Trump seeks $20 billion cut in unspent federal funds

US President Donald Trump's administration's proposal is a Republican effort to claim fiscal responsibility after a deficit-increasing tax cut and a massive fiscal 2018 spending Bill. PHOTO: EPA-EFE

WASHINGTON (BLOOMBERG) - US President Donald Trump's administration is asking Congress to cancel US$15 billion (S$20.04 billion) in unspent government funds, including US$7 billion from the Children's Health Insurance Programme, a senior administration official said on Monday (May 7).

The proposal is a Republican effort to claim fiscal responsibility after a deficit-increasing tax cut and a massive fiscal 2018 spending Bill.

It would cancel unspent money from previous years' children's health insurance and would have no effect on current programmes, the official said.

Other unspent funds that would be cancelled include US$4.3 billion for a vehicle technology programme and funds for Obamacare, the 2015 Ebola outbreak and railroad benefits.

The administration aims to follow up with a spending-cut plan that would take money from the current year's spending Bill, the official added.

The US$15 billion request is scaled back from the administration's initial goal of cutting a larger amount of domestic funds from the 2018 bipartisan US$1.3 trillion spending Bill signed by Mr Trump in March, which has proven unpopular with Republican voters.

The goal is to keep Congress from tapping the unspent money for new purposes as has happened in the past, the official said.

Senate Minority Leader Chuck Schumer of New York said in a statement the proposal was evidence that Mr Trump and congressional Republicans "are looking to tear apart the bipartisan Children's Health Insurance Programme (CHIP), hurting middle-class families and low-income children, to appease the most conservative special interests and feel better about blowing up the deficit to give the wealthiest few and biggest corporations huge tax breaks".

The administration's proposal would cancel US$5.1 billion authorised under a 2015 law designed to bolster reimbursements to states for children's healthcare costs.

It also would cancel US$1.9 billion from a contingency fund for states with children's insurance funding shortfalls because of higher-than-expected enrolment.

Senate Majority Leader Mitch McConnell of Kentucky and Republican members of the House and Senate spending committees had resisted the initial White House request to cut the current Budget.

Mr McConnell publicly argued that undoing this year's bipartisan spending Bill would undermine future congressional deal-making.

The scaled-back version may have a shot at being enacted.

Conservatives and some senior spending panel members appear to be willing to go along with the smaller request after White House Budget Director Mick Mulvaney said it would be the first in a series.

Democratic Senator Patrick Leahy of Vermont told reporters he'll meet with Republicans to discuss options on the proposal.

He said the effect on the CHIP programme depends on the details.

The Republican majorities in the House and Senate can cancel unspent funds with a simple majority vote in each chamber, with no need to get support from minority Democrats.

"It's a modest first step," said GOP Representative Warren Davidson of Ohio, a member of the conservative House Freedom Caucus.

Mr Davidson said the smaller amount has a better chance of passing the Senate and blaze the trail for a larger request later this year.

House Majority Leader Kevin McCarthy of California, who is seeking to become the next House speaker in 2019, negotiated the request with the White House.

In a Monday opinion essay in the Washington Examiner, he said that the effort would put election-year pressure on Democrats to cooperate.

"Democrats will now be forced to debate and defend their budget priorities in front of the public," Mr McCarthy wrote.

It's unclear how much the spending cut effort will be a factor in this year's congressional campaign.

"Voters don't seem to care about that stuff right now," said Mr Kyle Kondik, managing editor of Sabato's Crystal Ball at the University of Virginia Centre for Politics.

He said Mr Trump didn't run on a deficit-cutting platform and Republicans would have a hard time making it an issue because the tax cut act passed in December would increase the deficit by nearly US$2 trillion over 10 years, according to the non-partisan Congressional Budget Office.

Partly as a result of the tax-cut law, the annual federal deficit is projected to increase from US$665 billion in 2017 to US$1 trillion by 2020, the CBO said.

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