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Trump’s Budget Plan Faces Slim Odds This Year

When President Donald Trump sends his annual budget to Congress next week, it will be largely obsolete because the big decisions on government tax and spending priorities have already been made on Capitol Hill.

Last year’s White House budget proposed big cuts in spending programs including food stamps, disability benefits, welfare and student loans, totaling $4.5 trillion over a decade. In the process, it said, it would balance the budget in 10 years.

But a lot has changed since then. In December, Republicans passed a tax cut that congressional scorekeepers estimate will increase the deficit by $1 trillion over a decade when accounting for its estimated effects on growth and revenue collections. Then this week, Republicans and Democrats agreed to a plan to break budget caps and spend $300 billion more than previously planned over the next two years.

The Trump fiscal 2019 budget — due out Monday — could again propose large cuts in domestic spending, an even larger boost in military spending and a balanced budget. But to get there, it would have to ignore the political dynamic that recently gave way to large spending increases and higher deficits.

A White House budget is a window into an administration’s spending priorities and a regular Washington ritual that helps to set the tone of political debate between and within parties. In this case, said Steve Bell, a longtime Republican budget aide who is now a senior adviser at the Bipartisan Policy Center, it “has no relevance to what’s going to happen next year in appropriations for fiscal year 2019.”

The House and Senate narrowly approved legislation early Friday morning combining Congress’s budget agreement, which sets overall spending levels for the next two years, with a short-term spending bill to fund the government until March 23, ending a brief government shutdown. The agreement would also raise the government’s self-imposed ceiling on federal borrowing until March 1, 2019.

The budget agreement gives congressional committees several weeks to write detailed spending bills. Those measures and the underlying agreement will dictate the direction of federal spending.

Sen. Bob Corker (R., Tenn.), a member of the Senate Budget Committee, said Mr. Trump’s budget proposal could help lawmakers fill in some of the details as they write the full-year spending bill in coming weeks. The big issue of deciding how much the government will spend, however, has been largely set, he said.

Other paths toward managing spending appear to be shut off. Mr. Trump said during his election campaign he didn’t want to cut the big entitlement programs, Social Security and Medicare, and Senate Majority Leader Mitch McConnell (R., Ky.) said in December that entitlements were off limits in 2018.

Cuts to other mandatory programs targeted in last year’s budget would be difficult to clear in the Senate without support from Democrats, which seems unlikely.

The two-year budget agreement reached this week would increase domestic discretionary spending by about 9.6% from fiscal 2017, which ended last Sept. 30, compared with a roughly 10% decrease under the president’s 2018 budget. It would boost defense spending more than Mr. Trump proposed, to $700 billion this year compared with his $668 billion request, a roughly 10.4% increase from 2017, including emergency war spending.

“The president seems to be cheerleading this budget agreement, so it will be a little strange if the president sends a budget request that doesn’t mirror what’s in an agreement that he’s openly advocating for,” said Sen. Chris Murphy (D., Conn.).

Independent analysts say the new two-year agreement could boost deficits to $1 trillion by next year, at a time when the deficit as a share of gross domestic product is expected to rise and the economy is operating close to its full potential.

Congressional Republicans in the past have put forward budget resolutions that propose to eliminate the deficit over a decade. This year, House Republicans have discussed the possibility of skipping passage of a budget resolution for fiscal year 2019, since the Senate is unlikely to be able to pass one of its own.

“Congress appears to be looking for every excuse to run away from the responsibilities of budgeting,” said Maya MacGuineas, the president of the Center for a Responsible Federal Budget, a bipartisan nonprofit that advocates for deficit reduction. “They’ll politely nod at the president’s budget, and breathe a sigh of relief that they don’t have to put on paper something where the numbers would be very difficult to get to add up.”
Source: Dow Jones

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