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Donald Trump's budget proposal cuts social welfare and massively increases federal deficit

Alexandra Wilts
President Donald Trump is proposing a $4 trillion-plus budget: AP

President Donald Trump is proposing major cuts to social welfare programmes as part of a new $4.4 trillion spending plan that would massively increase the federal deficit.

While Mr Trump is touting more money for infrastructure improvements and the military – including the border wall with Mexico – such spending increases, when allied with the tax cuts provided at the end of last year, means severe pressure is being placed on government debt.

The budget proposal for Fiscal Year 2019, which begins 1 October, would widen the federal deficit to $984bn by October 2019. It also recommends spending $57bn less on domestic programmes than a cap previously agreed to by Congress. Last year, the White House projected that its tax and spending proposals would lead to a budget surplus of $16bn in 2027 – but has now said that will not be the case.

The plan, largely viewed as a vision statement by Mr Trump, has little chance of being enacted as written since it has to be approved by Congress. It also serves as another indicator of the President’s departure from traditional Republican orthodoxy, which has historically called for a balanced budget.

The President is demanding big boosts to military and infrastructure spending along with steep cuts to domestic programmes and entitlements, including Medicare – the federal health insurance programme for people who are 65 or older.

But despite upbeat economic forecasts and proposed funding reductions on social programmes, the plan still lays out a spending spree and projects deficits totalling at least $7.1 trillion over the next decade. It also embraces the $1.5 trillion tax cut passed by Congress at the end of 2017.

Complicating matters, the President last week signed a $300bn bipartisan budget measure that would raise both defence and domestic spending, negating many of the cuts in his new budget plan.

Mr Trump has long derided what he considers to be Washington’s wasteful spending.

“As of a couple of months ago, we have spent $7 trillion in the Middle East. $7 trillion dollars. What a mistake. But it is what is,” Mr Trump said on Monday.

“Think about it: as of a couple of months ago, $7 trillion in the Middle East and the Middle East is far worse now than it was 17 years ago when they went in and not so intelligently, I have to say, went in,” he added, alluding to US wars in Iraq and Afghanistan.

Like in his budget proposal last year, the blueprint is asking members of Congress to drastically reduce spending on environmental and diplomatic programmes he has long considered to be wasteful: a 27 per cent cut to the State Department and 34 per cent to the Environmental Protection Agency, with the elimination of virtually all climate change-related programmes.

If the President’s demands are heeded, the Pentagon would see an $80bn increase in its budget, up 13 per cent. At the same time, entitlement programmes would see a $1.7 trillion cut over 10 years, including $237bn from Medicare.

“Utterly astounding that 6 wks after slashing taxes on the wealthy & biggest corps, creating a huge deficit, asks older Americans & middle-class Americans to make up the difference by slashing Medicare & Medicaid,” wrote Senate Democratic Leader Chuck Schumer on Twitter.

The plan was also not met with enthusiasm by Republicans.

“Budgets are aspirational documents and seldom have a real impact on spending,” Republican Representative Mark Meadows told the Washington Post. Mr Meadows serves as chairman of the House’s conservative Freedom Caucus.

“Certainly I applaud the President’s willingness to address our military, veterans and many suffering from the opioid abuse epidemic,” he added. “I am not investing much time critiquing the budget when it has little to do with what Congress actually spends.”

The President is pushing for Congress to pass what he’s calling the “biggest and boldest” infrastructure plan, which proposes allocating $200bn in federal funds to spur at least $1.5 trillion in infrastructure investments.

“Our roads are in bad shape,” Mr Trump said in remarks at the White House. “And we’re going to get the roads in great shape. And, very important, we’re going to make our infrastructure modernized. And we’re really way behind schedule. We’re way behind other countries.”

But his proposal has not appeased Democrats, who were expecting a request for more federal funds. The plan, which the administration has called a starting point for negotiations, also does not directly address how the federal government will find the money it is calling for in investments.

“Trump’s plan is just another giveaway to corporations and wealthy developers at the expense of American workers, and it fails to address some of the most pressing infrastructure needs our country faces,” the Democratic National Committee said.

The President also wants to dedicate funds toward fighting the opioid epidemic and building his controversial border wall. Mr Trump’s budget proposes more than $23bn for border security and immigration enforcement – including the wall – and $13bn to address America’s opioid addiction crisis. However, his proposal is all just a guide since Congress sets spending levels.

Budget talks since the last fiscal year ended in September have been tied to immigration – primarily as a result of Mr Trump’s decision to rescind the Deferred Action for Childhood Arrivals programme, or DACA. The Obama-era policy hlets young immigrants known as Dreamers, who were brought to the US illegally as minors, live and work in the US without fear of deportation. Congress has until March 5 to come up with a permanent legislative fix for the programme.

This year, Democrats have demonstrated they are willing to allow funding for federal agencies to expire unless a budget bill is accompanied by a DACA measure.

On Monday, Trump said he never wanted to tie budget talks to the Dreamers debate and now that the budget has been proposed, “we start very serious DACA talks today”.

He also appeared to acknowledge that the infrastructure plan may not pass Congress. After the proposal had been released, he told reporters that the plan was not as important as military spending or passing of the tax cuts.

“What was very important to me was the military; what was very important to me was the tax cuts; and what was very important to me was regulation,” he said. “This is of great importance, but it’s not nearly of that category because the states will have to do it themselves if we don’t do it.”