Five things to watch in Trump’s budget proposal
President Trump is set to release his budget proposal for fiscal 2021 on Monday, highlighting his spending priorities as he seeks reelection.
Congressional Democrats are expected to declare the overall budget request dead on arrival, but the blueprint is likely to shape GOP spending objectives as the annual appropriations process gets underway.
Here are five things to watch for Monday.
Will Trump unveil new tax cuts or a health care plan?
The White House has long promised a new round of tax cuts, with Trump eager to roll them out ahead of the election.
One avenue for achieving that would be to make permanent the individual tax cuts from the 2017 GOP tax law. Those cuts are slated to expire in 2025.
White House National Economic Council Director Larry Kudlow said last month the administration was working on a broader package that could include a payroll tax cut, lower capital gains tax rates, an expansion of the earned income tax credit, changes for noncorporate businesses and tax relief for residents of high-tax states.
But Kudlow also said the plan might not come to fruition until the summer, meaning the budget request could contain a more modest proposal.
The budget request may also contain details of a potential health care plan. Previous spending proposals from the Trump White House have assumed the repeal of ObamaCare but did not include a replacement plan.
In his third State of the Union address Tuesday, Trump promised to maintain protections for people with preexisting conditions. Critics point out, however, that the Trump administration is backing a lawsuit that would eliminate protections for preexisting conditions.
Trump also promised to protect Medicare and Social Security. His previous budgets have proposed taking an ax to Social Security disability benefits, which the White House argues do not count as Social Security, and included more stringent Medicare restrictions to lower costs.
Democrats and other proponents of the entitlement programs will be keeping a close eye on any proposed cuts, which could provide Trump’s opponents with firepower during the 2020 campaign.
How will Trump tackle the deficit?
When Trump was elected, the deficit was about $587 billion. In 2021, it’s projected to exceed $1 trillion, in large part because of the 2017 tax cuts and increased defense and domestic spending.
Similarly, the nation’s debt has risen by $3 trillion since Trump took office, moving in the opposite direction of Trump’s promise to wipe out the debt altogether.
While his first two budget proposals set out a path to balance the budget over a decade by slashing domestic spending and some health and disability programs, last year’s proposal pushed that goal back to 15 years instead of 10.
Even then, critics argue, Trump’s budgets have relied on overly optimistic economic assumptions of 3 percent growth every year over a decade. The economy has not reached that level of expansion during Trump’s presidency, with growth slowing to 2.3 percent last year. The nonpartisan Congressional Budget Office has projected growth at 1.7 percent on average over the next decade.
Still, both Vice President Pence and Treasury Secretary Steven Mnuchin said in the past week that they anticipate growth will be around 3 percent in 2020.
Many Democrats and budget watchers say they’re surprised at how quickly Republicans have backed away from making deficit reduction a priority.
“I’m actually surprised that they’re not as concerned about the deficit as normally Republicans would be,” said House Budget Committee Chairman John Yarmuth (D-Ky.). “I think there’s a growing school of thought that there’s really no short-term concern about additional debt and deficits.”
Will Trump target popular programs again?
Trump’s previous budget proposals sought major cuts to a slew of popular programs, many of which have costs that are considered minuscule when compared with the overall budget.
In the past, Trump’s proposals have called for slashing or eliminating funding for the Corporation for Public Broadcasting, which supports PBS and NPR, as well as funding for the National Endowment for the Arts, the National Science Foundation and the Community Development Block Grant, which helps pay for Meals on Wheels.
Attempted cuts have led to outcries and embarrassing moments for Trump, including some that seemed to indicate he wasn’t fully aware of the contents of the White House budget request.
Education Secretary Betsy DeVos was once forced to defend a plan to pull funding from the Special Olympics in public hearings, only to have Trump suggest that he had never supported the plan.
“I have overridden my people,” he said. “We’re funding the Special Olympics.”
Monday’s budget unveiling will give a better picture of whether similar programs will be targeted again.
Will Trump break last year’s bipartisan budget deal?
In August, Trump signed a bipartisan agreement to raise spending caps for both 2020 and 2021. The deal was designed to make it easier for Congress to pass spending bills for fiscal 2021, which starts Oct. 1.
The roughly $1.3 trillion spending deal for 2021 includes $671.5 billion for defense and $626.5 billion for nondefense — both up $5 billion from current levels. But those figures don’t account for emergency spending, disaster relief, census funding or off-book spending designated for fighting the war on terror.
“The two things I’m interested in will be … whether they stick to the numbers in the budget agreement or whether they try to cut domestic spending, just domestic, nondefense discretionary, significantly,” Yarmuth said.
Backtracking on the deal or proposing unusual workarounds could poison the well with Democrats and set up an ugly fight heading into November’s election. Last year’s budget proposal from the White House sought to lop a third off the Environmental Protection Agency’s budget, shave a fifth from the Department of Transportation and eliminate a quarter of the State Department’s funding.
Congress ultimately ignored all those requests.
“They have to be realistic in terms of what they ask for,” said Rep. Marcy Kaptur (D-Ohio), a House appropriator.
Will there be any plans Democrats can support?
In his State of the Union address, Trump laid out several policy issues Democrats could support, such as infrastructure, education, drug prices and medical billing. But Trump also endorsed partisan bills and executive actions that Democrats have rejected.
The budget proposal presents an opportunity for Trump to move closer to what Democrats have backed, increasing the odds of bipartisan legislation.
Speaker Nancy Pelosi (D-Calif.) on Thursday said that despite tensions running high, there was room to cooperate on legislation, particularly infrastructure.
“I say to my members all the time, ‘There is no such thing as eternal animosity. There are eternal friendships, but you never know on what cause you may come together with someone you may perceive as your foe right now. Everybody is a possible ally in whatever comes next,’” she said.
Even without proposals that can realistically advance in a divided Congress, Trump’s budget could offer a guide as to what kinds of executive actions he might take this year as well as his plans if he wins a second term.
“We regard this as an important budget, even if little of it is enacted in the law this year,” said Robert Greenstein, president for the left-leaning Center on Budget and Policy Priorities. “The budget, thus, shouldn’t just be dismissed as dead on arrival.”
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