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In big reversal, new Trump budget will give up on longtime Republican goal of eliminating deficit

The spending deal reached between Senate Democrats and Republicans would garner trillion-dollar-plus annual deficits, bringing fears of larger economic effects. (Video: Reuters)

President Trump on Monday will offer a budget plan that falls far short of eliminating the government’s deficit over 10 years, conceding that huge tax cuts and new spending increases make this goal unattainable, three people familiar with the proposal said.

Eliminating the budget deficit over 10 years has been a North Star for the Republican Party for several decades, and GOP lawmakers took the government to the brink of default in 2011 when they demanded a vote on a amendment to the Constitution that would prohibit the federal government from spending more than it takes in.

House Speaker Paul Ryan (R-Wis.), when he used to chair the House Budget Committee, routinely proposed tax and spending outlines that would eliminate the deficit over 10 years, even though critics said his changes would lead to a severe curtailment in government programs.

In 2013, Ryan proposed $4.6 trillion in cuts over 10 years, an amount he said was sufficient to eliminate the deficit. Those changes were not adopted by Congress or supported by the Obama administration.

The White House and GOP leaders have largely jettisoned goals like this since Trump took office last year. Trump’s budget plan will call for a range of spending cuts that reduces the growth of the deficit by $3 trillion over 10 years, but it would not eliminate the deficit entirely, said the people familiar with the proposal, who spoke on the condition of anonymity to discuss the plans before they’re publicly unveiled.

GOP leaders have prioritized the tax-cut plan and a major increase to military spending over their past calls for eliminating the deficit. A vocal minority of GOP lawmakers have complained about this shift, but they proved no match for the bulk of the party last week when spending levels for the next two years were expanded.

Still, when Trump proposes a budget that falls far short of eliminating the deficit, it could heighten complaints from conservatives who have said the Republican party has strayed too far.

In 2017, Trump’s budget proposal sought to eliminate the deficit over 10 years, though his budget writers were ridiculed for what some alleged was a $2 trillion math error.

The U.S. government spends more money than it brings in through revenue, a gap known as the budget deficit. The government ran a deficit of $666 billion in 2017. The deficit in 2019 is expected to eclipse $1.1 trillion, in part because of measures put in place since Trump took office.

In June, the Congressional Budget Office projected the U.S. government would run deficits of roughly $10 trillion over the next decade. Since that report, Congress passed a tax-cut law that is projected to add at least $1 trillion to the debt over 10 years, and last week, Congress agreed on roughly $500 billion in new spending measures over the next two years.

It could not be learned how large the White House projects the deficit will be after 10 years. Even after accounting for the $3 trillion in cuts they will offer, the White House is expected to project the economy will grow at a much stronger clip than many economists believe will occur. The faster the economy grows, the more tax revenue will increase, helping offset spending.

Policymakers typically try to contract the deficit when the economy is strong and let it expand when the economy is weak. But the White House and Congress have in recent months sought to take a different approach, expanding the deficit when the unemployment rate is very low and the economy is growing at a stronger rate.

The U.S. government already has roughly $20 trillion in debt, according to some measures. Rising interest rates will make this debt more expensive for taxpayers, a phenomenon budget watchers believe could make it harder for the U.S. government to respond to an economic crisis.

In a brief synopsis of the budget released by the White House Sunday evening, it said it “imposes a fiscal discipline on Washington spending that many in today’s political climate reject, yet which remains more important than ever.”

The budget is expected to target spending cuts at social welfare programs such as Medicaid and the Supplemental Nutrition Assistance Program, large segments of government spending that have long been eyed by Republicans for cuts. The White House is looking at ways to curb these programs by expanding work requirements for beneficiaries, but it is unclear how much money changes like this would save or whether it would find enough political support.

The White House on Sunday evening revealed several parts of the budget that called for spending increases but didn’t detail a single area it planned to propose cutting.

For example, it called for $200 billion in federal funds for Trump’s infrastructure plan, $23 billion for border security and immigration enforcement, $85.5 billion for veterans programs and $13 billion over the next two years to combat the opioid epidemic.