President Donald Trump’s promise to “Make America Great Again,” which he campaigned on his ability to balance the federal budget, took an important step Tuesday when government officials unveiled a $4.1 trillion spending proposal.
Roughly two months after Trump’s administration released what was termed a “skinny budget,” the more comprehensive proposal — termed a “taxpayer first” plan — takes a hatchet to a number of programs while raising spending on border security and defense. It’s been called “ruthless,” misguided, and “dead on arrival.” Even the “rational” side of the proposal, if you look hard enough, is criticized as being borrowed from the Obama administration.
“We are no longer going to measure compassion by the number of programs or the number of people on those programs,” said Mick Mulvaney, Office of Management and Budget Director. “We will measure compassion and success by the number of people who get off those programs.”
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Defense is one of the few areas that gets a boost. It’s for this reason defense heavyweights such as Boeing (BA), United Technologies (UTX), Lockheed Martin (LMT) and General Dynamics (GD) are all trading in record territories. Trump’s plan calls for an additional $25 billion in defense spending for next fiscal year, following a similar bump in the current budget. Beyond increased defense spending, the budget calls for boost in National Nuclear Security Administration and Veterans Affairs — a big part of Trump’s campaign promises.
To be sure, there are tons of assumptions priced into the budget, which factors a projected 3 percent annual rise in GDP — something many economists are calling “optimistic.” Why? While the Fed forecasts GDP growth to be somewhere in the neighborhood of 2.1 percent for the year, actual first quarter growth was a paltry 0.7 percent on an annualized basis.
To be fair, some Wall Street analysts have cited Trump’s tax cut ideas as possible catalysts for GDP reaching 2.3 percent by 2020 — that’s according to the latest quarterly poll of forecasters by the Philadelphia Fed.
Trump’s promise to balance the federal budget within a decade and spur investments and create jobs, rests on his just-released budget proposal, which — whether or not it passes the Senate — provides a clear blueprint of where his priorities are. And given that Trump will need backing from at least some Democrats for his proposals to pass, those proclaiming the plan to be “dead on arrival” can see that the budget has boxed Trump’s supporters onto politically treacherous terrain. Trump will need to tap into his abilities as a deal-maker in order to get his budget passed.