Explainer: What's in White House Budget request

Copies of US President Donald Trump's 2019 fiscal budget are displayed in the bookstore of the US Government Publishing Office in Washington DC on Feb 12, 2017.
Copies of US President Donald Trump's 2019 fiscal budget are displayed in the bookstore of the US Government Publishing Office in Washington DC on Feb 12, 2017. PHOTO: EPA-EFE

WASHINGTON (NYTIMES) - The White House released its fiscal 2019 budget on Monday, outlining the Trump administration's fiscal priorities at a moment when Congress is moving ahead with its own spending plan.

The blueprint is largely a political statement and is unlikely to influence lawmakers, who control the federal purse strings and just passed a Bill, which President Donald Trump signed into law last week, raising spending caps by about US$300 billion over two years.

That deal, which briefly forced a government shutdown, increases military spending by US$195 billion over the next two years and increases non-defence spending by US$131 billion over that period.

Trump's budget proposal calls for a different approach and says Congress should not spend all of those additional non-defence funds. The proposal ultimately calls for spending US$57 billion less than the new congressionally mandated non-defence caps for 2019.

Here's a look at some of what the Trump administration is proposing:

Cuts to Domestic Spending

The budget includes more than US$3 trillion in proposed reductions to federal spending over a decade.

Nearly half of that comes from a sort-of gimmick: The "two penny plan," which would cut non-defence discretionary spending 2 per cent a year, every year.

That compounds to roughly a 40-per-cent cut. It would be an aggressive - and largely politically unrealistic - number in any circumstance, but it appears especially so this year, because Congress just reached an agreement, which Trump signed, to raise spending caps for non-defence discretionary programmes 10 per cent.

Rosy Assumptions on the Economy's Growth

Trump's plan could easily result in much larger federal deficits.

The administration made its calculations using assumptions about the nation's economic trajectory that are more optimistic than the consensus among private-sector forecasters, or the assumptions used by other parts of the government.

The forecasts in Monday's plan are also significantly more optimistic than the Trump administration itself used in its budget calculations last year.

Most notably, the administration projected annualised economic growth of 3.1 per cent over the next three years.

The Federal Reserve in December projected annualised growth of 2.2 per cent over that period. The Survey of Professional Forecasters estimated the annualised growth rate at about 2.4 per cent.

There is a similar gap in the projections of long-term growth.

If the less optimistic forecasts were correct, the government would collect significantly less revenue.

By its own estimates, the result would be another US$3 trillion in federal debt.

The administration attributed the difference to the expectation that the president's policies would significantly increase productivity growth.

Jason Furman, former chairman of President Barack Obama's Council of Economic Advisers, calculated that productivity growth would have to reach the highest level in any decade since the immediate aftermath of World War II. Productivity growth was 1.1 per cent over the last decade; it would have to reach 2.5 per cent.

"It is hard to understand where this growth would be coming from," Furman said in a Twitter post.

A Five-Per-Cent Reduction for the Education Department

Trump's 2019 budget proposal requests US$63.2 billion in discretionary spending at the Education Department, a reduction of US$3.6 billion, or 5 per cent, from 2017 spending levels.

The proposal calls for a US$1.5 billion "school choice" programme, which includes taxpayer-funded scholarships for private schools and a vast expansion of charter schools. However, the budget would eliminate or cut 39 programmes including two staple programs in public schools that provide teacher training and after-school programmes to low-income children.

The department's budget also funds initiatives that Trump has given lip service to in the last year, calling for US$43 million in "School Climate Transformation" grants to help fight the opioid epidemic in schools, and US$200 million in new grants to improve science, technology, engineering and mathematics education.

A Hint at the Special Counsel's Timeline

The proposal indicates that the work of the special counsel, Robert Mueller, could last another one and half years. It allocates US$10 million to his office from October 2018 through the end of September 2019.

But that does not mean the Russia investigation itself will last that long.

The office would also oversee a trial of Paul Manafort, the president's former campaign chairman, who has pleaded not guilty to charges he laundered millions of dollars through overseas shell companies.

No trial date has been set, but the judge in the case has indicated it would not start before the fall.

More for Immigration Enforcement and a Border Wall

The Department of Homeland Security would receive US$46 billion, a US$3.4 billion increase over the enacted 2017 budget, all part of the administration's efforts to crack down on illegal immigration and build a wall on the border with Mexico.

The request calls for US$18 billion for border security, including US$1.6 billion to build about 65 miles of the wall in South Texas. The request also calls for the department to hire 2,000 new Immigration and Customs Enforcement and 750 Border Patrol agents.

While most of the budget increases focus on illegal immigration and border security, the administration also requested funding to hire 450 new agents for the chronically short staffed Secret Service, US$1 billion for the department's cybersecurity efforts and US$71 million for new scanning technology for the Transportation Security Administration.

The new budget request would provide US$1.9 billion for the Federal Emergency Management Agency's grant program to state and local communities, US$800 million less than the US$2.7 billion funded in 2017.

Deep Cuts to the Environmental Protection Agency

Trump's second federal spending plan proposes steep cuts for the Environmental Protection Agency, despite Congress' rejection of a similar plan last year to dramatically shrink the agency's budget.

The fiscal 2019 budget blueprint would pare the EPA by US$2.8 billion or 34 per cent from its current level, while eliminating virtually all climate change-related programs. It also would cut the agency's Office of Science and Technology nearly in half, to US$489 million from its current US$762 million.

State Department Gets Less Funding

At the State Department and USAID, the US president's budget proposes a base budget of US$25.8 billion, a US$9 billion decrease in funding from the 2017 enacted budget. This is a 26-per-cent decrease in funding, similar to the president's budgetary intentions last year.

Notably, the president's new budget aims to shift US$12 billion from Overseas Contingency Operations funding to the base budget. The OCO is traditionally used for US presence in turbulent regions like Syria and Iraq.

The addendum provides an additional US$1 billion to USAID's International Disaster Assistance account for use in humanitarian crises as well as an additional US$400 million for the U.S. President's Emergency Plan for AIDS Relief.

Another Call to Repeal the Affordable Care Act

Trump's budget proposes once again to "repeal and replace" the Affordable Care Act and to eliminate the law's expansion of Medicaid. More than 30 states have expanded Medicaid under the law. Republican efforts to dismantle the law failed in Congress last year.

As a presidential candidate, Trump said there would be "no cuts" to Medicare or Medicaid if he won the election. But his 2019 budget request is full of proposals to squeeze savings out of the two programmes, which together provide health insurance for more than 100 million Americans.

Proposed savings in Medicare total more than US$490 billion over 10 years, or about 5 per cent of Medicare spending expected under current law.

The budget would cut US$69.5 billion over 10 years in projected Medicare payments to hospitals for "uncompensated care".

It would cut more than US$95 billion over 10 years from nursing homes and home health agencies, and US$22 billion from Medicare Advantage plans, which manage care for about one-third of Medicare beneficiaries.

In addition, the budget would cut US$48 billion over 10 years in Medicare payments to teaching hospitals for graduate medical education.

The budget includes several proposals intended to reduce out-of-pocket drug costs for Medicare beneficiaries by requiring insurers and pharmacy benefit managers to share at least one-third of the discounts and price concessions they receive from drug manufacturers. The budget would also establish a limit on beneficiaries' out-of-pocket costs for prescription drugs covered by Medicare.