You are here: Home » International » News » Economy
Business Standard

Trump's election-year budget cuts social expenditure, projects lofty growth

The proposal again abandons the stated goal of closing the budget deficit in 10 years, instead pushing the target date back to 2035

AFP/PTI  |  Washington 

Donald Trump speaking at Economic Club. Photo: Reuters
Donald Trump. Photo: Reuters

With months left before US elections, President unveiled a budget roadmap on Monday that abandons key deficit cutting promises based on lofty and unlikely economic growth assumptions.

The final spending plan of Trump's first term in office faces near certain defeat in the Democrat-controlled House of Representatives, but offers a window into the administration's priorities.

The budget makes cuts to social programs, environmental protections and foreign assistance, to fund higher defense spending and extend tax cuts for wealthy individuals and companies, according to officials and multiple US media reports.

The proposal again abandons the stated goal of closing the budget deficit in 10 years, instead pushing the target date back to 2035.

However, even that extended timeline assumes the US will grow by 3.0 percent a year or close to it through 2030, which would support higher tax revenues, something not achieved consistently in over a decade, and unheard of for an after 11 consecutive years of growth.

Despite pledging to pursue the Republicans' long-held war on deficits, the Trump administration has shown little interest in tackling the issue, with the gap expected to hit $1 trillion this year amid growing government debt -- double the estimate in his first budget.

The $4.8 trillion spending proposal for this year calls for $2 trillion in cuts to non-defense programs, including safety nets such as food stamps, and savings from the Medicare prescription drug coverage.

Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, offered praise for some of the policies in the budget but called for serious action to reduce deficits.

"We don't need more false promises about rapid economic growth or tax cuts that will pay for themselves. We need action to reverse our trillion-dollar deficits, save our largest trust funds, and prevent debt from reaching new record highs," she said in a statement.

"Frankly, budgeting has become pretty much a joke in this country, where budgets are used as messaging documents and an excuse to trade insults. This year's trillion-dollar deficit should cause us to re-think this dynamic."

Russell Vought, Trump's acting budget director, said Monday the proposal will include over $740 billion for defense spending, including a 20 percent increase for nuclear modernisation.

And the massive $1.5 trillion in tax cuts, mostly benefitting the wealthiest, will be extended beyond 2025.

Democratic House Speaker Nancy Pelosi lambasted the proposal.

"The budget is a statement of values and once again the president is showing just how little he values the good health, financial security and wellbeing of hardworking American families," she said in a statement.

First Published: Tue, February 11 2020. 00:50 IST