Donald Trump's budget plan targets safety nets

Members of the public picking up copies of President Donald Trump's budget plan - a record US$4.75 trillion (S$6.4 trillion) - at its release in Washington DC on Monday. The budget is considered dead on arrival in the House, which is led by Democrats
Members of the public picking up copies of President Donald Trump's budget plan - a record US$4.75 trillion (S$6.4 trillion) - at its release in Washington DC on Monday. The budget is considered dead on arrival in the House, which is led by Democrats.PHOTO: EPA-EFE

It calls for $2.6 trillion in cost savings from aid schemes like Medicare, 5% hike for Pentagon

WASHINGTON • US President Donald Trump has sent Congress a record US$4.75 trillion (S$6.4 trillion) budget plan that calls for increased military spending and sharp cuts to domestic programmes such as education and environmental protection for the 2020 fiscal year.

Mr Trump's budget, the largest in federal history, includes a nearly 5 per cent rise in military spending - which is more than the Pentagon had asked for - and an additional US$8.6 billion for construction of a wall along the border with Mexico.

It also contains what White House officials called a total of US$1.9 trillion in cost savings from mandatory safety net programmes, like Medicaid and Medicare, the federal health schemes for the poor and the elderly.

A senior administration official told reporters the budget would cut US aid to foreign countries by US$13 billion.

The budget - sent on Monday to Congress - is unlikely to have much effect on actual spending levels, which are controlled by Congress.

Democratic leaders in both the House and the Senate on Sunday pronounced the budget dead on arrival, and Mr Trump's budgets largely failed to gain traction previously, when fellow Republicans controlled both chambers.

But the blueprint is a declaration of Mr Trump's re-election campaign. His budget quickly antagonised Democrats, while making clear the contours of how he plans to run for re-election.

It is replete with aggressively optimistic economic assumptions and appeals to his core constituents, and it envisions deep cuts to programmes that Democrats hold dear. Yet it projects trillion-dollar deficits for the next four years and does not balance the budget for 15 years.

Senator Chuck Schumer, the Democratic leader, called the proposal "a gut punch to the American middle class".

 
 

The budget would hit Medicare and Medicaid, two schemes that Mr Trump had previously pledged to leave intact. It proposes shaving US$818 billion from projected spending on Medicare over 10 years and cutting nearly US$1.5 trillion from projected spending on Medicaid.

A few domestic spending programmes would see increases, if Mr Trump's budget were to become law. Those include efforts to reduce opioid addiction, as well as a 10 per cent increase in healthcare spending for veterans.

Mr Trump will also propose a new voucher programme for education, US$200 billion in infrastructure spending and efforts to reduce the cost of prescription drugs.

Tax cuts have been a priority for the Republican White House and Congress in the past two years, rather than deficit reduction.

The deficit ran to US$900 billion for FY2019 and the national debt has ballooned to US$22 trillion.

The Committee for a Responsible Budget said Mr Trump's budget would add US$10.5 trillion to the debt over a decade, and criticised the White House for what it called a "fantasy assumption" of 3 per cent economic growth over that time frame.

Unless the White House and Congress reach a spending deal, automatic spending caps will kick in on Oct 1, adding another level of urgency to the deadlines.

House Budget Committee chairman John Yarmuth said House Democrats would put out their own budget proposal around the first week of next month, adding that he hoped for a deal with the Senate.

"The ingredients... are there to make a reasonable deal. And the White House is the wild card," he said.

NEW YORK TIMES, REUTERS

A version of this article appeared in the print edition of The Straits Times on March 13, 2019, with the headline 'Trump's budget plan targets safety nets'. Print Edition | Subscribe