Trump proposes budget favouring military spending

President Donald Trump's budget statement calls deficits the harbingers of a "desolate" future, but the White House plan would add US$7 trillion to the deficit over the next 10 years.
President Donald Trump's budget statement calls deficits the harbingers of a "desolate" future, but the White House plan would add US$7 trillion to the deficit over the next 10 years.PHOTO: EPA-EFE

WASHINGTON (NYTIMES) - President Donald Trump sent Congress a US$4.4 trillion budget proposal on Monday outlining steep cuts to domestic programmes, large increases in military spending and a ballooning federal deficit that illustrates how far Republicans have strayed from their longtime embrace of balanced budgets.

The blueprint has little to no chance of being enacted as written and amounts to a vision statement by Trump, who as a businessman once called himself the "king of debt" and has overseen a federal spending spree that will earn him that title in an entirely different arena.

The White House budget request would add US$984 billion to the federal deficit next year, despite proposed cuts to programmes like Medicare and food stamps and despite leaner budgets across federal agencies, including the Environmental Protection Agency.

Trump's budget statement calls deficits the harbingers of a "desolate" future, but the White House plan would add US$7 trillion to the deficit over the next 10 years.

Last week, Trump signed a two-year bipartisan budget deal, struck by congressional leaders largely without his involvement, to boost both domestic and military spending by US$300 billion.

Trump's budget, which was drawn up before that package was completed, does not entirely embrace the law that he signed just days ago and proposes spending less on domestic programs than what Congress - and Trump - agreed to last week.

On Monday, Mick Mulvaney, Trump's budget director, informed House Speaker Paul Ryan in a letter that the administration "does not believe these nondefense spending levels comport with its vision for the proper role and size of the federal government".

That law increases military spending by US$195 billion over the next two years and non-defence spending by US$131 billion over the same period.

The White House is proposing US$540 billion in non-defence spending for 2019 - US$57 billion below the new spending cap set by Congress.

The plan contains at least US$1.8 trillion in cuts to federal entitlement programs such as Medicaid, Medicare and food stamps.

The White House is proposing to cut funding for a low-income food programme known as the Supplemental Nutrition Assistance Program, or SNAP, by more than 30 per cent over a decade.

It would also impose work requirements for "able bodied" recipients of food stamps and change how they get their benefits, replacing a portion of the coupons that allow them to purchase food at a grocery store with a premade box of "100 per cent American grown foods provided directly to households".

The Department of Housing and Urban Development's budget proposes allowing public housing authorities and property owners to set minimum work requirements for those in public housing as a way to control costs.

Mulvaney, in his letter, said domestic spending at the levels Congress authorised would add too much to the federal deficit.

Instead, he proposed using about US$11 billion of the money to scale back the social safety net by changing the way health entitlement programs are paid for.

That would essentially mean getting rid of mandatory programmes now funded automatically and without congressional approval, and covering the cost with discretionary funds that could be cut or redirected in the future.

The message, Mulvaney said, was, "You don't have to spend all of this money, Congress, but if you do, here's how we would prefer to see you spend it."

Yet for all of the talk of fiscal restraint, Trump's budget also amounted to an institutional surrender to the free-spending ways of Capitol Hill, which Mulvaney said had surprised the president and prompted him to refrain from even bothering to advocate deficit reduction.

"I probably could have made it balance," Mulvaney, a former anti-deficit absolutist, said ruefully of his plan on Monday, but "it would have taken funny numbers to do it."

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

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

The assumptions in Monday's release are also significantly more optimistic than the Trump administration itself used in its budget calculations in 2017.

Most notably, the administration projected annualised economic growth of 3.1 per cent over the next three years. In December, the Federal Reserve projected annualised growth of 2.2 per cent over that period. The Survey of Professional Forecasters estimated the annualised growth rate to be about 2.4 per cent.

The centrepiece of Trump's budget is a plan to devote US$200 billion over the next decade in new spending to improve the country's crumbling infrastructure, starting with US$44.6 billion in 2019.

The president says the plan will generate as much as US$1.5 trillion to US$1.7 trillion in new investments in building roads, bridges and other major projects over the next 10 years, in large part relying on states, cities and private companies to fund them. But the proposal faces steep challenges in Congress, where many lawmakers believe US$200 billion is far too little to create a sustainable stream of federal infrastructure money for the future.

"We will build, we will maintain, and the vast majority of Americans want to see us take care of our infrastructure," Trump said Monday at the White House as he released an outline of the plan and discussed it with Cabinet officials, governors and local leaders.

"Washington will no longer be a roadblock to progress; Washington will now be your partner."

Still, the budget compensates for the new infusion of infrastructure spending in part by slashing existing transportation programmes, which would be cut by US$178 billion over a decade. Grants to Amtrak would be halved, from US$1.2 trillion to US$538 billion, while the Army Corps of Engineers, which manages vast amounts of public infrastructure projects, would see a more than 20 per cent cut.

Lawmakers in both parties, who essentially went around Trump to strike their own budget compromise, made it clear they had no intention of embracing Trump's plan.

Representative Kevin Cramer denounced "drastic cuts" to the federal crop insurance programme, calling them "ill advised".

Representative Ed Royce, chairman of the Foreign Affairs Committee, said lawmakers in both parties would once again reject the president's "deep cuts" to the State Department and foreign aid.

Democrats dismissed Trump's proposal on Monday as a far-fetched plan full of misplaced priorities.

"While the president and his OMB director live in budget fantasyland, I will be in the real world negotiating a responsible, bipartisan appropriations package that invests in American families and communities," remarked Representaive Nita M. Lowey, the ranking member of the Appropriations Committee.

"It is utterly astounding that just six weeks after slashing taxes on the wealthy and biggest corporations, creating a huge deficit, the president asks older Americans and middle-class Americans to make up the difference by slashing Medicare and Medicaid," said Senator Chuck Schumer, the minority leader.

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

The request calls for $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.

Trump's plan would also allocate US$13 billion in new spending to tackle opioid abuse through prevention, treatment and recovery support services as well as mental health programs.

The president is also pressing forward with plans to slash funding for the Environmental Protection Agency, despite Congress' rejection of a similar plan in 2017. The budget blueprint would pare the agency by US$2.8 billion, or 34 per cent from its current level, while eliminating virtually all climate change-related programmes.

It would also cut the agency's Office of Science and Technology nearly in half, to US$489 million from its current US$762 million.

In outlining the budget, the Trump administration said the EPA is refocusing on what it called "core activities" and eliminating "lower priority programmes".

That list includes a program to promote partnerships with the private sector to tackle climate change; environmental education training; and an effort to protect marine estuaries.

The White House estimated that cutting those programs and others will save taxpayers US$600 million compared to last year.