Monday 25 June 2018

Trump’s 4.4 trillion dollar budget would increase US deficit

The budget never comes close to balancing the books, even after 10 years – unlike last year’s pledge.

The President’s FY19 Budget is on display in Washington (AP)
The President’s FY19 Budget is on display in Washington (AP)

By Andrew Taylor

President Donald Trump has unveiled a 4.4 trillion dollar (£3.18 trillion) American budget for next year – heralding an era of one trillion dollar-plus (£0.72 trillion) federal deficits.

Unlike the plan Mr Trump released last year, the budget never comes close to promising a balanced ledger, even after 10 years.

The growing deficits reflect, in part, the impact of last year’s tax overhaul, which is projected to cause federal tax revenue to plummet. Furthermore, Monday’s budget submission does not yet reflect last week’s two-year bipartisan 300 billion dollar (£216 billion) pact, which wholly rejects Mr Trump’s plans to slash domestic agencies.

Tax revenue would plummet by 3.7 trillion dollars (£2.67 trillion) over the 2018-27 decade, the budget projects.

The spending spree, along with last year’s tax cuts, has the deficit moving sharply higher with Republicans in control of Washington.

Mr Trump’s plan sees a 2019 deficit of 984 billion dollars (£711 billion), though 1.2 trillion dollars (0.86 trillion) is more plausible after last week’s budget pact and 90 billion dollars’ (£65 billion) worth of disaster aid is tacked on.

That is more than double the 2019 deficit the administration promised last year.

All told, the new budget sees accumulating deficits of 7.2 trillion dollars (£5.2 trillion) over the coming decade; last year, Mr Trump’s plan projected a 10-year shortfall of 3.2 trillion dollars (£2.31 trillion).

The 2019 budget was originally designed to double down on last year’s proposals to slash foreign aid, the Environmental Protection Agency, home heating assistance and other non-defence programmes funded by US congress each year.

Jason Furman, a top economic adviser to ex-president Barack Obama, said: “A lot of presidents’ budgets are ignored. But I would expect this one to be completely irrelevant and totally ignored.

“In fact, congress passed a law last week that basically undid the budget before it was even submitted.”

In a preview of Monday’s release, the White House focused on Mr Trump’s 1.5 trillion dollar (£1.08 trillion) plan for the nation’s crumbling infrastructure. He also is asking for a 13 billion dollar (£9.39 billion) increase over two years for opioid prevention, treatment and long-term recovery. A request for 23 billion dollars (£16.6 billion) for border security, including 18 billion dollars (£13 billion) for a wall along the US-Mexico border and money for more detention beds for detained immigrants, is also part of the budget.

Mr Trump would again spare Social Security retirement benefits and Medicare he promised during the 2016 campaign. While his plan would reprise last year’s attempt to scuttle the “Obamacare” health law and slash the Medicaid programme for the elderly, poor and disabled, Mr Trump’s allies on Capitol Hill have signalled there is no interest in tackling thorny health issues during an election year.

The budget also endorses a plan by senators Lindsey Graham and Bill Cassidy to replace the Obama-era health law with 1.6 trillion dollars (£1.1 trillion) in subsidies to states over the coming decade.

The plan also reprises proposals from last year’s Trump budget to curb crop insurance costs, cut student loan subsidies, reduce pension benefits for federal workers and cut food stamps, among other proposals.

Press Association

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