Trump Offers Spending Blueprint, But Congress Already Wrote The Check

Feb 12, 2018
Originally published on February 12, 2018 9:38 pm

Updated at 2:10 p.m. ET

President Trump released his 2019 budget proposal Monday calling for increased spending on the military, border security and the opioid crisis. But the White House blueprint has already been overtaken by events. The two-year budget deal passed by Congress last week boosts spending for both the military and domestic programs by nearly $300 billion over the next two years, complicating White House efforts to reorder federal priorities.

"We really thought we could cut a deal with the Democrats that would increase defense spending in order to defend the nation," White House Budget Director Mick Mulvaney told Fox News Sunday. "But when the doors closed, what happened was they would not give us a single dollar worth of additional defense spending without giving us additional money for welfare spending and that's just the world we live in."

The White House offered an amendment to its 2019 budget to account for the additional spending. It also suggested cuts that Congress could make in the current fiscal year.

"What we're doing is saying, 'Look, you don't have to spend all of this money,' " Mulvaney said. "These are spending caps. They're not spending floors. So you don't have to spend all that."

The Republican-controlled Congress largely ignored the proposed spending cuts in the president's first budget last year, but Mulvaney says the White House is not giving up. The administration's budget would cut funding for the State Department by 26 percent next year and would reduce spending at the EPA by 34 percent.

"There's still going to be the president's priorities as we seek to spend the money consistent with our priorities, not with the priorities that were reflected most by the Democrats in Congress," Mulvaney said.

The budget calls for $716 billion in defense spending in 2019, in line with the congressional deal. "Our military was totally depleted, and we will have a military like we've never had before," Trump said.

The White House is also proposing stepped-up spending on border security, including $18 billion over the next two years for a wall along the Southern border with Mexico. In addition, the president wants funding for 750 more Border Patrol agents, 2,000 more ICE officers and 52,000 detention beds — a 25 percent increase from 2017.

The budget includes an ambitious, $1.5 trillion infrastructure program, although the bulk of the money for rebuilding roads, bridges and other projects would have to come from state and local governments or the private sector. "We're trying to build roads and bridges and fix bridges that are falling down, and we have a hard time getting the money," Trump said during an infrastructure meeting at the White House on Monday. "It's crazy."

The spending plan also calls for nearly $17 billion to combat opioid addiction.

And it includes changes to safety net programs such as food stamps that the administration says will help move able-bodied Americans back into the workforce.

The White House budget assumes that economic growth will accelerate, from 2.3 percent last year to 3 percent this year and 3.2 percent next year, spurred on in part by the $1.5 trillion tax cut the president signed in December. Many independent economists see the White House forecast as overly optimistic. Even with the assumption of robust economic growth, the federal deficit is expected to hit 4.2 percent of GDP this year and 4.7 percent next year.

It's common for the deficit to grow during a recession, when tax revenues slump and spending on safety net programs increases. In 2009, for example, the deficit was 9.8 percent of GDP. But it's very unusual for the government to run large deficits when the economy is near full employment as it is today.

"Certainly there's a risk that interest rates will spike and there's a concern," Mulvaney said. But he insisted that the tax cuts, while reducing revenue in the short run, will eventually pay off.

"This is not a fiscal stimulus. It's not a sugar high," Mulvaney said. "We have fundamentally changed the structure of the American economy to where we think we can change the long-term trends of our growth possibilities."

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ARI SHAPIRO, HOST:

What if you spent months working on a household budget only to find that your partner or spouse had already emptied your joint checking account to go on a spending spree? That's kind of what happened to President Trump. The president unveiled his budget proposal this morning, offering a detailed blueprint of how he thinks the government should spend its money next year, but members of Congress who actually control the purse strings had already come up with their own bigger spending plan last week.

NPR's Scott Horsley joins us now from the White House. Hi, Scott.

SCOTT HORSLEY, BYLINE: Hi, Ari.

SHAPIRO: So a presidential budget is usually seen as a political document rather than an actual binding financial plan. Is that even more true this year? I mean, what do you get out of this budget?

HORSLEY: You're right. Lawmakers often ignore the White House budget when it comes out. This year, lawmakers acted even before the budget came out and agreed to their own top-line spending levels for both this year and next. Now, there is one area where the White House is in sync with Congress, and that's defense spending. Trump's budget seeks $716 billion in defense spending next year, which, by coincidence, is exactly what lawmakers agreed to last week.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: Our military was totally depleted, and we will have a military like we've never had before.

HORSLEY: There's more of a disconnect, though, on the domestic side, where Trump wants spending cuts but Congress has authorized more money next year - $68 billion more for discretionary nondefense programs.

SHAPIRO: If Congress is going to go its own way on the budget anyway, what difference does this proposed budget from the president make?

HORSLEY: Well, it's a signal of the White House priorities. For example, Trump wants more money for border security, including $18 billion for his border wall plus additional money for Border Patrol agents, ICE officers and tens of thousands of detention beds. Now, White House budget director Mick Mulvaney was pretty frank this afternoon in saying Congress is not likely to approve that kind of money except as part of a broader agreement on immigration. But Mulvaney says the point of this exercise is for the administration to put a marker down on spending.

(SOUNDBITE OF ARCHIVED RECORDING)

MICK MULVANEY: The executive budget has always been a messaging document. What are the messages this year? Number one, you don't have to spend all of this money, Congress. But if you do, here is how we would prefer to see you spend it.

HORSLEY: For example, the White House is calling for a 34 percent cut in EPA spending, a 26 percent cut in State Department spending and a 16 percent cut in spending by the Agriculture Department, which, by the way, includes some steps on welfare reform - for example, more stringent work requirements for people receiving food stamps.

SHAPIRO: Scott, any budget is going to have the revenue element and the spending element. And Congress has not only agreed to spend more money. Lawmakers have also cut taxes by $1 and a half trillion. What does that do for the federal deficit?

HORSLEY: The deficit is expected to balloon. The White House is predicting that it's going to grow this year to more than $800 billion or more than 4 percent of the overall economy. Next year, the deficit is projected to hit 4.7 percent of GDP. Now, it'd be one thing to see deficits that big in a time of recession, but it's really remarkable to see that much red ink when the economy is doing well as it is right now and we're near full employment.

And what's more, the White House may actually be lowballing the deficit figure because this budget assumes fairly robust economic growth. They expect growth to grow from 2.3 percent last year to 3 percent this year, 3.2 percent next year and then to hold at 3 percent or higher all the way through 2024. A lot of independent economists think that's overly rosy. And if they're right, the federal deficits could get even bigger.

SHAPIRO: NPR's Scott Horsley speaking with us from the White House. Thanks, Scott.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.