Donald Trump’s first major budget has now been released. At the core of the economic proposal, Trump has asked Congress to approve $3.6 trillion worth of spending cuts, including slashing aid to anti-poverty programmes as he attempts to steer government into balancing the federal budget over a 10-year timeline.
The president has called for a cut to welfare and healthcare support for poorer families, for example by cutting food stamps and student loan payments. Meanwhile, Trump has inflated the military and social security’s budget. Notably, most of the US discretionary budget was already spent on defence.
What’s really puzzling is Trump’s growth expectations. The budget forecasts that the federal deficit will be eradicated in just one decade and that GDP growth will pay for it by accelerating to 3% by 2021, coupled with cuts in the discretionary budget.
The budget calls for a 2% decrease in non-defence discretionary spending a year in an attempt to reduce the deficit to balance by 2027.
Republican’s overall spending will dip from 21.2% in 2017 to 18.4% by 2027. Washington’s analysis finds that the budget will be in a surplus by 2027.
Conversely, the Congressional Budget Office expects growth to come in just under 2% for 2021 until 2027. Due to the stagnant labour force and low productivity it will be extremely difficult for the US economy to expand at a robust pace, in the way Trump is alluding to.
3% growth would amount to an extra $2tn of income over the decade long span.
Policymakers in each corner of the arena have suggested that the plans will not make a dent in Congress, however. Trump’s demand may be met with a brick wall, just as his plea for border wall funds were just this month.