Trump bud­get in­cludes in­fra­struc­ture plan, steep so­cial cuts, ris­ing deficits

Daily Mirror (Sri Lanka) - - FOREIGN -

Pres­i­dent Don­ald Trump on Mon­day un­veiled an am­bi­tious pro­posal to re­new Amer­i­can in­fra­struc­ture as part of a bud­get that calls for a stun­ning rise in debt and tril­lions in cuts to the so­cial safety net and other spend­ing.

The blue­print for the 2019 fis­cal year aban­dons the long-held Re­pub­li­can goal of bal­anc­ing the fed­eral bud­get within a decade, with deficits pro­jected to peak in 2020 and per­sist into the fore­see­able fu­ture amid an ag­gres­sive and costly de­fense buildup.

The ini­tia­tive to re­vive crum­bling US roads, bridges and air­ports in­cludes just US $ 200 bil­lion in fed­eral funds, which the White House says will spur at least an­other US $ 1.3 tril­lion in in­vest­ments from state gov­ern­ments and pri­vate in­vestors.

Ad­min­is­tra­tion of­fi­cials tout the in­fra­struc­ture plan as part of a shift back to na­tional pri­or­i­ties, with US $ 50 bil­lion ded­i­cated to projects in ru­ral ar­eas, many of which favoured Trump in the 2016 elec­tions.

Trump said the shift comes in the wake of the waste­ful mil­i­tary spend­ing since the ter­ror­ist at­tacks of Septem­ber 11, 2001. But he also touted a big boost in de­fence spend­ing, in­clud­ing a re­vived nu­clear arse­nal that would leave the US armed forces “far in ex­cess of any­body else.”

“We have spent US $ 7 tril­lion in the Mid­dle East, US $ 7 tril­lion. What a mis­take,” Trump said Mon­day.

“And we’re try­ing to build roads and bridges and fix bridges that are fall­ing down and we have a hard time get­ting the money and its crazy.”

De­bate in Con­gress

Over 10 years, the White House pro­posal seeks to slash tril­lions in spend­ing across the much of the fed­eral gov­ern­ment, with the knife go­ing es­pe­cially deep into spend­ing on health and poverty.

It would elim­i­nate for­mer Pres­i­dent Barack Obama’s sig­na­ture health in­surance pro­gramme and cut more than US $ 200 bil­lion in food as­sis­tance for the poor while cut­ting med­i­cal pro­grammes aimed at the poor and older Amer­i­cans.

De­spite these cuts, the US $ 4.4 tril­lion to­tal bud­get pro­posal still in­creases spend­ing by 10 per­cent over 2017.

The ad­min­is­tra­tion’s fis­cal plan likely will have lit­tle real im­pact once de­bate be­gins in Con­gress, where law­mak­ers may find it hard to im­pose some of the big pro­gram cuts.

But White House bud­get pro­pos­als are an im­por­tant sig­nal of the ad­min­is­tra­tion’s pri­or­i­ties, with deficits fore­cast to peak at nearly US $ 1 tril­lion in 2020 and drive up the fed­eral debt by a stun­ning 61 per­cent over 2017 lev­els by 2028.

“It’s a mes­sag­ing doc­u­ment,” said White House Bud­get Di­rec­tor Mick Mul­vaney, a for­mer Re­pub­li­can law­maker long aligned with the Tea Party move­ment for fis­cal re­straint -- which op­posed Pres­i­dent Barack Obama’s ef­forts to launch an in­fra­struc­ture in­vest­ment pro­gramme dur­ing the re­ces­sion. He ac­knowl­edged the White House did not ex­pect the doc­u­ment to be­come law but in­stead to set the tone among law­mak­ers.

But the spend­ing plan is sure to raise the hack­les of deficit hawks in Con­gress who will ques­tion how the gov­ern­ment can jus­tify such am­bi­tious projects amid yawn­ing rev­enue short­falls.

In­vest­ment bank Jpmor­gan said Mon­day that Trump’s deficit was ex­pected to surge to 5.4 per­cent of GDP in the 2019 fis­cal year, the high­est ever with­out a re­ces­sion, and sur­passed only by the deficit reached dur­ing the global fi­nan­cial cri­sis.

The plan is based on es­ti­mates the US econ­omy will ex­pand at a 3 per­cent an­nual clip for the next six years, a growth rate many economists say is un­re­al­is­tic, even given the short­term bump from the mas­sive tax cuts ap­proved in De­cem­ber.

Trump is ex­pected to host law­mak­ers from both ma­jor par­ties at the White House this week in an at­tempt to ham­mer out dif­fer­ences.

Sen­a­tor Chuck Schumer, leader of the op­po­si­tion Democrats in the up­per house, on Mon­day ac­cused the White House of ask­ing the mid­dle class, chil­dren and work­ers to shoul­der the bur­den of tax “give­aways” to cor­po­ra­tions.

Speak­ing on the Se­nate floor, he said it would be best for Con­gress to hash out spend­ing lev­els on their own and “ig­nore” the pres­i­dent.

Trump “should have no il­lu­sions about his bud­get be­com­ing law,” Schumer said. “It won’t be­come law.”

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