Even with deep spending cuts, the president’s plan would not balance the budget until the mid-2030s, two people briefed on the plan said, falling short of the 10-year time frame that Republicans have sought for years. The people spoke on the condition of anonymity to discuss the plan ahead of its public release.
Instead, Trump’s advisers say the budget would balance after 15 years because they presume that economic growth will continue at high levels and bring in more revenue, a prediction that many economists have said is not possible.
Still, the White House’s new 15-year deficit target illustrates the fiscal constraints of an agenda that prioritizes tax cuts and increased defense spending while simultaneously protecting big-ticket items like Medicare from any major changes.
The proposal is Trump’s first comprehensive budget blueprint since Democrats took control of the House in January. Unlike in the past two years, White House officials say they plan to forcefully fight for the proposed cuts, hoping to draw a sharp contrast with Democrats on Capitol Hill.
And the White House plans to expand its effort to cut anti-poverty programs. It will propose strict new work requirements for “able-bodied” Americans across a range of welfare programs, including health care, housing and nutrition assistance.
Many Republicans have said these programs are bloated with waste and discourage people from returning to work. But Democrats have fiercely opposed such requirements in the past, saying they penalize the poor and strip benefits from those in need.
Democrats — and even some Republicans — are already girding for battle with the Trump administration over many of the other proposed reductions, which they say are draconian and would severely restrict a range of government programs, from food assistance to foreign aid.
“Clearly it’s a nonstarter in the House,” said Budget Committee Chairman John Yarmuth (D-Ky.), adding that Democrats have no plans to include the domestic spending cuts. “Obviously we’re going to disregard it.”
Complicating matters for the White House, key Republicans this week signaled that parts of the budget plan would be met with a visceral reaction from both parties once it is formally presented.
“It’s hard to maintain a straight face with that kind of proposal,” said Rep. Tom Cole (R-Okla.), a member of the House Appropriations Committee.
Presidential budgets are routinely rebuffed by Capitol Hill, and Trump’s previous efforts have been no exception. The White House has proposed cuts previously, but officials have backed down and agreed to bipartisan deals to increase spending.
Administration officials are hoping to pivot to targeting spending this time around, particularly as the 2020 election nears and they try to draw Democrats into a debate about the size of government.
“Time and again, Congress has ignored presidential cost-saving recommendations and plowed ahead with irresponsible budgets that increase both spending and the size of government. This needs to stop,” acting White House budget director Russell T. Vought wrote in a recent opinion piece. “It is time for Congress to join the president in his commitment to cutting spending.”
Lawmakers have funded the government through the end of September, but if the White House and Congress don’t reach a new spending deal by that point, they could face another shutdown. Both parties are expected to spend the next few months detailing their proposals, and the White House will take the first step Monday.
In his budget plan, Trump will propose major cuts to domestic and international programs that provide foreign aid, environmental protection and transportation, among other initiatives.
Overall, the White House will seek a 5 percent reduction in spending for these programs compared with caps that were set to go into place next year. Spending for these programs must be approved by Congress each year, and many lawmakers see the proposed cuts as unlikely to get traction.
“Cutting 5 percent of all the other programs? It’d be hard. Plus you got the House, too,” said Senate Appropriations Committee Chairman Richard C. Shelby (R-Ala.). “I think that’d be a difficult task.”
The White House says cuts to these programs will help restrain overall spending levels, even though these programs represent a relatively small portion of the broader budget.
Lawmakers eight years ago put in place budget caps on certain programs, but Congress has routinely raised those caps to prevent big cuts from going into effect. Trump will propose keeping the caps in place for the first time in his presidency, though he will also propose shifting close to $175 billion in defense and emergency money into another fund that does not face the same restrictions. A large portion would go into a fund known as Overseas Contingency Operations. The Obama administration also used this account for defense money, drawing complaints from lawmakers of both parties that the White House was relying on a budget gimmick, a point Cole repeated Friday.
Yarmuth said moving such large sums into the overseas account was “just insane.” He said he’d warned White House budget director Mick Mulvaney against the approach, telling him, “We’re going to kick your butt over this.”
Recent spending deals have involved Democrats accepting big Pentagon funding increases pushed by Republicans, in exchange for GOP support for comparable domestic investments. Lawmakers expect that they will ultimately reach an agreement along similar lines this time, too, which would amount to a bipartisan repudiation of the president’s budget blueprint — although Democrats intend to push for even higher levels of nondefense domestic spending now that they control the House.
White House officials plan to describe the president’s upcoming budget as having three main elements.
The first will be Trump’s continued focus on border security and immigration enforcement, and he is expected to propose billions of dollars in additional spending on these initiatives, including more money for a wall along the U.S.-Mexico border. Before Congress and the White House reached a spending deal in January, Trump led a 35-day government shutdown because Congress would not appropriate $5.7 billion for the construction of a wall.
Eventually, he relented. And last month, Congress agreed to spend $1.375 billion to erect 55 miles of barriers along the Mexican border.
Trump still aims to build a much more extensive series of barriers, and last month he took steps to redirect close to $7 billion in additional funding from other programs. The president reapportioned some of that money by declaring a national emergency at the southern border, a move that infuriated many lawmakers in both parties. The House has passed a resolution that would overturn that declaration, and the Senate is set to take similar action, though Trump has the power to veto the measure and his critics lack the votes to override him.
By signaling that border security will remain a major focus in the upcoming budget, White House officials show no sign of retreating from their clash with Congress over how this money should be used.
Another element of the budget that White House officials plan to tout is reforms that they say are necessary to make the government more efficient and less duplicative. It could not be immediately learned what these changes would be.
Finally, the plan is expected to lay out a new “fiscal path” for the country, a direction White House officials believe has been prompted by economic growth caused by the 2017 tax cut law and the elimination of numerous regulations. The plan will project that the economy will grow by roughly 3 percent a year, slightly higher than the level achieved in 2018 but much higher in the coming years than a range of economists have said is feasible. The Federal Reserve forecasts 2.3 percent growth for 2019.
The White House budget will predict that faster economic growth will boost tax revenue past current projections, helping to reduce the deficit somewhat.
White House officials say the deficit would be eliminated over 15 years if all of Trump’s proposals were enacted.
Trump’s advisers said his first budget proposal, offered in 2017, would have eliminated the deficit within 10 years, but it was slammed by critics who decried its controversial accounting assumptions and rosy economic forecasts. The budget plan last year, like the new plan, also did not eliminate the deficit over 10 years, something that had long been a stated goal of conservatives in Congress.
The federal government spends more than $4 trillion each year on a range of programs, and it will bring in slightly more than $3 trillion this year through taxes and other revenue. The gap between the two figures is called the deficit, which the government pays for with borrowed money by issuing debt.
The government now has more than $22 trillion in debt, and the deficit is projected to run between $900 billion and $1 trillion in the coming years.
To tackle the deficit, Republicans in the past have proposed cutting spending on large programs, such as Medicare, a health-care program for older Americans; food stamp benefits for the poor; and Medicaid, a health-care program for low-income people and those with disabilities.
“Until you get serious about entitlement spending, there’s just no way to balance,” Cole said.
Trump, however, has told aides that they cannot cut Medicare or Social Security spending in his budget because they are very popular with older Americans. That makes it much harder for his budget to constrain spending.
Some Democrats have proposed reducing the deficit by raising taxes, both by reversing some tax cuts that were approved in 2017 and by adding taxes on upper-income households to finance new spending on health care, education and environmental programs.