President Donald Trump on Monday unveiled his annual fiscal 2019 budget request, a $4.4 trillion blueprint that does not balance after 10 years while calling for a major military buildup and assuming lower savings from economic growth than in last year’s iteration.
Debt and Deficits
The tax and spending plan aims to trim $3.6 trillion from annual deficits over the next 10 years through program cuts and associated savings on debt service payments, while bringing in an extra $813 billion in revenue from economic growth.
However, the budget would not balance over the next decade, a shift from traditional conservative budgets. In part, that is a result of the administration toning down their growth projections from last year’s budget request, which assumed $2.06 trillion in 10-year savings from implementing Trump's tax and regulatory initiatives.
Projected deficits would rise from $873 billion in fiscal 2018 to $987 billion in fiscal 2020, before declining for the rest of the next decade. At the end of the 10-year budget window, there would still be a budget deficit — $363 billion in fiscal 2028 — rather than a surplus.
The White House’s budget forecast is less rosy than last year, when Trump’s fiscal 2018 plan estimated a deficit of $526 billion in fiscal 2019 and projected a $16 billion budget surplus by fiscal 2027.
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The administration is projecting total borrowing needs of at least $1 trillion this year and for the next three fiscal years, including financing for federal credit programs. Debt held by the public rises to nearly 82 percent of gross domestic product by fiscal 2022 before beginning to slope downwards, according to the budget documents.
Trump’s spending priorities for fiscal 2019 echo many of his requests last year: a massive military buildup, border security, veterans programs and resources to curb the opioid epidemic. He’s also seeking $200 billion in new federal funds for his infrastructure overhaul, aiming to leverage nearly $1.5 trillion in total spending with the rest coming from private investors and state and local governments.
The White House budget again calls for winding down nondefense discretionary spending over the next decade, saving up to $1.5 trillion from domestic programs while adding $777 billion for the military over 10 years. Those numbers appear to not take into account the immense spending deal Trump just signed, and it’s unlikely the broad domestic spending cuts would gain any traction in Congress.
The budget would also cut $1.8 trillion from mandatory spending programs over the next decade. More than a third of those savings would come from repealing the 2010 health care law. Another $236 billion in 10-year savings would come from cutting “wasteful spending in Medicare” and changing “drug pricing and payment policies;” $263 billion comes from reducing welfare programs and $203 billion from changes to federal student loans.
Taxes and Fees
On the revenue side, Trump’s combined policies would lower receipts by $21 billion over ten years — not much of a change, as the administration lets last year's mammoth tax overhaul soak in.
Desired changes to air traffic control would lower revenue by more than $125 billion over the decade, while health care changes modeled after a Senate GOP proposal to repeal the health care law would drop revenue by another $37 billion. Offsetting revenue increases would come from proposals including limiting medical liability, increasing federal employees’ retirement contributions, and devoting more resources to IRS tax collections.