The White House on Monday offered a $4.4 trillion budget plan that brought into sharp focus the fiscal strains created by the Trump administration and Congress in the past year, revealing how large tax cuts and a new spending agreement are driving up government debt.
The White House projected the deficit would swell to near $1 trillion annually in 2019 and 2020 because of the new tax law and last week’s agreement to add $500 billion in new spending.
“Does it balance? No, it doesn’t,” White House Office of Management and Budget Director Mick Mulvaney told reporters Monday. “I probably could have made it balance, but you all would have rightly absolutely excoriated us for using funny numbers because it would have taken funny numbers do to it.”
He placed the majority of the blame on Congress, saying lawmakers simply refused to cut spending.
The worsening fiscal picture has put enormous pressure on Congress to try to reconcile Trump’s call for even more spending on infrastructure and border security with long-held promises of wiping out the deficit over 10 years. As the growing deficit pushes debt levels beyond $20 trillion, rising interest rates are making it more expensive for the Treasury Department to borrow money.
But the White House and Congress have shown little willingness to cut back on spending, finding it easier to cut taxes and increase spending during Trump’s presidency.
Trump’s budget plan included a number of other initiatives that senior aides hope will be considered as budget talks continue this year.
The proposal includes new measures to speed up approvals for generic drugs, something the White House believes will cut spending on Medicare and Medicaid. And it called for cutting the Supplemental Nutrition Assistance Program, commonly known as food stamps, by 20 percent in 2019 and even more in the following years. It would do this in part by requiring many beneficiaries to accept food deliveries in addition to financial assistance, a change the White House believes will improve nutrition quality and cut back on costs.
Democrats were unanimous in scorching Trump’s budget proposal and saw it as a blueprint they could use to attack Republicans going into the midterm elections.
“He slashes education, environmental protection and Medicare and Medicaid,” Senate Minority Leader Charles E. Schumer (D-N.Y.) said on the Senate floor. “While corporations reap billions in tax giveaways, older Americans now have to worry about the Trump administration cutting Medicare and Medicaid. It’s in his budget.”
He said: “The Trump administration should have no illusions about its budget becoming law. It won’t.”
Rep. John Yarmuth of Kentucky, the top Democrat on the House Budget committee, said that while the deficit and debt are “pretty bewildering” to the average voter, Democrats would be pointing to the GOP’s record on those issues heading into the midterms, particularly in relation to last year’s tax bill that added $1.5 trillion to the debt.
“I think we will certainly talk about the deficit and the connection to the tax bill. I don’t think there’s any question about that,” Yarmuth said.
“It’s an interesting role reversal,” he said.
The budget sent conflicting signals, calling for both increases and reductions in spending at a time when Congress appears less inclined to take direction from the White House on economic matters.
For example, the plan proposed cutting the Environmental Protection Agency’s budget by more than 20 percent just a few days after Congress agreed to add money to the EPA’s budget.
The Trump budget also proposed adding more money to the National Institutes of Health one year after the White House called for big cuts to that agency. Mulvaney said at the briefing that he had learned a lesson from some of the cuts he offered last year, adding that Congress “pounded the hell out of me.”
One reason White House officials believe their spending-cut proposals will have little traction is because lawmakers agreed last week to boost spending levels over the next two years by $500 billion, boosting military and domestic programs to meet priorities of both Democrats and Republicans.
Mulvaney said Monday that many of the White House’s proposals to ratchet back spending would probably be ignored by lawmakers, but he said it was important to specify the administration’s priorities as budget discussions begin.
Congress is typically unwilling to tackle tough legislation in an election year, and Capitol Hill looks unlikely to be fertile ground for any presidential initiative in the months ahead. The deep safety-net cuts in Trump’s budget may play to his base, but they will go nowhere in the Senate, where support would be needed from Democrats.
The budget calls for $716 billion in defense spending spread across a number of federal agencies in 2019, a substantial increase from 2017 levels, as part of a costly effort to retool the military to deter and, if necessary, fight major powers such as Russia and China.
Defense Secretary Jim Mattis, who was flying to Rome for defense ministerial meetings, described the budget as “quite an achievement for the president” that will return the United States to a “position of primacy.”
The Trump plan provides more money for just about everything a general or admiral might desire. Some of the additional money, including $70 million for training of sailors and new ship equipment, is being set aside to fix pressing needs. Navy ships have been involved in a series of deadly accidents at sea in the past year.
Trump has spoken often about the need to modernize the nuclear arsenal to ensure that the United States remains “the most powerful nation in the world.” The current budget sets aside $24 billion for all three of the legs — submarine-carried, land-based and air-launched — of America’s nuclear triad.
To put Eastern European allies at ease and deter Russia, Trump’s budget request includes more than $6.3 billion for a multiyear program that will send additional combat equipment to places such as Poland and Estonia.
The budget also seeks $13 billion over the next two years to combat opioid addiction and $18 billion for the construction of a wall along the Mexico border.
But it proposes big cuts on spending in other areas, particularly health and welfare programs.
Trump’s budget calls for cutting federal Medicaid funding by $250 billion over the next 10 years by repealing the Affordable Care Act and giving states more flexibility to bring down health costs. It would also cut more than $200 billion from Medicare spending, though White House officials cautioned that this was meant to target what it believes are overpayments and would not lead to a reduction in benefits.
Elsewhere, the budget cuts billions from the crop insurance program that farmers use to protect themselves against loss. That angered the chairman of the Senate Agriculture Committee, Pat Roberts (R-Kan.), who said that Trump promised him not to cut the program. “I thought we had an agreement on crop insurance,” Roberts said. “I know it’s OMB’s position that these are reforms. They’re not reforms. They’re cuts.”
Trump’s budget arrives on Capitol Hill barely a month into the year, but lawmakers are increasingly preoccupied by the approaching 2018 midterm elections, when Republicans will defend their majorities in the House and Senate.
With Congress in charge of the purse, presidential budgets are little more than aspirational documents at best, with the potential to guide lawmakers in spending decisions. This time around, though, those decisions have already been made. The budget unveiling comes days after Congress signed off on a massive two-year budget deal that includes huge increases for the military as well as for domestic agencies that Trump has in the past targeted for cuts. Congress will rely on those figures, not on Trump’s plan, in writing spending bills for the remainder of the 2018 fiscal year and the next one.
Even many Republicans responded to the budget with a cool shrug. “We’re going to have to live within the reality of [last week’s] agreement, and the president’s budget in that sense will be less relevant than it would have been absent this deal,” Rep. Tom Cole (R-Okla.) said.
Trump’s decision to abandon GOP orthodoxy of aiming for a balanced budget within 10 years represented a split with congressional allies, including House Speaker Paul D. Ryan (R-Wis.), that stands to make it that much tougher for Republicans to claim they’re the party of fiscal discipline.
House Budget Committee Chairman Steve Womack (R-Ark.) said it would be his panel’s intention to write a budget that does balance.
“I don’t know that I would characterize it as disappointing,” he said of Trump’s decision to forgo a balanced budget. “Presidents propose. The president is going to advocate for those things that they believe are most needed in our economy right now, and I am all over that. I think that’s wonderful.”
But the other side of the equation, Womack said, is “where are we going with deficits and debt, can we justify the expense, and if so how are we going to pay for it on the back end in that 10-year window? And that conversation is just beginning since we just received the budget.”
Even though Congress has set budget levels for the next two years, members must vote on appropriations bills before late March. Mulvaney predicted Congress would try to assemble a huge spending package to fund all programs through the end of September. Few others in the White House have been vocal in calling for spending cuts, making it harder for him to persuade lawmakers to take these requests seriously.
“I do think that spending a bunch of money that we don’t have is wrong,” he said.
Greg Jaffe contributed to this report.