President Donald Trump's $4.8 trillion budget request has set the stage for a battle over the size and role of government — from now through Election Day.
Democrats are already going after proposals for steep cuts to health care and social safety net programs, coupled with an extension of Trump's tax cuts and more money for a southern border wall.
The president has proposed some major cost cutting to trim deficits, much of which would come from Medicare and Medicaid and the signature health insurance expansion signed into law under Trump's predecessor, Barack Obama. Previewing a line of attack Republicans are likely to hear repeatedly in the coming months, Speaker Nancy Pelosi, D-Calif., has already heaped scorn on the fiscal 2021 budget plan as "brazenly inflicting savage multibillion-dollar cuts" to health care entitlements while also seeking to overturn the 2010 health care law in court.
"Americans' quality, affordable health care will never be safe with President Trump," Pelosi said in a statement, echoing arguments that helped propel House Democrats back to control of that chamber in the 2018 midterm elections.
The White House blueprint would stray from a bipartisan budget deal enacted last summer that allowed for modest increases in both defense and nondefense discretionary spending in fiscal 2021. Instead, Trump would allow defense spending to rise as planned, but cut nondefense spending by about 6 percent from this year’s level, or $40 billion.
Over the coming decade, Trump’s plan would cut more than $4 trillion from projected spending, roughly half of which would come from entitlement programs such as Medicare, Medicaid and food stamps.
But the president would provide about $1 trillion over 10 years for a major infrastructure spending initiative that both parties say they favor. And he would pump another $2 billion into a border wall, which is more than Congress agreed to provide for the current fiscal year but far less than the $8.6 billion Trump sought last year.
Trump’s budget includes a “health reform vision” that promises to save $844 billion over the coming decade. After accounting for the repeal of health care taxes already passed by Congress the net savings would be $597 billion.
The administration is also betting it could save nearly $465 billion over 10 years by eliminating “wasteful federal spending” in Medicare. Eliminating “wasteful spending, fraud and abuse” in Medicaid would save an additional $52 billion. The White House also wants to begin transforming Medicaid from an open-ended entitlement to a system of capped payments to states. That change would save $152.4 billion over a decade.
And Trump would push for a yet-to-be-defined program lowering the cost of prescription drugs, an initiative both parties say they support in principle. That effort would save $135 billion over a decade, with specifics subject to negotiation on Capitol Hill.
Winners and losers
The overall cut in nondefense spending masks some dramatic proposed changes to the budgets of various federal agencies.
The State Department and related international programs would suffer a 21 percent cut, with its budget falling to $44.1 billion, including the loss of money provided through an Overseas Contingency Operations account that the administration wants to eliminate.
The budget for the EPA would be slashed by 26.5 percent, to $6.7 billion. And the Army Corps of Engineers would get a 22 percent cut, bringing its budget down to $6 billion.
But other agencies would be big winners. NASA’s budget would get a nearly 12 percent increase, to $25.2 billion, as Trump seeks to return astronauts to the moon by 2024, or what he hopes to be the end of his second term.
And the Department of Veterans Affairs would get a 13.3 percent increase, bringing its discretionary budget to $105 billion, mainly to meet the rising costs of veterans health care.
Taxes and fees
White House officials have teased for months the possibility of a new round of tax cuts as Trump campaigns for reelection this year.
The fiscal 2021 budget includes no major tax cut proposals. Administration officials have said a tax cut plan could be unveiled later this year.
But the budget doubles down on the GOP’s 2017 tax code overhaul . It assumes personal income tax cuts from that law set to expire after 2025 would be made permanent, at a cost of $1.4 trillion over a decade.
And the White House projects generating about $200 billion in new revenue savings over 10 years by requiring Social Security numbers for the child tax credit and earned income tax credit and eliminating some tax breaks such as one for electric vehicles.
Debt and deficits
Annual deficits would gradually decline over the coming decade from this year’s $1 trillion level.
But Trump, who once promised as a candidate to pay off the national debt in eight years, would have the government running deficits at least through 2030. Deficits would amount to $5.6 trillion over the decade.
And the debt held by the public would grow from nearly $17.9 trillion this fiscal year to nearly $23.9 trillion in fiscal 2030. As a share of the economy, however, debt would be on the decline, falling from 80.5 percent of gross domestic product this fiscal year to 66.1 percent in fiscal 2030.
The White House projects the economy will grow by an average of 3 percent a year if all of its proposals are adopted. The administration said real, or inflation-adjusted, gross domestic product would grow by 3.1 percent in 2021, up from its estimate of 2.8 percent this year.
The administration forecast is considerably higher than the Congressional Budget Office's estimate that GDP will grow by 2.2 percent this year, 1.9 percent in 2021 and average 1.7 percent through 2030.
An administration official said the White House forecast is based in part on the expectation the 2017 tax cuts, which would be extended in the budget plan, will spur business investment and economic growth.
Trump's budget proposals will get skewered by Democrats on Capitol Hill this week.
The House Budget Committee will hear from acting White House budget director Russell Vought on Wednesday, while the Senate Finance Committee hears from Treasury Secretary Steven Mnuchin. “Judging by initial reports, this destructive and irrational president is giving us a destructive and irrational budget,” House Budget Chairman John Yarmuth, D-Ky., said in a statement.
Given the political opposition and the demands of reelection campaigns this fall, there is little chance that spending bills will be passed before the Oct. 1 start of the new fiscal year.
And Yarmuth has already tipped his hand that a budget resolution probably isn't in the cards this year, which would make translating Trump's entitlement spending cuts into legislative reality very unlikely. That's because without the availability of budget "reconciliation" procedures that adopting a joint budget blueprint would provide, there's little chance of obtaining the necessary 60 votes to move such legislation through the closely divided Senate — let alone convincing enough House Democrats to go along.