Trump’s budget sets up an ‘epic battle’ over government spending – Business Insider


Donald Trump rallyMark Wallheiser/Getty Imges

There’s another fight brewing in Washington, which analysts
predict could be of “epic proportions.”

President Donald Trump’s team is expected to roll out
its fiscal year 2018 budget proposal this week, starting the
process of laying out the government’s funding future.

Analysts say it is unlikely Trump’s budget proposal will resemble
what makes its way into law, based on what’s reported to be
included. It does, however, set up a larger philosophical battle
that will reveal the ideological dynamics in Washington.

In the deal

The deal is expected to include proposals for major cuts
in domestic sending programs across the
board, especially deep slashes in the Environmental Protect
Agency and State Department.

According to
a report from Axios’ Jonathan Swan
, the budget proposal
will also include deep cuts to spending on Medicaid —
the program that provides health coverage for low-income
Americans — and other entitlements that will total $1.7 trillion
over the next 10 years. Other proposed entitlement cuts,
according to Axios, will come from food stamps, the Children’s
Health Insurance Program (CHIP), and disability insurance.


Screen Shot 2017 05 22 at 9.18.26 AMCompass
Point


The Washington Post’s Emma Brown,
Valerie Strauss, and


Danielle Douglas-Gabriel reported
that the budget would also
cut $10.6 billion from federal education initiatives, including
college work-study programs and public-service loan forgiveness —
while at the same time increasing investments in charter
schools.

That, according to reports, would allow the federal
government to have a balanced budget in 10 years.

At the same time, spending on the departments of defense,
homeland security, and veterans affairs would increase
substantially.

Whether or not the proposal includes funding for some of Trump’s
pet projects, such as the wall along the border with Mexico,
is not yet clear.

‘Epic battle’

The Trump budget’s prioritization of military and defense
spending at the expense of many other departments will make
for a tough battle in Congress, analysts say.

Greg Valliere, chief investment strategist and political analyst
at Horizon Investments, said in a note titled “An Epic Battle
Over Fiscal Policy Begins This Week” that the fight could
reveal the fissures between Republicans in the two chambers
of Congress.

And make no mistake, this is will be an epic fiscal policy
showdown that highlights a fundamental issue: concentrating
spending power in Washington versus the states,” Valliere wrote
in a note to clients on Monday. “And it will pit the House, which
is dominated by conservatives, against the Senate, which is
dominated by moderates and liberals.”

Chris Kruger, an analyst at Cowen Washington Research
Group, gave an even more blunt take on the White House budget
proposal.


donald trump paul ryan mitch mcconnellChip Somodevilla/Getty Images

“The budget has already been declared DOA on Capitol
Hill … by Congressional Republicans,” Kruger said in a note to
clients Monday. “Budgets are governing documents, and this is no
different from a headline and policy-noise perspective.”

Valliere said the biggest disagreement would come
over the cuts to mandatory entitlements and likely will get no
traction on either side of the aisle.

“This will hit a brick wall in the Senate and Trump will
get the worst of both worlds: scathing criticism from the left
for these spending cuts, and the inability to get most of them
enacted,” Valliere said.

Trump repeatedly promised through the campaign to make no
cuts to entitlements, including Medicaid.

“I was the first & only potential GOP candidate to
state there will be no cuts to Social Security, Medicare &
Medicaid,” Trump
tweeted on May 7, 2015.
 

In the end, it is more likely that Congress will devise its
own budget deal between the House and Senate. With competing
interest and the pet projects of various lawmakers, it is
likely that deep domestic cuts would not be enacted,
said Issac Boltansky and Lukas Davaz of the political
research firm Compass Point.

“The White House’s budget proposal will drive headlines
over the week ahead as key administration officials head to the
Hill, but this proposal should be viewed as nothing more than an
opening move in a long and labored budget process that will shift
significantly in the months ahead,” the analysts
wrote. 

Next steps

The budget proposal will be rolled out early this week, and Mick
Mulvaney, the director of the Office of Management and Budget,
will testify in a series of hearings.

The degree to which Mulvaney, a former representative from South
Carolina and member of the hard-line conservative House Freedom
Caucus, is combative during his testimony will be indicative of
just how hard the Trump administration will be on their budget
priorities.

Congress will have to pass a budget resolution by the end of
September to keep the government from shutting down.

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