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Trump to propose $4.8 trillion budget

President Trump is expected to release a $4.8 trillion budget that charts a path for a potential second term, proposing steep reductions in social-safety-net programs and foreign aid and higher outlays for defense and veterans.

The plan would increase military spending 0.3%, to $740.5 billion for fiscal year 2021, which begins Oct. 1, according to a senior administration official. The proposal would lower nondefense spending by 5%, to $590 billion, below the level Congress and the president agreed to in a two-year budget deal last summer.

The proposal is unlikely to become law, however, as Democrats control the House and spending bills in the GOP-led Senate need bipartisan support. Democrats signaled their opposition later Sunday to the administration’s budget plan, which Rep. John Yarmuth (D., Ky.), chairman of the House Budget Committee, called “destructive and irrational.”

Graphic: Proposed spending changes over a decade compared with current law, by major category

Budget analysts expect lawmakers to punt final decisions on 2021 spending until after the November election, and instead fund the government with temporary spending measures for the first few months of the fiscal year.

NASA would see a 12% increase next year under Mr. Trump’s proposal as he seeks to fulfill his goal of returning astronauts to the moon by 2024. On the other hand, the Environmental Protection Agency’s spending would be slashed by 26%.

The plan would request $2 billion in new funding for construction of the wall on the southern U.S. border, the senior administration official said—Mr. Trump’s signature 2016 campaign promise that sparked fights with Democrats, leading the president to trigger a historic five-week government shutdown last winter after lawmakers refused to fund the project. 

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, including $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 disability benefits.

The budget would lower future spending from where it would be under current policy. A senior administration official said government spending will continue to rise, but not as much as it would under current policy.

The budget plan 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. It also expects economic growth will be faster than most economists predict if the president’s policies are implemented. After a brief pickup in 2018, growth last year settled back to the roughly 2% pace that has prevailed during the decade since the recession ended, where many economists expect it to remain. At the same time, unemployment has fallen close to a 50-year low.

The White House projects the economy will grow 3.1% in the fourth quarter of 2020 compared with a year earlier, and 3% in 2021, and that it will continue to expand at that pace for the rest of the decade.

The federal budget deficit would shrink to $966 billion next year from an estimated $1 trillion in 2020, but more than twice what Mr. Trump projected in his first budget proposal in 2017. The administration forecasts total deficits over the next decade would shrink $4.6 trillion under its plan, and annual deficits would be eliminated by 2035. During his 2016 campaign, Mr. Trump discussed paying off the federal debt within eight years.

Source: The Wall Street Journal

Graphic: Congressional Budget Office


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