If the Trump GOP still wants a balanced budget, this chart shows just how hard that will be

1. James Pethokoukis @JimPethokoukis

James Pethokoukis is a columnist and blogger at the American Enterprise Institute. Previously, he was the Washington columnist for Reuters Breakingviews, the opinion and commentary wing of Thomson Reuters.

As a candidate, Donald Trump said he favored a balanced budget “relatively soon.” Then again, he also said, “I love debt. I love playing with it.” Just how much Trump loves or hates federal debt will be revealed in the coming months. Congress, too. Congressional Republicans have typically offered annual budget resolutions that would eliminate the budget deficit within a decade by reducing spending growth.
The same this time around? Goldman Sachs raises some issues:

Three factors will make this year’s budget plans even more difficult to put together. First, the projected deficit at the end of the ten-year period that Congress uses for fiscal plans is slightly larger. Second, Republican leaders will need to make room in the budget for tax reform and increased infrastructure spending, unlike previous budget proposals. Third, more of the budget appears to be politically off-limits to proposed cuts than in the past.

This chart illustrates the difficulty of the task, followed by explanation (italics mine):

Exhibit 3 presents a scenario in which Medicare is considered off-limits, savings from the ACA are not counted because they would need to be redirected into new benefits for those currently covered, and defense spending is kept at the same slightly increased level as last year’s proposal, and cuts in the remaining areas are scaled up proportionately to achieve balance while covering the cost of the tax cuts and infrastructure spending.
The upshot is that Medicaid, non-defense “discretionary” spending (funds appropriated by Congress for purposes other than defense) and other “mandatory” spending (income support programs, federal and military pensions, and veterans’ benefits) would need to be cut by between 50-80% to achieve a balanced budget within the next ten years. We are skeptical that a budget resolution that proposes cuts of this size could win the 51 votes necessary to pass in the Senate.

Some options here: First, abandon the balanced budget goal. Second, put entitlement reform back on the table, even though Trump has dimissed it. Goldman: “…it is difficult to see how congressional Republicans will put together a credible budget proposal that achieves balance within ten years without proposing changes in this area.” Third, scale back tax cuts. Is there a door number four?