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Trump budget looks to leverage $800B in private money for infrastructure

By ANDREW TAYLOR
and MARTIN CRUTSINGER
Associated Press

WASHINGTON (AP) — President Donald Trump on Tuesday sent Congress a $4.1 trillion federal spending plan that would seek to drum up $800 billion in private investment in infrastructure using $200 billion in federal spending.

The budget would also try to achieve faster economic growth even while cutting programs for the poor in an attempt at balancing the government’s books over the next decade.

The proposed 2018 budget immediately came under attack by Democrats, and even some GOP allies deemed it a non-starter. The proposal is laced with $3.6 trillion worth of cuts to domestic agencies, food stamps, Medicaid, crop insurance and medical research, among other spending priorities.

About $200 billion in federal infrastructure investments would be used to leverage another $800 billion in private investment. Construction groups greeted the proposal with cautious optimism.

Stephen Sandherr, chief executive of the Associated General Contractors of America, noted that presidents’ budget proposals are usually nothing more than the starting point for debate over national priorities.

“As a policy document, this budget provides an important, and much-needed, first step in identifying the best ways to pay for needed improvements, and expansions, to our aging infrastructure,” Sandherr said in a statement. “The President rightly appreciates the need to increase investment levels significantly above current amounts.”

At the same time, the blueprint boosts spending on the military by tens of billions and calls for $1.6 billion for a border wall with Mexico that Trump repeatedly promised voters the U.S. neighbor would finance. Mexico emphatically rejects that notion.

Budget experts, Democrats and Republicans challenged the economic assumptions of the White House and Budget Director Mick Mulvaney.

During the campaign, Trump attacked the weak economic growth of the Barack Obama years, and pledged that his economic program would boost growth from the lackluster 2 percent rates seen since the recovery began in mid-2009. Trump’s new budget assumes sustained economic growth of more than 3 percent, sharply higher than the expectations of most private economists.

Without more than $2 trillion in such “economic feedback” over the coming decade, the budget would never achieve a balance and would run a deficit of almost $500 billion.

“Three percent, I’m not seeing how you get there mathematically,” said Rep. Mark Sanford, R-S.C. “I think realism in the way we forecast numbers is part and parcel to a constructive budget process.”

The proposal projects that this year’s federal deficit will increase to $603 billion, up from the actual deficit of $585 billion last year. But the document says if Trump’s initiatives are adopted the deficit will start declining and actually reach a small surplus of $16 billion in 2027. However, that goal depends not only on the growth projections that most economists view as overly optimistic but also a variety of accounting gimmicks, including an almost $600 billion “peace dividend” from winding down overseas military operations.

The government hasn’t run a surplus since 2001, and deficits spiked during former President Barack Obama’s first term in the aftermath of the Great Recession.

“Through streamlined government, we will drive an economic boom that raises incomes and expands job opportunities for all Americans,” Trump said in his budget message. His budget is titled, “The New Foundation for American Greatness.”

Democrats had an opposite interpretation.

“In the America of President Trump’s budget, children, working families, seniors and people with disabilities will be ‘fined,’ while the wealthiest Americans will get a ‘bonus.’ What’s so ‘great’ about that America?” asked Sen. Dick Durbin of Illinois.

Food stamp cuts would drive millions from the program, while a wave of Medicaid cuts could deny nursing home care to millions of elderly poor people.

“Isn’t it reasonable to at least ask the question, ‘Are there people on that program who shouldn’t be on there?'” Mulvaney asked.

The budget does feature a handful of domestic initiatives, including a six-week paid parental leave program championed by Trump’s daughter, Ivanka.

Trump would keep campaign pledges to leave central Medicare and Social Security benefits for the elderly alone, but that would lead to even deeper cuts in programs for the poor such as Medicaid and food stamps.

Medicaid, the government insurance program for the poor and many disabled Americans, would be cut by more than $600 billion over 10 years by capping payments to states and giving governors more flexibility to manage their rosters of Medicaid recipients. Those cuts come on top of the repeal of Obamacare’s expansion of the program to 14 million people and amount to, by decade’s end, an almost 25 percent cut from present projections.

Likewise, a 10-year, $191 billion reduction in food stamps — almost 30 percent — far exceeds prior proposals by Capitol Hill Republicans. The food stamp program serves about 42 million people.

“These cuts that are being proposed are draconian,” said veteran GOP Rep. Harold Rogers, who represents a poor district in eastern Kentucky. “They’re not mere shavings, they’re deep, deep cuts.”

Other cuts in Trump’s budget include reductions in pension benefits for federal workers – a change that would be achieved in part by requiring employees to make higher contributions. In agriculture, the proposed budget would limit subsidies to farmers, including for purchasing crop insurance, a move already attacked by farm state lawmakers.

On taxes, Trump promises an overhaul that would cut tax rates but rely on economic growth and erasing tax breaks to avoid adding to the deficit. There would be three tax brackets — 10 percent, 25 percent and 35 percent — instead of the current seven, and there’s a promise to lower the corporate tax rate to 15 percent.

But the budget contains virtually no details showing it would deliver on Trump’s promise for “massive” tax cuts.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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