Congress

White House readies lean budget with fat nondefense cuts

Democrats have already rejected plan that even some Republicans say is unrealistic

Copies of President Donald Trump’s fiscal 2020 budget run through the binding process at the Government Publishing Office in Washington on Thursday. (Bill Clark/CQ Roll Call)

BY PAUL M. KRAWZAK AND DAVID LERMAN

President Donald Trump will send a budget request to Capitol Hill on Monday seeking to eliminate deficits in 15 years, relying on rosy economic growth forecasts to boost revenue and tight limits on nondefense appropriations to counterbalance hefty increases for the military and his signature border wall project.

While Democrats have already rejected the plan, and even some Republicans say it is unrealistic, the fiscal 2020 budget is expected to offer an olive branch on initiatives like infrastructure spending and efforts to lower prescription drug costs, which Democrats support. Trump’s proposal is not expected to propose the type of long-term changes to Medicare and Social Security that marked past GOP budget efforts, which Democrats panned as attacks on the elderly.

The budget, which will be officially released Monday at 11:30 a.m., still calls for spending cuts totaling $2.7 trillion over 10 years. It includes some structural changes, such as requiring colleges and universities to foot some of the bill for federal student loans. The package also could offer clues about initiatives the administration will pursue later in the year without need for legislative approval but could still move the needle on conservative policy goals, like work requirements for certain benefit programs.

Some Republicans may dislike the longer path to balanced budgets than they’d otherwise prefer, but Trump’s advisers are touting economic growth as the more pressing near-term priority.

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“I don’t think good growth policies have to obsess necessarily about the budget deficits,” National Economic Council Director Larry Kudlow said on “Fox News Sunday.”

The immediate budget battleground is consideration of the 12 annual appropriations bills, as the two dozen subcommittees in the House and Senate measure their proposals against the White House’s baseline.

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Policymakers again find themselves in the limbo that has marked odd-numbered years for much of this decade: what to do about the austere budget caps imposed by a 2011 law. Those caps will lower the amount lawmakers have to parcel out in fiscal 2020 by $126 billion, amounting to an 11 percent reduction in defense accounts and 9 percent in nondefense from this year’s enacted spending.

The White House is digging in for a fight over the caps, arguing the administration would rather have no deal than another agreement Democrats use to leverage more spending for programs Trump officials deem wasteful.

“We’re going to do our own caps this year, and I think it’s long overdue. Some of these recent budget deals have not been favorable towards spending,” Kudlow said.

Trump’s proposal is expected to ask for $174 billion in cap-exempt defense funds, mostly designated as Overseas Contingency Operations funding, on top of the $576 billion allowed under the fiscal 2020 cap. That would bring the total to $750 billion — nearly 5 percent more than fiscal 2019.

The budget is expected to seek as much as $8.6 billion for the U.S.-Mexico border wall, according to a senior administration official, or over 50 percent more than Trump’s $5.7 billion fiscal 2019 demand that led to the longest government shutdown in history.

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At the same time, administration officials are touting a 5 percent overall cut to domestic and foreign aid programs from the $597 billion appropriated for fiscal 2019. Cuts for most of those programs could be larger, however, as much of the wall money would be credited to nondefense accounts, squeezing out other priorities. And the administration is also seeking a nearly 10 percent boost for veterans’ medical care, and more money to combat opioids addiction that will also mean less for other programs.

The Office of Management and Budget’s acting director, Russell Vought, wrote in an op-ed last month that the plan would avoid the need for higher fiscal 2020 caps. To meet the $542 billion nondefense target required under law, the budget would achieve the additional 4 percent reductions necessary by rescinding unspent funds, an administration official said.

Sources said the proposal will bar the future use of “changes in mandatory programs,” or CHIMPs, which create room under the budget caps without producing any real savings. The use of CHIMPs enabled appropriators to tack on an extra $15 billion or so in fiscal 2019 nondefense funding without violating this year’s $597 billion cap.

The sources discussed the fiscal 2020 proposal on condition of anonymity because they were not authorized to speak publicly in advance of the release Monday.

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Behind schedule

Given the 35-day shutdown, the White House is a month behind schedule in getting the budget out, which has already pushed back the appropriations process on Capitol Hill. The administration will release just the main budget volume Monday, including the president’s budget message, an overview and summary tables. The rest of the budget materials will be released next week.

The House is still expected to adhere to an aggressive schedule, with Budget Chairman John Yarmuth planning to mark up a budget resolution the first week of April. Majority Leader Steny H. Hoyer wants to push all 12 spending bills through the House by June 30, and he’s already been talking to Senate GOP leaders about placeholder topline figures for appropriators in lieu of a spending caps agreement with the White House.

Even if many of his budget proposals are ignored, Trump may look for ways to reduce spending through executive action — for example, by making changes in various government program rules, according to a person familiar with the White House strategy.

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After Republicans were unable to repeal the 2010 health care law, Trump set in motion several executive initiatives aimed at reducing health care costs without the need for legislative action. And when Congress did not appropriate the $5.7 billion he was seeking for border barriers, Trump sought to shift funds from other programs into border security.

Robert Greenstein, president of the liberal-leaning Center on Budget and Policy Priorities, said on a call with reporters Friday that the budget “signals what the administration has in mind” for executive orders and regulatory changes, two areas where the administration has been active the last two years.

Parity principle

In the last three bipartisan agreements to raise the spending caps — which came at the end of 2013 and 2015, and again in early 2018, after losing much of the fiscal year without a deal — Democrats successfully insisted on parity, or roughly equal increases to defense and nondefense spending. With Trump starting from a much different negotiating position, it’s unclear whether and when the two parties can reach agreement.

“We have had a general agreement on parity, which has kept us working together for a number of years,” Senate Minority Whip Richard J. Durbin said last week. “If the president abandons that, there’s going to be quite a bit of friction between Democrats and Republicans.”

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Some Republicans have also criticized the strategy, suggesting that in the days after the budget arrives, the GOP-led Senate and Democrat-led House could work together at some distance from Trump to try to reach agreement on higher spending totals.

“I don’t think anybody takes the $174 billion [Overseas Contingency Operations funding] seriously,” said Texas Rep. Mac Thornberry, the ranking Republican on the House Armed Services Committee. Spending totals have to be “resolved in the negotiation between the House and the Senate, and I don’t think that anybody will even pay attention to that,” he added.

Senate Armed Services Chairman James M. Inhofe said the plan to get $174 billion in OCO funds is “not going to happen, I’m afraid,” though the Oklahoma Republican emphasized that the important thing for him was to achieve the president’s overall $750 billion defense topline.

“My effort is to get away from parity,” Inhofe said, adding Democrats will not accept anything less.

Senate Appropriations Chairman Richard C. Shelby said trying to get a budget passed with deep cuts to nondefense spending “would be hard.” After seeing presidential budget requests for the past four decades, the Alabama Republican said, “I haven’t seen any of them enacted yet.”

Kellie Mejdrich and Doug Sword contributed to this report.

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