9 Top Takeaways From Trump’s $4 Trillion Federal Budget
First Take on the Budget

9 Top Takeaways From Trump’s $4 Trillion Federal Budget

iStockphoto/The Fiscal Times

The early days of Donald Trump’s presidency have been confusing for both his supporters and his detractors as his administration has alternately embraced and backed away from positions he took on the campaign trail last year. But on Tuesday, with the release of his first official federal budget request, the 45th president set a new baseline with a document that touches on virtually every facet of the federal government’s operations.

The document, which will be officially released late Tuesday morning, partially confirms many early leaks about its contents, calling for roughly $1 trillion in reductions to social safety net programs over the 10-year budget window. It also contains a large $43 billion boost to Defense spending in 2018, but otherwise keeps military spending on the same growth track. 

Related: Why Trump’s Spending Plan Won’t Really Balance the Budget

The budget ostensibly charts a path to a balance between federal outlays and revenues by 2028, but that claim will almost certainly be criticized by deficit hawks and economists who believe the administration’s economic growth forecasts are unrealistic.

While it will take days and perhaps weeks to fully dissect the Trump budget, there are a number of immediate takeaways worth noting. Here are nine of them:

Defense: The budget request includes a smaller-than-expected $43 billion increase in defense spending as part of Trump’s pledge to mount an historic buildup and modernization of the military. Trump has promised the military a new influx of jet fighters, battleships and other hardware. He also wants to begin increasing troop strength by 56,000 in the military services. He will also seek separate overseas contingency operations funding of $64.5 billion for ongoing military operations in Afghanistan and Iraq.

However, over 10 years, the budget proposes an increase of only $469 billion in total, which falls below levels consistent with the kind of build-up being promised. The administration has indicated that because the military is still planning for the expansion, future budgets will likely reflect larger increases.

Related: Trump Delays Decision on Obamacare Subsidies – Which Means Prices Will Rise

The budget also assumes $593 billion in savings over10 years from cuts to the Overseas Contingency Operations fund, an off-budget expense that funds ongoing conflicts abroad.

Border Wall: Trump is seeking a smaller-than-expected $1.6 billion line item for materials and planning to begin building a wall along nearly 2,000 miles of the southern border with Mexico and related work that experts say could cost as much as $26 billion before it is completed. The president has also requested additional funding for beefed up border security. Trump declared repeatedly during the campaign that he would force the Mexican government to pay for the wall, but he has backed away from that pledge more recently and is now demanding that it be financed with U.S. taxpayers’ dollars.

Medicaid and Children’s Health Insurance: Trump promised during the campaign to safeguard Social Security, Medicare and Medicaid; but from the looks of his new budget, the Medicaid health care program for low-income families and individuals is very much on the chopping block. Trump is seeking $616 billion in combined cuts to Medicaid and to the Children’s Health Insurance Program. The cuts are smaller than expected and will be difficult to reconcile with the  Republicans’ House-passed American Health Care Act, aimed at dismantling and replacing the Affordable Care Act. That bill would slash Medicaid alone by more than $800 billion. The Congressional Budget Office has estimated that such a move would slash or cut off benefits for about 10 million people over the coming decade –- most of them among the economically most vulnerable in the country.

Food Stamps: Trump wants to cut $192 billion from the federal food stamp program over the coming decade, the Department of Agriculture’s Supplemental Nutrition Assistance Program (SNAP) that has been critically important to low-income and working-poor families, especially during tough recessionary times. The proposed cut would eliminate about a quarter of the program’s overall spending, which supports an estimated 45 million people and provides an average benefit per person of $125.50 per month. The rolls are down from a high of 47 million in 2013, but Republican lawmakers have long complained that the eligibility standards are too lax.

Related: 3 Big Changes Trump Wants to Make to Student Loans

Environmental Protection Agency: Trump and his EPA director, Scott Pruitt, are climate change skeptics and have targeted the environmental protection agency for some of the deepest cuts to any department or agency. The White House has proposed to shrink spending by 31 percent, to $5.7 billion from $8.1 billion, and to eliminate about a quarter of the agency’s 15,000 jobs.

One of the biggest targets will be EPA’s Office of Science and Technology, which will lose nearly half its funding, while funding for EPA workers who oversee and impose environmental regulations will be pared by roughly 40 percent.

State Department and foreign aid: While Trump is stressing foreign policy this week with his trip to the Middle East and Europe, his new budget would slash the overall State Department budget by 29 percent. The White House budget office signaled that the vast majority of the cuts would be in the $30 billion a year in foreign aid, with only a small part related to diplomacy. Funding for the United Nations, World Bank, and other international institutions would be reduced as well. The plan is to transform much of the current foreign aid structure, which offers grants to other nations into a loan program that would require other countries to repay those aid dollars.

The budget plan would also end about $1billion of foreign military grants administered by the State Department to dozens of countries, including Pakistan, Tunisia, Lebanon, and Ukraine. Those grants would be converted to less desirable low-interest loans to those countries. But the change wouldn’t affect about $3.1 billion in military grants to Israel, $1.3 billion for Egypt and $350 million for Jordan.

Related: Trump’s First Budget Is Coming, and the Spending Cuts Are Severe

Health and Human Services: The Department of Health and Human Services, and the numerous research and disease prevention agencies under its purview will face dramatic budget cuts under the Trump plan. The National Institutes of Health would see its budget drop from $31.8 billion to $26 billion next year. The National Institute of Allergy and Infectious Diseases would face $838 million in cuts, the National Cancer Institute would lose $1 billion, and the National Heart, Lung and Blood Institute would lose $575 million.

Taxes: Republicans in Congress are still working to come to an agreement on a plan for tax reform, but all indications are that whatever they produce will contain major cuts that primarily benefit wealthy Americans. The plan to do away with the Affordable Care Act, all by itself, would reduce tax revenue by nearly $1 trillion over a decade. However, despite all this, the Trump budget assumes that government tax revenues will actually increase by $1 trillion over a decade.

The Deficit and Economic Forecasts: Despite a spate of big spending plans, including the defense buildup and a costly tax cut, the administration claims it can wipe out the federal deficit – which totaled $587 billion in 2016– within ten years. Trump contends he can accomplish that task through a combination of steep cuts in certain means-tested entitlement programs, other savings and robust economic growth to help drive up federal tax revenues.

The White House is projecting that the economy will grow at a rate of 3 percent annually by 2021,  arguing that its proposed tax cuts and regulatory relief will spur economic growth and leave the federal coffers flush with new tax revenues. But budget analysts dismiss these forecasts as a “rosy scenario,” and that the country would be lucky to sustain a 1.9 percent to 2 percent average growth rate over the coming decade.