By Ian Salisbury
March 1, 2017

After a rocky first month in office, on Tuesday evening President Trump got a big chance to sell his agenda to Congress — and the American people.

Speaking for the first time to both houses of Congress, the new president laid out his top goals: Boost infrastructure and military spending, protect entitlements like Social Security and Medicare and cut taxes.

But while the speech earned plaudit’s, what the president didn’t say – how he plans to pay for his it all – is going to be the tricky part. Although Trump has previously suggested that a faster rate of GDP growth and “simple, common sense” spending cuts could offset the cost of his proposals, that idea has been dismissed by experts on both sides of the aisle.

That means, like so many candidates-turned-office-holders, he’s going to face tough choices. In fact, Trump’s favorite programs — the military and entitlements — already take up roughly three-fourths of the budget. So any plans to spare or improve on these without raising taxes deliver very little wiggle room.

Here’s a guide to the key numbers in the federal budget — and the conundrums President Trump is facing. (You can also check out the stats yourself on the Congressional Budget Office’s website.)

Total 2016 annual federal spending: $3.9 trillion

That sounds like a lot, so it can’t be hard to find a place to cut … Right? Sort of. The first problem President Trump faces is that total spending already outpaces revenue, which was only $3.3 trillion in 2016. The shortfall — nearly $600 billion last year — gets added to the federal debt.

That doesn’t pose an immediate problem, because so far, investors have been happy to buy up all the debt the government issues, keeping interest rates near historic lows. It is worth noting, however, that the government can’t go on borrowing forever — much less cut taxes without offsetting cuts in overall spending. As of 2016, the federal debt equaled 77% of U.S. GDP, nearly double its 50-year average of 40%.

Mandatory spending: $2.4 trillion

These programs aren’t quite set in stone, but cuts would be both extremely challenging and politically dicey. This category includes Social Security ($910 billion per year); Medicare, the government healthcare program for the elderly ($692 billion); and Medicaid, the government healthcare plan for the poor ($368 billion), as well as much smaller programs targeting veterans, the unemployed and others.

Adding still more difficulty: With boomers set to retire and healthcare costs rising, the CBO projects these mandatory outlays will balloon to more than $4 trillion a year by 2026. While some prominent Republicans, including House Speaker Paul Ryan, have called for reforming these so-called “entitlements,” President Trump has pledged to protect the biggest of them — both on the campaign trail and since entering office.

Discretionary spending: $1.2 trillion

The rest of the federal budget is split more or less evenly between defense spending ($584 billion) and everything else ($600 billion). That’s why Trump’s plan to boost defense spending by $54 billion not to mention any extra infrastructure spending could yield drastic cuts for other departments. One favorite political target, foreign aid, accounts for roughly $42 billion in annual spending. Others, such as the Corporation for Public Broadcasting ($445 million) and the National Endowment For the Arts ($150 million), are essentially rounding errors.

Interest paid on U.S. debt: $241 billion

You may have noticed that $2.4 trillion and $1.2 trillion don’t quite total $3.9 trillion. The remainder is interest that we pay on the national debt. While that’s manageable for now, the CBO projects that rising Social Security and Medicare costs could push the annual debt service tab to more than $700 billion a year by 2026 — and that’s before any tax cuts, which would only add to the deficit.

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