Include 3. 6 billion in cuts. Mull Mick Mulvaney will be holding a briefing in a moment. In the meantime, joining us is former cbo director and treasury for secretary phillip swiggle. Good to have you both with us. Good morning. Dan, every time we get a budget, obviously, we make all the kaf ycaveats of challenges e its reality but what strikes you about this initial proposal. You know, the budget was really only three numbers, if you will. Revenue, Discretionary Spending and what we call entitlements or mandatory spending. In this budget the president proposes to cut Discretionary Spending, particularly domestic, and some entitlements, particularly medicaid. But he leaves off the table, as he did during the campaign, Social Security and medicaid or medicare, im sorry. Of course, interest on the debt you cant cut. So, there are substantial portions of the budget that are literally off the table, which means pretty big cuts to the rest of the budget and no revenue increases. Certainly thats keeping mostly within the promises he made during the campaign that there would not be cuts to medicare and Social Security. Yeah, thats right. And it just shows how difficult it is to reach a balanced budget if you dont if you leave those off the table. You have to have Economic Growth assumptions that are quite difficult to achieve. Dan, theres certainly a signal of what the Trump Administration views as important to invest in here. The military is largely protected, even though aside from that first 43 billion increase, we dont see many increases from there. What else do you see here that the Trump Administration is investing in . Well, there are things, creating new funds, for example, for Public Health initiatives out of hhs. So, if we have Public Health emergencies, Something Like ebola or zika, theyre creating funding to do that. So there are some things that are new initiatives. One of the biggest ones they will talk about, certainly, is. Brings in spending for paid leave and other things to help working mothers in particular. Whats interesting about this is people are already calling it dead on arrival when republicans are in control of congress. It reads more, a lot of people are saying, as a mulvaney budget than a trump budget. Much more on the side of the ultraconservative wing of the house republicans. What provisions do you think that more mainstream republicans are going to have a hard time with agreeing to politically . As dan said, the medicaid cuts are pretty difficult. Medicaid has ramped up substantially because of the Affordable Care act. There are some states like rhode island that have done a good job with reforms to medicaid but thats a whole policy conversation. I would like to see the administration say, hey, heres the problems with medicaid. Heres how we can can fix it and let the numbers flow from that, but start with the policy, start with the rationale and then get to, you know, how it affects the dollars and cents. Speaking of the dollars and cents, as we await details on the budget from the omb director, we want to turn to kayla whos been looking through line items this morning on capitol hill. Good morning to you. Good morning, carl. The line item that will matter most at least in the legislative near term for members of congress here is going to be that medicaid cut you guys were just talking about. Roughly 600 billion is what the budget calls to eliminate from the current budget going forward. This morning paul ryan said he anticipates a great debate taking place on this budget and looks forward to working with members of congress. Yesterday the budget director said the fact that the president supported the American Health care act which includes steep cuts to medicaid, means hes on board with the cuts to these programs. The budget director seemed to be anticipating the response from even colleagues of his in the House Freedom caucus, like congressman mark meadows who said cutting things like meals on wheels is not something i can get behind. I want to share with you what the budget director told reporters yesterday. Were no longer going to measure compassion by the number of programs or people on them. Well measure the success of the program by the number of people we can get off those programs. You can expect the budget director to basically talk in those same broad contours today when he takes the podium because some of that reaction has been consistent with what happened and what the criticism was when that skinny budget in march was announced. Just a question on the health care, and i know youve been following this one closely, doesnt some of those medicaid cuts also take into assumption that congress can successfully repeal and replace obamacare . It does. There is a very large line item that assumes the repeal and replace of obamacare, assuming it happens by 2018. And assuming it is implemented at some point in the near future. The irony or, perhaps, the coincidence or, perhaps, the question around the fact that the add administration is basically imbedding the assumption of the ahca passing in the budget is the fact that the ahca is not going to be the exact bill that ends up getting implemented. Tomorrow were going to get a score from the Congressional Budget Office that puts a little bit of a finer point exactly on how much it expects to be eliminated from medicaid over the life of that bill. How many people, how many fewer people would have insurance under that bill and what the broad effect would be on the American Health care consumer. Thats going to change the discussion a little bit. Clearly, the white house wants to put its numbers in accordance with the ahca out there before that debate gains a second wind. Dan, as we await mulvaney, kayla, dont go anywhere, this point about looking at government assistance and trying to measure them measure their effectiveness by how many people you can withdrawal from the rolls, people are trying to draw a line between that and 90s era welfare reform. Can this be as profound as that . I dont know because the details of medicaid reform, as you know, are going to be left mostly to the states, which is something, remember, too, when the cbo scores come out tomorrow, its the assumptions around those scores almost exclusively rely on their assumption about state activity. The baseline that cbo has to use is current law. They assume more people more states will expand, in fact, up to 9 million of the people they say wont receive coverage. Those 9 million arent receiving coverage now. Again, most is left up to states so its hard to tell how proceed founs it will be. Certainly, capping entitlements, capping medicaid and per capita caps are going to be a good experiment in many ways. But its not clear what the effect will ultimately be on workforce and other things youre referring to. Families are told not to budget based on hope but to budget based on reality. A lot of hope in this budget. Hope for 3 growth. Hope for ahca passage. To what extent in government is that a problem . You know, there is a sense in which a budget, any budget is full of hope and its the program of the administration. You know, if everything goes right, we get a good tax reform, we get good trade deals, make immigration reform, we can hit 3 growth. Does it look like its going to happen this year or next year . Boy, its hard to see it. I dont mind the hope. I would just like to see more explanation of how we get from where we are now to 3 growth and all the other good outcomes. Thats the point everybody has been harping on all morning long on cnbc. You were there as congressional budget director under reagan. Eight years into an economic recovery while the fed is raising Interest Rates and unemployment is at the lowest point since the recession at 4. 4 . How optimistic is it to get to 3 growth . Its quite optimistic given current economic circumstances, much of which you addressed. Economic growth is only two things. Its growth in the workforce and growth in product tift. The assumption, of course here primarily is well get more productivity because of investment. So, current workforce growth is slightly positive but productivity has been flat and in some recent quarters a negative. I think 3 is a real reach. Meanwhile, kayla, youve had some you had a good tweet this morning about the savings from deregulation and the different numbers were getting from the white house and the hill. To be fair, carl, its one of those ameoebalike, unquantifiable. The they had been tallying up value for company and workers of obamaera regulations they rolled back so far in this administration. They found 67 billion over the life of those regulations. In the budget, the white house said they expect the savings annually will be between 600 million and 1. 2 billion annually. There is a very wide kasim between those two figures. The white house being far more conservative than their colleagues on capitol hill. Interestingly, looking in the budget specifically and where they have identified places where theyll have further deregulation, the government wants to lease oil and gas land in alaska on the wildlife refuge for drilling. They want to sell a bunch of transmission assets, power assets, the government owns. They want to sell half the Strategic Petroleum reserve. They expect that will raise 16 billion. Its clear theyre going item by item at each of the agencies, trying to identify where they can roll back some of these regulations. Carl, the environmental criticism has been overshadowed by some of the criticism on the health care side because thats really the nearest term priority for congress. That will grow louder and louder, too. To some degree, phillip, it seems like given the level of u. S. Crude production and nat gas and shale, i mean, do we really need that much of an spr these days . I was just thinking that. Theres a sense in which the dakotas are our Petroleum Reserve. Weve seen hydralic fracturing industry can ramp up pretty quickly. I think thats something reasonable in the administration budget. The question of whether we need the petroleum in the salt domes in louisiana when we can easily tap it in the upper midwest. I thought that was sort of interesting. Might come as a surprise for the market. I just wonder how realistic that is, dan, at a time where opec, including saudi arabia, where President Trump just visited, is trying to balance the market and bring prices down by trying to get rid of the supply glut. It seems like an odd time for the u. S. To flood the market. I think thats right. Well only get market prices for whatever oil we want to sell. More importantly, asset sales, whether theyre justified or not, are onetime savings. It doesnt really address the budget problem, primarily the growth in health care costs, and also Social Security. We might lower the deficit somewhat this year or next but it wont do anything for the long term. The omb director Mick Mulvaney has taken the podium to present President Trumps first budget. Lets take a listen. Make a brief statement before we start about things that are probably more important than the numbers. Folks like me sometimes get caught up in the numbers. Want to talk very briefly about what happened in manchester, england. The president this morning summed it up emotionally for a lot of us. He just called these people who perpetrated this, one person, evil losers. The president has, i think, 11 or 12. I took my son to his first concert when he was 11 or 12. All of us who have children that age, this is something that hits especially close to home. We stand shoulder to shoulder with our ally and our friends in the uk and also have the victims and their families in our hearts. As we talk about these other things that somehow pail le in comparison. Lets talk about the budget. Some of you were here yesterday. Lets talk about what this is. This is the president s fy2018 budget. The name on the cover is the new foundation for american greatness. As i read through it over the weekend, as i did in fact, weve been working on this before i actually got here, it struck me the title should have been different. The title should have been a Taxpayer First budget because thats what this is. And as i was trying to reconcile those two things, its called the new foundation for american greatness but i want to call it the Taxpayer First budget, it struck me that thats what was really new or one of the things that was new about this budget. That we looked at this budget through the eyes of the people who were actually paying the bills. I think for years and years weve 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 havent spent nearly enough time focusing our attention on the people who pay the taxes. I got a couple questions today about compassion. Compassion needs to be on both sides of that equation. Yes, you have to have compassion for folks receiving federal funds, you also need compassion for folks paying it. Thats one thing thats new about the president s budget. What else is new . Its new in that it balances for the first time in at least ten years. The last time we looked, we couldnt find a president obama budget that balanced ever. I think he tried to convince us a couple times that is primary balance, that is balance without payment on debt is balance. We reject that. We get to actual balance on this budget within the continueyete budget. Thats how important it was and is to this president to try to bring some fiscal discipline. Again f youre looking through the perspective of the people who pay, you would like to be able to tell that at some point in the foreseeable future youll be able to balance. Previous administration completely gave up on that. As ive said before to the Previous Administration, if you borrow money if i take money from you and i have no intention of ever giving it back, that is not debt. That is theft. If were going to borrow money from people, we he have to have a plan for how were going to pay it back. Thats what this budget does. Thats one of the things that is new about this budget. The next word in the title is foundation. What is the foundation were trying to build here . I sum it up this way. Again, i saw an article a couple weeks ago about what is trumponomics. Its sustained 3 Economic Growth. Everything that we do in this administration, every single time im called into the oval office, whether its on immigration policy, health care policy, tax reform policy, trade policy, budgets and spending, the focus is sustained 3 Economic Growth. We have been attacked stunningly by some folks on the left and even in the mainstream that say thats an unreasonable assumption. We should think about how absurd that is to think 3 growth in an American Economy to some people is an absurd assumption. Is used to be normal. Ten years ago it was normal. In fact, its been normal for the history of the country. The average over the 240odd years weve been a country has been over 3 . Its certainly been over 3 since world war ii. The 1. 9 growth rates the Previous Administration assumed at the end of their administration, and the 1. 3 growth rate for the entire tenyear period the cbo assumes, the Congressional Budget Office assumes, are simply we simply reject. That is a pessimistic look at what the potential for this country and for what this countrys people is. We reject that pessimism. You know what, we probably should have gone in and assumed 3. 5 or 4 growth because that would be aggressive. 3 growth is just getting back to normal. I say it and i say it again, if youre 30 years old watching this and sitting here, you have never had a job as an adult in a healthy American Economy. Its either been a recession or slow, sluggish economy stumbling along at less than 2 growth. The difference between 2 growth and 3 growth doesnt sound like much. In fact, i cringe when i hear people say its only a 1 difference. The difference in that is tangible. 3 Economic Growth in a healthy American Economy, if you dont like your job, you can quit because you know you can go get another job. If you get laid off, you know you can go off and start your own business these are the opportunities people have forgotten about. These are the things, the optimism in the country, the di dine nichl in the country the president is eager to bring back to the country. Its what drives any one of our policies, especially anything dealing with jobs and the economy. We will bring back 3 Economic Growth to this country. And those numbers are assumed in this budget. By the way, if you dont, the budget will never balance. If you assume 1. 9 growth, my guess is, youll never see a balanced budget again. So, we refer to accept thats the new normal in this country. 3 is the old normal. 3 will be the new normal again under the Trump Administration. That is part in parcel, one of the foundations of this budget. Along those same lines, the budget also seems to and funds a lot of the president s priorities. Weave talked about this since march when we unveiled the budget blueprint National Security, obviously, a priority for this president. Border security, another priority for him. We can talk at length today if you want to about the details of the additional money we spend in those areas. The total plus up again for the 2018 budget is 54 billion over the Congressional Budget Office baseline. Law enforcement gets a significant increase here. Thats both at the federal and the state and local level as we follow through on our efforts to enforce the law. Veterans see more money here. Naets a class