Trump to propose US$4.8 trillion US budget with large cuts in safety nets

President Donald Trump's US$4.8 trillion budget plan for the coming fiscal year drew a prompt rejection on Monday from congressional Democrats, who said it betrayed his promise to protect popular health and safety-net programs.
US President Donald Trump walks on the South Lawn of the White House after returning by Marine One, in Washington, DC, Feb 7, 2020.
US President Donald Trump walks on the South Lawn of the White House after returning by Marine One, in Washington, DC, Feb 7, 2020.PHOTO: EPA-EFE

WASHINGTON (REUTERS) - US President Donald Trump will release a US$4.8 trillion budget on Monday (Feb 10) that will propose steep cuts to social safety net programmes and foreign aid, the Wall Street Journal reported on Sunday.

The budget will raise military spending by 0.3% to US$740.5 billion for the fiscal year 2021, starting Oct 1, the Journal reported, citing a senior Trump administration official.

It will also propose higher outlays for defence and veterans, according to the report.

According to the Journal, the White House proposes to slash spending by US$4.4 trillion over 10 years. The Trump budget targets US$2 trillion in savings from mandatory spending programmes, the newspaper said.

That includes US$130 billion from changes to Medicare prescription-drug pricing, US$292 billion from cuts in safety net programs – such as work requirements for Medicaid and food stamps – and US$70 billion from tightening eligibility rules for federal disability benefits, the Journal reported.

Trump will also propose cutting billions of dollars in US foreign aid in his fiscal 2021 budget while seeking an increase in funds to counter developing economic threats from China and Russia, senior administration officials told Reuters.

Trump, a Republican, sought in his budget proposal last year to slash foreign aid but faced steep resistance from Congress and did not prevail.

His latest budget is a blueprint for his spending proposals that is unlikely, again, to be passed, particularly in an election year.

Trump will seek to make a 21 per cent cut in foreign aid in the proposal, which seeks US$44.1 billion in the upcoming fiscal year compared with US$55.7 billion enacted in fiscal year 2020, an administration official said.

Aid to Ukraine would remain at its 2020 levels under the new proposal, the official said.

Trump was acquitted last week of impeachment charges that he withheld aid to Ukraine to spur Kiev to investigate political rival Joe Biden, a Democratic presidential candidate and former US vice president.

Administration officials told Reuters that Trump would request an increase in funding for the US International Development Finance Corporation (DFC) to US$700 million compared to US$150 million the previous year.

The DFC was formed in large part to counter China's growing economic influence. It serves as a development bank that partners with the private sector to provide loans in developing countries. It also serves as an alternative financing option to what the United States sees as predatory practices from China.

US officials want to counter the soft power China has wielded with such loans and help countries avoid what they consider Beijing's "debt trap" diplomacy in which countries give up control ports, roadways or other major assets when they fund infrastructure projects with Chinese loans that they cannot pay back.

"Every country knows the drawbacks of working with autocratic governments," said Adam Boehler, the DFC's chief executive, in an interview, listing poor infrastructure as one consequence developing countries faced.

"There are very few countries in this world that wouldn't prefer the American private capital market...That's what we represent."

The increased budget funding would help counter economic threats and was in line with Congress's bipartisan wish the agency would have such resources, he said. He said part of the agency's money would be oriented to driving 5G technology in developing countries.

The budget also proposes US$1.1 billion for cybersecurity efforts by the US Department of Homeland Security.