More Details Surface Re: Trump's FY 2021 Budget

Posted on 02/09/2020 5:57 PM

Winners and losers in Trump budget proposals, even though Congress will not approve

Update:

Trump budget proposes savings in agriculture mandatory programs (in millions of dollars):

Item                                                                                 2021-2025       2021-2030

Tighten farm payment eligibility rules                                  -1,255               -2,654
Reduce Crop Insurance subsidies                                      -9,999              -24,985
Eliminate redundant Farm Bill programs                             -3,151                -6,417
Streamline conservation programs                                      -3,300                -9,145
Eliminate in-kind international food aid                                   -830                -1,660
Establish new user fees for food inspection
   and mineral extraction                                                       -2,685               -5,985
Reform commodity purchases under Section 32                 -2,289                -5,141
Improve Child Nutrition program integrity                                -679                -1,714
TOTAL, AGRICULTURE                                                    -24,188             -57,701



President Trump on Monday will unveil a $4.8 trillion budget that proposes steep reductions in social-safety-net programs and foreign aid and higher outlays for defense and veterans. Trump said on twitter Saturday that the budget “will not be touching your Social Security or Medicare.”

The plan would increase military spending 0.3%, to $740.5 billion for fiscal year 2021, which begins Oct. 1, according to administration officials and some specific numbers first appearing in the Wall Street Journal.

The proposal would cut nondefense spending by 5%, to $590 billion, below the level Congress and the president agreed to in a two-year budget deal last summer and a level that will not be approved by lawmakers.

The budget proposes moving the U.S. Secret Service from the Dept. of Homeland Security to the Treasury Department. The change would require congressional approval.

Dead before arrival. As one veteran budget watcher said, “Budgets are the most pointless and feckless exercise and each year are more irrelevant than the last. Particularly in this administration they are Mick Mulvaney odysseys.” Bottom line: Federal spending is appropriated by Congress. However, this year’s budget will serve as a blueprint for Trump’s priorities if he wins a second term. And some of the proposals can be achieved without the approval of Congress.

Agencies that would receive the biggest boost under Trump's priorities include NASA, which would see a 12% increase next year as Trump seeks to fulfill his goal of returning astronauts to the moon by 2024.

     Other winners in Trump’s budget include the Department of Veterans Affairs, with a 13% increase next year, and the Department of Homeland Security, with 3%. The National Nuclear Security Administration’s budget would get a 19% boost.

     As previously noted, the package requests $2 billion in new funding for construction of the wall on the southern U.S. border, significantly less than the $5 billion the administration sought last year. The budget document says that the administration expects to have completed 400 miles of new border wall by the end of 2020. Besides the border wall funding, Trump plans to ask Congress for $15.6 billion for the Customs and Border Protection agency, a 7% increase from current spending levels, and $9.9 billion for Immigration and Customs Enforcement, a 23% increase.

     The proposals include $1 trillion in new infrastructure spending, including $200 billion for high-priority projects. The White House last week signal a $25 billion proposal for "Revitalizing Rural America" with grants for broadband Internet access and other traditional infrastructure projects such as roads and bridges. According to USA Today, the plan also includes:

  • A $1.5 billion loan level for rural business and industry guaranteed loans;
  • $8.9 billion in farm loans;
  • $614 million in funding for water and wastewater grants and loans;
  • $5.5 billion in rural electric loans;
  • $250 million for a USDA Rural e-Connectivity "ReConnect" pilot program, $690 million in loans to finance broadband infrastructure deployment of rural telecommunication facilities, and $30 million for the "Community Connect grant program" that targets remote areas;  
  • Funding for health care programs that include what the budget plan calls "telemedicine services," rural health clinics, and new emergency hospitals. The proposed budget will also call for the Department of Veterans Affairs to provide more programs in rural areas;
  • $13.5 million for the Bureau of Indian Affairs and the Bureau of Indian Education to expand broadband access in areas that are home to Native Americans.

     The budget will seek an increase in funds to counter developing economic threats from China and Russia.

The White House proposes to cut spending by $4.4 trillion over a decade. Of that, it targets $2 trillion in savings from mandatory spending programs, spending that does not include Social Security or Medicare., but includes $130 billion from changes to Medicare prescription-drug pricing, $292 billion from safety-net cuts — such as work requirements for Medicaid and food stamps — and $70 billion from tightening eligibility access to federal disability benefits, along with crop insurance and other agriculture-related cuts, according to information received. The budget will also cut spending on federal disability insurance benefits by $70 billion and on student loan forgiveness by $170 billion.

     A big loser in the coming Trump proposal is the Environmental Protection Agency is a big loser in the coming Trump proposal, which wants spending axed by 26%.

     Other budget losers include the Department of Housing and Urban Development, whose budget would be cut by 15%, although the proposal includes $2.8 billion in homelessness assistance grants. The Commerce Department’s budget would be reduced by 37% from 2020, but the bulk of that cut comes via completion of the census. Foreign aid would be slashed by 21% — the plan seeks $44.1 billion in the upcoming fiscal year compared with $55.7 billion enacted in FY 2020. Aid to Ukraine would remain at its 2020 levels under the new proposal. Administration officials told Reuters that Trump would request an increase in funding for the U.S. International Development Finance Corporation (DFC) to $700 million compared to $150 million the previous year. The plan would eliminate funding for the Corporation for Public Broadcasting. The Centers for Disease Control and Prevention would see its budget decline 9%, but with the coronavirus sparking global panic, $4.3 billion in funding for fighting infectious diseases would be preserved. The administration has notified Capitol Hill that it might reprogram $136 million in funds from fiscal year 2020 to address the virus, but no final decision has been made on whether the money is needed. The Education Department would be cut by $6 billion as the administration proposes a consolidation of elementary and secondary education, a person briefed on the proposal said.

2017 tax cut assumed extended. The budget assumes the $1.5 trillion tax-cut package enacted in 2017, set to expire by 2025, is extended, and projects revenues in line with last year’s proposal. Extending those tax cuts would reduce revenue by roughly $1 trillion.

Regarding economic assumptions, the plan forecasts economic growth will be faster than most economists predict if the president’s policies are implemented. The document projects the economy will grow at a 2.8% rate this year, which is more than a half percentage point more than forecasters at the Federal Reserve and the Congressional Budget Office predict.

     Growth in 2019 fell nearly a percentage point short of White House projections. Officials on Sunday attributed a half-point of that shortfall to the effects of American trade policy — specifically, uncertainty over resolution of trade talks with China and congressional approval of a new trade agreement with Canada and Mexico. They said those uncertainties were now resolved and that growth would accelerate accordingly.

     The administration predicts 3.1% growth in the fourth quarter of 2020 versus a year earlier, and 3% in 2021, and that it will continue to expand at that pace for the rest of the decade. The Fed, the budget watchdog and others all see growth falling below 2% annually in that time.

     The administration forecasts the 10-year Treasury yield, which reflects the cost of government borrowing to finance the deficit, will average 2% in 2020 and rise gradually over the next decade, well below the rates forecast in last year’s budget. The change reduces projected net interest costs by $600 billion over the next decade.

The federal budget deficit would shrink to $966 billion next year from an estimated $1 trillion in 2020, but more than twice what Trump projected in his first budget proposal in 2017. The administration forecasts total deficits over the next decade would shrink $4.6 trillion under the administration's plan, and annual deficits would be eliminated by 2035. The Congressional Budget Office said in January that it projected that the United States deficit would top $1 trillion annually over the next 10 years, reaching $1.7 trillion in 2030. During Trump’s first year in office, his advisers said their budget plan would eliminate the deficit by around 2028. The federal debt has already grown by about $3 trillion under Trump.


 

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