Business

Trump budget includes infrastructure plan, steep social cuts, rising deficits

Budget

WASHINGTON: US President Donald Trump on Monday unveiled an ambitious proposal to renew American infrastructure as part of a budget that calls for a stunning rise in debt and trillions in cuts to social spending.

The fiscal blueprint abandons the long-held Republican goal of balancing the federal budget within a decade, with deficits projected to peak in two years and persist into the foreseeable future amid an aggressive buildup in defense spending.

The initiative to revive crumbling US roads, bridges and airports includes just $200 billion in federal funds, which the White House says will spur at least another $1.3 trillion in investments from state governments and private investors.

Administration officials tout the infrastructure plan as part of a shift back to national priorities, with $50 billion dedicated to projects in rural areas, many of which favored Trump in the 2016 elections.

Trump said the shift comes in the wake of the wasteful military spending since the terrorist attacks of September 11, 2001. But he also touted a big boost in defense spending, including a revived nuclear arsenal that would leave the US armed forces “far in excess of anybody else.”

“We have spent $7 trillion in the Middle East, $7 trillion. What a mistake,” Trump said Monday.

“And we’re trying to build roads and bridges and fix bridges that are falling down and we have a hard time getting the money and its crazy.”

The infrastructure proposal aims to eliminate bureaucratic barriers to construction such as environmental safety reviews and the need for authorizations from more than one agency.

“We’re going to have a lot of public and private (investment), and that way it gets done in time on budget,” Trump said.

Debate in Congress

Release of the administration’s fiscal plan begins the tortuous process of setting the 2019 federal budget although the proposal may have little real impact once debate begins in Congress, where lawmakers may find it hard to impose some of the big spending cuts.

But White House budget proposals are an important signal of the administration’s priorities, with deficits forecast to peak at nearly $1 trillion in 2020 and drive up the federal debt by a stunning 61 percent by 2028.

The spending plan is sure to raise the hackles of deficit hawks among lawmakers who will question how the government can justify such ambitious projects while cutting taxes.

Investment bank JPMorgan said Monday that Trump’s deficit was expected to surge to 5.4 percent of GDP in the 2019 fiscal year, the highest ever without a recession, and surpassed only by the deficit reached during the global financial crisis.

White House Budget Director Mick Mulvaney, a former Republican lawmaker long aligned with the Tea Party movement for fiscal restraint — which opposed President Barack Obama’s efforts to launch an infrastructure investment program during the recession — said the Trump budget shows responsible management.

“Just like every American family, the budget makes hard choices: fund what we must, cut where we can, and reduce what we borrow,” he said in a statement on Sunday.

The plan is based on estimates the US economy will expand at a three percent annual clip for the next six years, a growth rate many economists say is unrealistic, even given the short-term bump from the massive tax cuts approved in December.

Trump is expected to host lawmakers from both major parties at the White House this week in an attempt to hammer out differences.

Senator Chuck Schumer, leader of the opposition Democrats in the upper house, on Monday accused the White House of asking the middle class, children and workers to shoulder the burden of tax “giveaways” to corporations.

“If Americans want a picture of who President Trump works for, the combination of the tax bill and this budget make it crystal clear,” Schumer said in a statement.

“He’s for the rich and the powerful at the expense of the middle class.”

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Trump budget includes infrastructure plan, steep social cuts, rising deficits

by AFP