STEVE INSKEEP, HOST:
Here are a few of the priorities as expressed in President Trump's first budget proposal - meals for seniors, out, aid for students, out, climate change mitigation, out, soft power-like diplomacy, out. Hard power, like the military, is in. Here's Mick Mulvaney, the president's budget director.
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MICK MULVANEY: He wants more money for defense, more money for border enforcement, more money for law enforcement, generally, more money for the vets, more money for school choice and then to offset that money with savings elsewhere so that all of that is done without an additional dollar added to the deficit.
INSKEEP: Let's hear two views. Jared Bernstein is former chief economist to Vice President Biden. Good morning, sir.
JARED BERNSTEIN: Good morning.
INSKEEP: And we're also joined by Peter Morici, a conservative economist at the University of Maryland. Thanks to you for coming by as well.
PETER MORICI: Good morning.
INSKEEP: And he's got the tie untied, as he often does. He's ready for battle. Does this approach make sense, Peter?
MORICI: Well, it's a very broad approach. I mean, that - we can note the things that are very unacceptable and the proposed cuts. But there are also some things that probably need to be done. Look at it this way. It's Mr. Trump's how to make a big deal, right in front of you - "The Art Of The Deal." He always makes a huge, outrageous first - first request. And then he figures he's going to settle someplace in the middle. And that middle will be higher if he asks for the moon. But in the end, he's probably going to have to settle for a couple of rocks because they're going to have to deal with the realities within his own party and the Democrats.
INSKEEP: The reality's that a lot of the programs he proposes cutting are quite popular. Jared Bernstein.
BERNSTEIN: Yeah, no - I think that's right. Like many presidents' first budget, he's not going to get everything he wants. But interestingly, he's got a Republican Congress. And they're pushing back, really quite hard, already on this budget. The priorities - you mentioned that word, Steve - are extremely misguided in this budget in my view, the cuts to programs like job training, student aid, help with college, economic development, housing assistance, you know, help to elderly people to pay for heating costs.
Meals on Wheels, which is actually a very - Mick Mulvaney got this wrong yesterday. He said there's no evidence that that program's helpful. That's actually extremely helpful in helping seniors stay at home. And so it's just, I think - just an example of Trump's really misguided priorities here, plussing up defense and really decimating programs that help people.
MORICI: I think there are things that they proposed cutting that are worth cutting, like the aid to some of these regional development commissions. Heck, we've been pouring money into Appalachia since the Roosevelt administration. At what point do we say, we've done what we can?
INSKEEP: Can I stop you for a second and say that there's been a lot of economic development in Appalachia over the years?
MORICI: I understand. But we can't attribute it just to the fact that the federal government is pouring money in. And if there's been a lot, maybe it's time to say, they don't need special treatment anymore. But there's also areas that they really haven't looked at. There are places where federal agencies could be more efficient, like I used to work for the International Trade Commission. We do investigations very differently than the Canadians do, and we - for the same kinds of investigations. And we do it much more expensively.
The Defense Department - heck, there's plenty of money to save inside the Defense Department to find $54 billion, for example, their pension system and their 20 year retirement. You know, we're all living a lot longer and working a lot longer, except for people in the military.
INSKEEP: I think you're saying that the Defense Department should be told to spend money more efficiently, rather than be given tens of billions of dollars.
MORICI: Well, I don't - I am not saying they don't need any more money, but certainly some of the 54 can be found that way.
BERNSTEIN: So look, you could always find areas in the government to be more efficient. Peter's right about that. And that is very much the case in defense, as elsewhere. But actually, if you go down the list - and you mentioned the Appalachian development programs - not only have those programs been found to be helpful in economic development in areas that really need that sort of help, but those are precisely the people that Trump said he was going to help through his expenditures in his budgets. And he's really leaving them behind.
And in many ways, this budget is kind of a very close cousin of the Health Reform Act that, in that case, really it takes a bunch of money out of Medicaid - so health insurance for low income people - and gives tax cuts to wealthy people. Now, the tax cuts aren't in this budget. But they're coming. And so again, you see the priority. It's like Trump is looking out at America and seeing that, you know, poor people have too much and rich people don't have enough. And that's just an extremely upside-down way to understand America right now.
INSKEEP: Isn't that actually true, Peter? This does actually shift money from poorer people to better-off people.
MORICI: Well, we just - we've had eight years of Barack Obama declaring class warfare on people who are successful. So it's only natural that we'd look at some of the disincentives to creating wealth and investing. Just because programs have been useful in the past doesn't mean they need to be continued indefinitely. The purpose of regional development is to develop the region so it doesn't need the aid. But there are areas where significant cuts can be made, where significant efficiencies can be found. But I'll say this. Bannon and company really are politically tone deaf. They've gone after his own constituents.
INSKEEP: Steve Bannon.
BERNSTEIN: So, you know, Peter plays the class warfare card here. So Warren Buffett said something that resonated. He said, yeah, we've been having class warfare in this country for a long time. And our side is winning. That's Warren Buffett saying his side is winning. That's very - very much the case.
You know, if you actually look at what's gone on in terms of how the benefits of growth have been distributed, it's widely understood that they've largely flowed to the top. And I'm talking pretax, just market outcomes. So when you pile on with budgets like this or a health care plan like this and you take these unequal market outcomes and you amp them up even further, I think it's just really bad economics.
INSKEEP: Very briefly, does it make sense for Republicans, having complained for years about the size of the federal debt, the size of the federal deficit, to have the president then propose a budget that has the same deficit? Because you're not touching Social Security. You're not touching Medicare. And you're actually increasing defense, and that's where the money is.
MORICI: Well, the president has promised not to touch entitlements. And discretionary spending and defense spending are about the same size. So it's dollar-for-dollar. The real problem here is we're not growing. I mean, Jared can talk about, you know, the distributional consequences of the Obama policies. But the reality is the economy is only growing at 2 percent. And 2 percent may be good enough for milk, but it's not good enough for growth.
INSKEEP: Jared Bernstein, you get the last word.
BERNSTEIN: OK, so first of all, the president is touching entitlements. And that's Medicaid. So he's already proposing a - well, the Republicans are proposing a significant cut Medicaid that he's endorsing. I'm not particularly worried about the budget deficit right now. I just don't think it's - it's really the problem that many people make it out to be. And actually, here I partially agree with Peter that one of the best ways, at a time like this, to reduce the deficit is to have faster economic growth. You're not going to get that, though, if you start gutting a bunch of programs that provide opportunity to less - less well-off people.
INSKEEP: You actually wrapped up early, so Peter gets the last last word - a few seconds, here.
MORICI: Well, some of the tax cuts that he's proposing would help growth. For example, the corporate tax cuts I think would be very, very useful for encouraging investments. Some of the regulatory rationalization would be helpful.
INSKEEP: Last, last, last word.
BERNSTEIN: I wish that - I wish that were the case. But the supply-side tax cuts leading to growth never happens, economic fairy dust.
INSKEEP: (Laughter) OK. The last, last, last, last, last word goes to me because I want to say that Jared Bernstein is a former chief economist for Vice President Biden. Thanks for coming by.
BERNSTEIN: My pleasure.
INSKEEP: And Peter Morici is a conservative economist at the University of Maryland. Glad you've joined us as well.
MORICI: Thank you for having us.
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