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President Donald Trump

Trump Proposes Historic Cuts Across Government to Fund Defense

March 16, 2017
“You see reductions in many agencies as [President Trump] tries to shrink the role of government, drive efficiencies, go after waste, duplicative programs,” says Office of Management and Budget Director Mick Mulvaney.

President Donald Trump is proposing historically deep budget cuts that would touch almost every federal agency and program and dramatically reorder government priorities to boost defense and security spending.

The president’s fiscal 2018 budget request, which will be formally delivered Thursday to Congress, would slash or eliminate many of the Great Society programs that Republicans have for decades tried to peel back while showering the Pentagon and Department of Homeland Security with new resources.

Some of the deepest cuts are reserved for the agencies and programs Trump has often derided. The State Department would be hit with a 28% reduction below fiscal 2016 levels that mainly targets international aid and development assistance; the Environmental Protection Agency would face a 30% reduction. Also in the crosshairs are agriculture programs, clean energy projects and federal research funding.

“You see reductions in many agencies as he tries to shrink the role of government, drive efficiencies, go after waste, duplicative programs,” Office of Management and Budget Director Mick Mulvaney told reporters. “If he said it in the campaign, it’s in the budget.”

Trump’s proposal for $1.15 trillion in federal discretionary funding for fiscal year 2018 is certain to face vigorous opposition from lawmakers in both parties who will resist chopping favored programs, whether foreign aid, rural water projects, or development grants for Appalachia and the Mississippi Delta. In addition to a solid wall of opposition from Democrats, senior Republicans including Senate Majority Leader Mitch McConnell have raised objections to specific agency cuts even before the budget request went to the Capitol.

The proposal codifies Trump’s “America First” approach to governance -- the budget document was even titled with the campaign slogan -- and underscores his priorities to allies in Congress in a document that bears close resemblance to a proposal put forward last year by the conservative Heritage Foundation. It would provide a promised increase in military spending without expanding the deficit.

“To keep Americans safe, we have made the tough choices that have been put off for too long," Trump said in a statement accompanying the budget. “But we have also made the necessary investments that are long overdue."

The blueprint doesn’t include answers to some of the biggest outstanding questions about Trump’s plans. The document, a partial budget request that presidents typically release in their first months in office, doesn’t account for his proposals to cut taxes, resolve internal Republican disputes over entitlement spending, or reveal what the White House forecasts for economic growth. That is to come as part of a larger document in May.

The calculations in this article are based on the enacted spending levels for fiscal 2016, the last year for which the government was fully funded. The government is operating now on stopgap funding in fiscal 2017 that only runs through April 28. The calculations in the White House request assume Congress will extend spending at the same levels through the end of the fiscal year on Sept. 30. As lawmakers negotiate that package at the end of next month, the numbers for some agencies may be subject to change.

Although Trump’s budget would decrease total discretionary spending 1% from fiscal 2016 -- the last full-year spending legislation passed by Congress -- it doesn’t substantially change the outlook for the deficit. The Congressional Budget Office projects the fiscal 2018 shortfall will be $487 billion.

Nine federal departments would see their budgets slashed by between 11% and 29%.

Funding for the Department of Health and Human Services would be slashed by $19.5 billion, the State Department would see its budget cut $10.8 billion, the Labor Department would incur a $2.6 billion paring and the Department of Agriculture would see reductions of $7.3 billion. Each represents a more than 20% cut compared to the last full fiscal year under President Barack Obama.

By contrast, the Pentagon would see a $52.3 billion -- or 10% -- increase, with the Department of Homeland Security’s $3 billion hike representing a more than 7% increase. Because of the deep domestic cuts, the explosive growth of the president’s security budget won’t increase the baseline deficit projection for the coming year.

Congress will need to agree to a stopgap spending gap before then to avoid a shutdown of most of the federal government. In addition to its budget for the following year, the White House revealed it would ask lawmakers to complete the remaining 11 funding bills for the current fiscal year by the April 28 deadline in a way that will boost defense by $30 billion and border security by $3 billion while cutting other programs by $18 billion.

Funding the Border Wall

Of that, $1.5 billion would be used for a pilot program examining different ways to construct the president’s proposed border wall with Mexico. That amount would increase to $2.6 billion over the full 2018 fiscal year.

Trump promised to make Mexico pay for a wall, but no one in the administration has spelled out how the Mexican government -- which staunchly opposes picking up the tab -- could be compelled to do so. On Wednesday, Mulvaney acknowledged the administration would initially be asking the U.S. Treasury to foot the bill.

As details of the budget blueprint leaked out over the past several weeks, Republican spending panel members also made clear that they, rather than Trump, would be shaping the bills needed to fund the government.

“As I always say, the president proposes and Congress disposes,” said Robert Aderholt, an Alabama Republican who chairs the House subcommittee that writes the USDA funding bill. He said he knows cuts need to be made but plans on tailoring them.

Senator Lindsey Graham, a South Carolina Republican whose subcommittee oversees the State department budget, this month called the proposed cuts “dead on arrival.” McConnell said that such deep cuts to State, which he personally opposes, would “probably not” be able to pass the Senate.

“When we get to funding the government, obviously it will be done on a bipartisan basis,” he said.

If adopted, the budget would mean significant reductions in the federal workforce, another Trump promise.

“You can’t drain the swamp and leave all the people in it,” Mulvaney said. Asked about the possible impact on the Washington, D.C., region, where a high number of federal jobs are concentrated, the OMB director told reporters in Washington that "we did not write this budget with an eye to the value of your condo."

His comments were emblematic of the president’s approach, which favored outsourcing the functions of government to state and local officials or the private sector whenever possible.

Among the winners in the budgeting process were school choice programs in the Department of Education budget - which saw $1.4 billion in new spending for school choice programs - as well as the Department of Veterans Affairs, where a $7.3 billion increase would expand a program allowing eligible veterans to seek private health care.

Trump’s budget also proposes privatizing the federal air traffic control system, authorizing a multiyear program to create an independent non-governmental organization to manage the nation’s 14,500 air traffic controllers. During a meeting with airline executives in February, Trump heard complaints about an outdated air traffic control system, and showed support for privatizing the system.

And the plan reduces funding for multilateral development banks like the World Bank by $650 million. The cuts, which include reductions to U.S. participation in the International Monetary Fund, are part of a broader effort by the Trump administration to step back from foreign aid. Trump has said repeatedly that other countries take advantage of the U.S. and need to pay their fair share.

With the president’s blueprint facing a steep climb on Capitol Hill, attention will likely shift to which elements of the package are taken up by congressional Republicans. The substantial increase in defense spending is likely to earn praise from even those lawmakers critical of the president’s proposed cuts. That could portend a push by the GOP to jack up security budgets, even if they can’t corral the votes to slash other discretionary programs.

Mulvaney said the president had made his priorities clear, but the White House was willing to listen to lawmaker ideas on how to accomplish his goals.

“This is not take it or leave it. We don’t do that with an executive budget,” Mulvaney said. “If they’re interested in engaging in that conversation, we will -- in fact, we started that conversation.”

By Justin Sink and Erik Wasson

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Licensed content from Bloomberg, copyright 2016.

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