The Trump administration’s first budget proposal this month will not include any specific changes to the tax code or big programs like Medicare and Social Security, an administration official said, focusing instead on boosting defense spending and cutting other programs that are annually authorized by Congress.
This budget proposal is expected to be released around March 16. Other budget proposals will come at a later date, the Office of Management and Budget spokesperson official said.
Unveiling the budget in this way will be a break from the comprehensive budget package that the Obama administration released at the beginning of its first term.
This means Congress and the public won’t have a clear picture about what President Trump’s budget package would mean for the deficit and debt until sometime later, but the delay also gives the White House more time to negotiate changes with lawmakers on Capitol Hill. The Obama administration proposed its first budget — complete with tax changes — in late February of his first year, but his budget plans often ran into political buzz saws on Capitol Hill, and the Trump administration seems to be deploying a different strategy.
The upcoming budget plan will call for new appropriations for the partial creation of a wall along the border with Mexico and also additional money for the White House’s education initiative, which is intended to expand “school choice” options, White House Office of Management and Budget Director Mick Mulvaney said in a radio interview Monday on “The Hugh Hewitt Show.”
Combined with the proposed increases in defense spending, this will be more than $54 billion in new spending.
The administration will offset all of these costs with cuts in other programs, Mulvaney said, saying the targets would be things that weren’t considered Trump’s priorities.
The White House releases a budget proposal each year that includes tax and spending proposals for the following fiscal year, and this budget package is composed of numerous elements. The Trump administration appears to be breaking these elements out into pieces that will come separately.
The first piece, which will be released around March 16, will be a series of spending increases for defense programs and cuts in other parts of the budget that are known as “discretionary” spending, which must be authorized each year by Congress. This represents 31 percent of the 2017 budget, according to the Congressional Budget Office.
CBO has projected that the government will spend $3.963 trillion in the current fiscal year and bring in $3.404 trillion in revenue, leaving a deficit of $559 billion.
Later this year, the White House will propose changes to “mandatory” spending, which are things such as Medicare, Medicaid and Social Security. This is a much larger portion of the budget, although Trump promised on the campaign trail not to make changes to Medicare or Social Security.
The White House has not said when it will propose specific changes to the tax code, only that it won’t be part of the March 16 budget.
“This is and has always been a sequential budget,” the OMB official said. “The March budget will just be discretionary spending, with mandatory spending coming later as part of the larger budget.”
The tax code changes could have the biggest impact on the budget. Trump has proposed steep cuts in the corporate and individual tax rate, which would expand the deficit starkly if they aren’t offset by the elimination of tax loopholes or other measures to increase revenue. Trump advisers have said the tax cuts will lead to so much economic growth that it will create new revenue, but these sorts of forecasts are controversial because they are very difficult to anticipate.
If the slimmed-down budget comes on March 16, it will arrive the same day Congress’s suspension of the debt ceiling expires. In 2015, Congress suspended the debt ceiling until March 15, 2017. So on March 16, the Treasury Department will have to use what’s known as “extraordinary” measures to avoid falling behind on government obligations. It will likely be able to use these extraordinary measures, such as delaying pension payments, only until August or September, budget experts have said. After that time, if Congress doesn’t intervene, they estimate the government will begin falling behind on its debts.
The White House and Congress face another near-term deadline. Congress has funded government operations only through April 28, which means lawmakers will have to reach a new spending agreement by that date to avoid a partial shutdown of the government. Many conservatives want the White House to pursue steep spending cuts this year, but Democrats and a number of Republicans have raised concerns about this approach. This could expedite a fiscal showdown between the White House and Congress next month, likely while they are still working to craft a tax proposal and before they put out a plan for any changes to Medicaid.