WEEK 16

WEEK 16

Just to restore perspective, here is my list of ongoing disasters: (1) Global warming, (2) Gaza, (3) Ukraine, (4) Trump. I do not know enough about Sudan to place it. But my obsession is with Trump.

The 2026 budget proposal

No document reveals goals of governments better than their budget proposals. Hence, I decided look in detail at the proposal sent on May 2 by the Office of Management and Budget to the Senate, "regarding President Trump's recommendation concerning discretionary funding levels for fiscal year (FY) 2026." (www.whitehouse.gov/wp-content/uploads/2025/05/Fiscal-Year-2026-Discretionary-Budget-Request.pdf). The bottom line is that the President proposes to reduce non-defense discretionary spending by 22.6% with regard to the 2025 levels and this number includes an increase of 43.8 billion for the Department of Homeland Security, about 7.9% of the total. It is just a hecatomb. It eliminates every form of US non-military involvement in the world: all programs of foreign aid and of participation in international organizations, including items as diverse as peacekeeping missions or educational and cultural exchanges. Domestically, it is anti-poor, anti-minorities, anti-science, and anti-environment. It contains some surprising items, such as a major reduction of funds for the National Oceanic and Atmospheric Administration which provides weather forecasts, for National Parks, and for the Internal Revenue Service. It eliminates in one swoop 23 small agencies, including the Corporation for Public Broadcasting, National Endowment for the Arts, and National Endowment for the Humanities. One must read the entire document to appreciate the breadth and the depth of the cuts.

It is important to realize that this proposal does not cover the entire budget. The budget that was approved by a narrow majority by the House and which is pending in the Senate has well over 1,000 pages. The document I analyze refers only to discretionary spending. It does not include elimination of the food stamps (SNAP) program, which has about 40 million recipients. It does not include cuts and additional bureaucratic obstacles to Medicaid, which are currently estimated to eliminate above 13 million people from eligibility. Hence. the proposal concerning discretionary spending does not portray total government spending. I focus on it only because it reveals its authors intentions.

The proposal is organized by departments and agencies but I summarize it thematically, listing just some of the programs that are proposed to suffer major cuts, if not total elimination. The largest items are on the entire list include the elimination of any form of housing assistance and a major cut to the National Institute of Health. In contrast, some items are miniscule, including the elimination of the Office of Civil Rights or a cut of a subsidy to Howard University.

Here are some cuts that cannot but affect the well-being of most people, including the Trump base. They include all kinds of educational programs, from pre-school education, to the access of low-income people to higher education, work study programs, and adult education. Almost all these programs were conditioned on income, so they affect almost exclusively low-income earners. Retraining program, Job Corps, Senior Employment Assistance, food support for people over 60, and school lunches are shredded. Energy subsidies for low-income people are eliminated. Homeless assistance program is out. Farmers are losing the Rural Development Program and Farm Services. The federal government will no longer protect from natural disasters: FEMA is severely cut, as is the program on Infrastructure Security and the Shelter Services.

Several cuts are targeted at minorities. They include the Equity program at the Department of Justice, a program promoting minority businesses, and a program promoting access of minorities to the National Science Foundation. Native Americans will suffer from cuts of specific programs at the Department of Housing and at the Department of Justice. Cuts aimed at immigrants include English language training, migrant education subsidies, and a program protecting and assisting immigrant minors.

Environment and energy programs are decimated. By far the largest cut is to the Infrastructure Investment and Jobs Act passed under Biden. Funds for clean water programs, subsidies to renewable energy, harbor maintenance, and conservation are eliminated or reduced, as are funds for the national forests and the regulation of hazardous substances.

Funds for science are slashed throughout the departments and agencies. Reading the budget gives an impression that someone or some algorithm combed the list of government agencies for the words "science" or "research" and cut their funds or eliminated them completely. The National Institute of Health is the subject to the largest cuts, followed by the Center for Disease Control and the National Science Foundation. Agencies where science programs are affected include Substance Abuse and Mental Health, Health Care Research, Research and Development at the EPA, Energy Office of Science, US Geological Survey, National Institute of Food and Agriculture, Agricultural Research, Forest Research, Space Science at the NASA, Earth Science at the NASA, and Other Space Research at the NASA.

Each cut gets a justification. In some cases the justification is that a particular program is duplicative or no longer necessary. But many are couched in a purely ideological language. Cuts to international assistance programs are motivated by the comment that "U.S. economic and development aid has been funneled to radical, leftist priorities, including climate change, diversity, equity, and inclusion (DEI), and LGBTQ activities around the world." Some funds are cut because they "have been used to fund radical leftist ideology," some because they "have been used to promote DEI," some because they "were weaponized by the Biden-Harris Administration to give cash handouts, medical services, and job training to illegal immigrants," some because they "funded radical leftist NGOs, who spent funding to facilitate mass illegal migration into the interior of the Nation." Energy programs are referred to as the "Green New Scam." The words that kill any program are "equity," "diversity," and "climate."

I have wondered for some time about the economic rationality of the Trump administration. The proposal includes increases for some infrastructure projects. But this is about it. It destroys, not builds. It does implement the vision that eliminating federal government programs is sufficient to "release the initiative of American citizens," in the words of his first Executive Order. In this vision, states, localities, school districts, and individual citizens are on their own. It is up to them to scramble, no assistance of the government is needed or forthcoming.

The reduction of government spending proposed for 2026 is historically almost unprecedented. The military governments in Chile and Argentina did reduce government spending by respectively about 26% and 21% within a couple of years after taking over. Among democratically elected governments, President Milei of Argentina effectuated cuts of about the same magnitude as the 2026 proposal, the US sharply reduced government budgets in the aftermath of the two world wars, and Greece did it between 2010 and 2017. These were responses to crises -- inflation, war, and bankruptcy -- and these are the only historical precedents that come anywhere close under democratic regimes. The cuts effectuated by Thatcher and Reagan -- the two governments that ushered in the neoliberal era -- were miniscule in comparison. By historical standards, the current budget proposal is nothing short of a revolution. Again, except for Milei, no democratically elected government ever attempted restructuring the relation between the State and society to a similar extent. I still do not want to believe but I published several articles arguing that transformations of this scope cannot be effectuated under democratic conditions. So, again, I just hope I was wrong.

Long-term damages

What are the long-term damages of the measures implemented by the Trump administration, including the non-budgetary measures?

The most obvious is the damage to the generation of kids growing in poverty. We have systematic evidence that they are more likely to be poor as adults. Malnutrition or homelessness have known devastating life-long consequences. The US for a long time had rates of child poverty disproportionate to its average income. The subsidies during the Covid pandemic reduced this rate sharply but their withdrawal made them skyrocket again. The budget proposal cuts spending for school districts for children from low-income families, eliminates pre-school development grants, eliminates a program of preparing children from low-income families for college, and the work study program used by children from low-income families to support themselves while in college.

The consequences for health and mortality also seem predictable. Reduction of funds for the Center for Disease and the lunatic opposition to vaccination by the Secretary of Health and Human Services already made the country vulnerable to the growing measles epidemic. Other epidemics are brewing and, as the Covid experience has shown, some cannot be predicted. Elimination of programs on Substance Abuse and Mental Health, Clean and Drinking Water, Hazardous Substances Superfund, and Lead Hazard exposes people to a variety of hazards. Elimination of regulation of product safety and working conditions adds to these hazards. People in general will become less healthy and even the rich cannot completely protect themselves from epidemics.

One term that appeared during the Covid epidemic and already disappeared from our language is "essential workers." They were essential because the rest of us could not have survived without them putting themselves at risk. Many of them were grocery cashiers, transportation workers, utility workers, warehouse and delivery workers, and gas station attendants. And many among them were immigrants, legal or illegal, documented or undocumented, whatever these terms mean. This is not the place to consider the consequences of their massive expulsion for the economy. What struck me is that the budget proposal eliminates the few programs that facilitated their integration into the society: English Language Acquisition, Migrant Education, and the Refuge and Unaccompanied Alien Children Program.

Finally, the topic close to my heart. I do not even know where to begin thinking about the damage to science. For centuries, most societies that could afford it financed some basic research, the quest for knowledge regardless of its potential practical applications. This support was to some extent fed by a blind belief that some of it would turn out to have consequences for enhancing our welfare. The ex-post evidence that it did is overwhelming but ex-ante it cannot be predicted. Still when I was growing up, topology, a purely abstract branch of mathematics, was considered a frivolous pursuit, only to find widespread applications in computer science, biology, and physics. I can understand why some practically oriented cultures would be skeptical about financing basic science. But science oriented to have practical consequences, science aiming at improving our health, our technology, our ability to understand the world and make everyday decisions? Research into weather, earth, space. biodiversity, agriculture, geology, forests? I list these topics because they are all subject to budget cuts or complete elimination in the 2026 budget proposal. These cuts will not only make us know less but be able to do less.

I could go on but enough is enough. Still, an inescapable question is which of these damages are reversible. According to Brooke Nichols, an associate professor of global health at Boston University, foreign aid cuts have already resulted in about 300,000 deaths, most of them of children, and will most likely lead to significantly more by the end of the year. The damage done to the cohort of poor children in the US is also not reversible. The damage done to our health can be perhaps reduced but only slowly and at a large cost. The same is true of the damage to science: one cannot revive mice bread for several generations but one can start breeding them for generations again. What is lost is lost, but even where it is possible reversing the damage will take time and will be costly.

Electoral prospects

The economy is trembling. Having increased by 2.4% in the last quarter of 2024, real GDP decreased by 0.2 percent in the first quarter of 2025. Three indices of inflation which were below 3% in the last quarter of 2024 rose above it in the first quarter of 2025. But Trump's base is not eroding. His base is solid at around 45%. It has not moved during the month of May. His anti-immigrant policy is popular, at least when survey questions are posed abstractly. Conditioning Medicaid on working is also popular. Although the bulk of tax reductions will go to top income earners, almost all people paying taxes will see a reduction if the budget is approved in its current form. Trump's enrichment does not seem to bother his base: he does not try to cover up anything -- his bitcoins, the Qatar airplane -- and it appears that his followers do not mind it. Thus far, Trump has avoided an open conflict with the Supreme Court -- something the Court seems to be avoiding -- and polls indicate that his base would not be shaken even if he would openly defy the "unelected judges."

Now, according to exit polls following the 2024 election, Trump received 50% of the vote among the 27% of the electorate with incomes below $50,000, while Harris got 48%. They drew at 49% among the voters with incomes above $50,000. Trump won 51% of the vote among the 59% of the electorate with incomes below $100,000 and Harris won 47%, while these proportions were exactly reversed among the voters with incomes above $100,000. These numbers imply that about 27% of Trump's electorate were people with incomes below $50,000 and 59% with incomes below $100,000. Given that 152 million voted and Trump won 50.7% of the vote, about 20.8 million people with incomes below $50,000 voted for Trump and about 45.5 million with incomes below $100,000 did.

I plow through these numbers to figure out if these people can escape the brunt of Trump's policies. Some policies will affect low-income people regardless if and how they vote. They will drink dirty water, consume and use hazardous products, and remain unvaccinated. But such effects are almost imperceptible. The question is whether Trump's base will suffer perceptible damages that could be attributed to government policies. Decline of real incomes is prominent among them: people do experience prices of eggs every time they shop. But many low-income people who received monetary transfers or were assisted by government programs either did not vote or voted Democratic. Even if the elimination of food stamps would affect 40 million people and if 13.6 million would lose Medicaid coverage, even if elimination of other income-dependent programs would also affect millions, it may have only a limited effect on Trump's base. It makes me think that I jumped to conclusions when I thought Trump's base will be inevitably hurt.

There is an academic paper which I found to be exceptionally illuminating: "Compensate the Losers?" Economic Policy and Partisan Realignment in the US," by Ilyana Kuziemko, Nicolas Longuet-Marx, and Suresh Naidu. It shows that low-income people value incomes they earn much more than transfers they receive. This fact contradicts the most basic assumption of economics, for it implies that at least some people prefer to have the same income with less leisure than with more leisure. But the paper is rich in evidence and I find it convincing. The obvious explanation is that receiving government transfers carries a social opprobrium, that people feel diminished by not being able to earn their livelihoods. It opens the possibility that the elimination of transfer programs may be approved even by people who receive them.

All this makes me cautious about predicting political consequences of Trump's policies. He and his acolytes seem to think that their political support is not at stake. I still think that they are wrong but it is not impossible.

Glimpses

Shadow of the Soviet Union. Secretary of Education Linda McMahon: "Universities should continue to be able to do research as long as they are abiding by the law and in sync, I think, with the administration and what the administration is required to accomplish."

An article in Politico quotes some reactions to the verdict of the Court of International Trade questioning Trump's authority with regard to the tariffs. They reveal how his supporters think about the role of courts. Kevin Hassett, the head of Trump's National Economic Council, is quoted as saying: "It's certainly not going to affect the negotiations. Because in the end, people know President Trump is 100 percent serious and they also have seen that President Trump always wins." White House deputy press secretary Kush Desai said: "It is not for unelected judges to decide how to properly address a national emergency. President Trump pledged to put America First, and the Administration is committed to using every lever of executive power to address this crisis and restore American Greatness." Trump adviser Jason Miller followed: "What this really shows is the global deep state is real, this legal deep state. This is their last line of defense --- you have these unelected judges who are trying to force their own will when it comes to tax policy, trade policy, and all matters of the economy." I have been waiting for the moment when the Administration would openly defy the courts. It has been avoided thus far only because the Supreme Court has been trying to avoid a confrontation, perhaps anticipating the posture revealed by these quotes. But the personal attacks on federal justices and the political offensive against the judiciary as an institution may force the SCOTUS to take a stand. We will have what the constitutional lawyers refer to as a "constitutional crisis."

On a personal note. I just read a truly deep novel by Andrzej Szczypiorski, The Beautiful Mrs. Seidenman. It is about Poland and I cannot tell how much of it is intelligible without understanding references to Polish history and culture. But It is a philosophical novel about the ubiquity of evil, reaching well beyond the place and time it portrays.

Last minute

I just learned that twenty-four people from eleven countries disappeared last Thursday after being detained at the 26 Federal Plaza Immigration Court. The very places where they sought a recourse to law turned into traps. As much as I try to avoid it, I am shaking with anger, impotent anger.