's proposing a 40 percent cut in all these programs. And remember, these programs have been cut year after year for the last 25 years, under both Democrats and Republicans, so it's not like there's a lot of fat on this. These are already fairly lean. And what he's doing is just taking an ax to them, a 40 percent reduction.

The consequence of his proposal, I don't think even he fully understands. For instance, we would lose the vote at the U.N. if he carried out his programs. I mean, so, basically, we're -- we're saying to international --

AMY GOODMAN: What do you mean we'd lose the vote at the U.N.?

JOSEPH STIGLITZ: Well, because he's cutting out all support for international organizations. And if we don't pay our dues, our core dues, to the U.N., we lose our vote. And they're an important source of our influence in international politics. So, you know -- and this is a consequence of what he is proposing. There is no discussion of what the implications of this 40 percent cut in government. You know, there are some programs that can be cut. That's clear. But he hasn't gone pruning. He's taken an ax and said, "Oh, I can get a balanced budget, if I make up numbers about growth and if I just pretend that I'm going to take a 40 percent cut from somewhere."

AMY GOODMAN: Let's go to Mick Mulvaney, director of the White House Office of Management and Budget.

 

MICK MULVANEY: I think, for years and years, we've simply looked at a budget in terms of the folks who are on the back end of the programs, the recipients of the taxpayer money. And we haven't spent nearly enough time focusing our attention on the people who pay the taxes.

 

AMY GOODMAN: Mick Mulvaney. Your response, Joe Stiglitz?

JOSEPH STIGLITZ: Oh, totally wrong. I mean, I was in the White House for four years. And we did a very, very careful analysis of the benefits and costs, how it would affect taxpayers and ordinary consumers, the rich, the poor, the middle class, when we evaluated the program. We were very, very aware that this was money that people had worked for, earned, and that, on the other hand, they need help in a whole variety of areas, help in sending their kids to college, in buying a home. You know, the --

AMY GOODMAN: This would drastically shrink low-income student loan program.

JOSEPH STIGLITZ: Oh, some of the programs would be wiped out. So, you know, the American dream, we've gradually understood, is really a myth, the fact that anybody can go from the bottom to the top. This is, what is remnant of that American dream, he's saying, "I'm going to hit it with a sledgehammer."

AMY GOODMAN: Under Trump's budget, the Environmental Protection Agency faces a 31 percent cut, the steepest cut of any agency or department across the government. Well, during a press conference on Tuesday, a reporter asked White House budget director Mick Mulvaney about the EPA cuts.

 

REPORTER: Can you characterize the treatment of climate science programs and cuts to those? And do you–do you describe those as a taxpayer waste, if you do cut them?

MICK MULVANEY: You tell me. I think the National Science Foundation last year used your taxpayer money to fund a climate change musical. Do you think that's a waste of your money?

REPORTER: What about climate science?

MICK MULVANEY: I'll take that as a yes, by the way.

 

AMY GOODMAN: There's Mick Mulvaney. Joe Stiglitz?

JOSEPH STIGLITZ: Well, you know, of course, every government program has the worst thing. The financial sector and the private sector makes a mistake. Remember we had a crisis in 2008? That was a misallocation of trillions of dollars. So, I don't want to pretend that every program is perfect. But if you get rid of environmental protection, we're going to be suffering from dirty air, dirty water, toxic waste, that lower our health. And here's the point. He wants faster economic growth. A less healthy America is not going to be as productive.

AMY GOODMAN: And the massive increase in military spending? I mean, you've written books about this, about the wars and what they cost us.

JOSEPH STIGLITZ: That's right. And we're fighting, we might say, a war on terrorism. But another aircraft carrier is not going to win -- help us in the war on terrorism. You know, the Cold War, that fight with Russia, in the form that it was, ended a quarter-century ago, and yet we're spending money as if it hasn't ended. So we've been spending lots and lots of money on weapons that don't work, against enemies that don't exist. If he used that criteria that he said for shutting down a department, the Defense Department would have been shut down long ago. You know, the $1,000 toilet, the hammers that cost $100 or things like that -- if we used the criteria of misspending, the Defense Department is illustration number one.

AMY GOODMAN: So we just have a minute right now. Republicans have joined with Democrats in condemning this, saying that this budget is dead on arrival. He has it released when he's out of town. What actually happens here? You were a chief economic adviser in a White House, under President Clinton. What happens next? What happens to this budget?

JOSEPH STIGLITZ: Well, actually, the House Budget Committee starts putting together their own budget. You know, this will be a little bit in their background. It will give a little bit of impetus to the extremists. You know, it's so ironic. He's talking about Islamic extremists while he's in Saudi Arabia, and here we have budget extremists back home, really extremist. And so, it is giving a license for that kind of extremism in thinking about the social fabric in our country. But they will go ahead on their own and try to structure. The House, led by Ryan, is going to come up with a more extreme budget than I think is going to be acceptable to the American people. Fortunately, the Senate will try to be -- tame it in and bring it in. A good chance that they won't be able to compromise. That is to say, they won't be able to put together the numbers that work. And what happens then is, the government operates on a continuing resolution, where what you say is, "We haven't figured out how to make a new budget. We'll keep the old budget for another three months or six months, until we can reach an agreement."

AMY GOODMAN: Well, I want to thank you very much, Joseph Stiglitz, Nobel Prize-winning economist, Columbia University professor, chief economist for Roosevelt Institute, served as chair of the Council of Economic Advisers under President Bill Clinton, author of numerous books, most recently, The Euro: How a Common Currency Threatens the Future of Europe.

This is Democracy Now! When we come back, the I-word, "impeachment." Stay with us.


Appeared at truth-out.org