Trump's plan for slashing budget to set off battle in Congress
President Donald Trump will call for sharp cuts in domestic spending that likely will be mostly ignored by Congress even as it sets up a funding fight that risks another government shutdown in the fall.
The president in coming days is set to deliver his first budget blueprint since Democrats took control of the House and elected Nancy Pelosi as speaker. The proposal will mark an aggressive opening bid in negotiations over the coming months to lift caps on spending for domestic and defense programs and to increase the $22 trillion federal debt limit. Trump will seek a boost in defense spending by using war contingency funds to get around the budget limits.
In each year of his presidency, Trump has proposed deep cuts to domestic agency spending as well as cuts to some entitlement programs, and in each year Congress has ignored them. The unrestrained spending combined with the Republican tax cuts passed last year increased the federal deficit and put it on course to surpass $1 trillion by 2022, according to the Congressional Budget Office.
Acting budget director Russ Vought has said the budget will seek a "historic" five percent decrease in discretionary spending, though the administration has refused to specify whether that is in addition to the nine percent cut that would be forced by the budget caps set to kick in for the 2020 fiscal year, which begins Oct. 1.
Some programs would see even deeper proposed cuts. For example, the Office of Energy Efficiency and Renewable Energy would see its $2.3 billion budget slashed by about 70 percent, to $700 million, according to a Energy Department official familiar with the plan.
The White House budget blueprint is sure to hit a wall of opposition from Democrats. During the spending standoff that shut down part of the government for 35 days earlier this year over funding for a border wall, Pelosi and Democratic lawmakers demonstrated they can stand unified against Trump's demands.
It's liable to hit resistance from Republicans as well. Republican Sen. Richard Shelby of Alabama told reporters that even a five percent cut to non-defense spending from current levels would be a "difficult task."
"I've been here since Jimmy Carter was president and I don't ever remember a president's budget being accepted by the Congress," Shelby, the chairman of the Appropriations Committee, said.
Asked if a five percent cut would pass Congress, Republican Sen. Roy Blunt of Missouri said, "I'm certain it won't."
The budget proposal will be heading to Congress before lawmakers begin what's sure to be a clash over budget caps, which were set into law as part of legislation that ended a deadlock over the debt ceiling in 2011 . Unless Congress acts to raise them, the $647 billion limit on regular defense spending will fall in 2020 to $576 billion while the non-defense discretionary spending cap will be lowered to $542 billion from $597 billion.
The White House has said it would keep the defense cap in place at $576 billion while using a contingency fund for war operations, which isn't subject to limits, to provide an increase in money for the military.
Senate Armed Service Committee Chairman Jim Inhofe told reporters this week he expects the president to budget a whopping $174 billion in contingency funds -- up from $69 billion this year -- to raise total defense spending to $750 billion.
Dick Durbin of Illinois, the second-ranking Senate Democrat, said the use of the Overseas Contingency Operations, or OCO, bodes ill for a budget caps deal anytime soon.
"Republicans are living in a wonderland if they think we will except $100 billion plus through OCO for defense while they devastate domestic programs," Durbin said.
"They are injecting a greater amount of uncertainty into an already difficult process," said Sen. Jack Reed of Rhode Island, the top Democrat on the Armed Services Committee.
The debate over spending and budget caps also will entangle negotiations on raising the federal debt limit, which snapped back into place March 2. The Treasury Department has been able to shift funds and take other so-called extraordinary measures to prevent a default on the government's debt.
The CBO has projected that Treasury would be able to continue to do that into late summer or early fall if Congress doesn't act earlier. Yet lawmakers haven't been in a hurry. Senate Finance Committee Chairman Chuck Grassley, an Iowa Republican, said last month that Congress likely would raise the debt limit as part of a deal on the budget caps.
Without a deal on the caps, a stopgap bill would be needed to avoid a shutdown after Sept. 30. Across the board cuts enforcing the caps known as sequestration would occur in December or January.
But twice during Trump's presidency, standoffs over policy issues have blocked agreements on spending, leading to partial government shutdowns that leaders of both parties in Congress said they wanted to avoid.
Republicans who are eager to raise defense spending, will be looking to see how Trump proposes to spend the extra dollars. Shelby said he will be looking closely at how the budget handles the new Space Force that Trump is trying to set up and whether it will draw funds away from the Air Force.
"I'm wary of creating another agency," he said.
The budget will also offer clues to Trump's approach to a possible infrastructure deal and the quest for a wall on the U.S.-Mexico border, with members of Congress eager to learn whether he will try to allocate more federal dollars for roads and bridges than the $200 billion he has backed in the past and whether he would be satisfied for now with the $8 billion he has sought to employ for a wall in part by declaring a national emergency.
Last year, the Office of Management and Budget asked for just $1.6 billion for a border wall. Trump in an Oval Office meeting months later was incensed that it had not asked for more, lawmakers later said.
A demand for $5.7 billion in wall funding led to the government shutdown and Trump's decision to declare an emergency to transfer military construction funds to a wall account. Congress is poised to vote against the emergency declaration next week, which would lead to Trump's first veto.
The president, in his budget request, last year abandoned the long-held Republican goal of balancing the budget within 10 years, even as he employed rosy economic assumptions and a much criticized estimate that his $1.5 trillion tax overhaul law would pay for itself.
He is not expected to call for the deep cuts to Medicare and Social Security or tax increases that would be necessary to achieve balance in the new budget either.
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This article was written by Erik Wasson and Steven T. Dennis, reporters for Bloomberg.
Bloomberg's Justin Sink and Ari Natter contributed.