Trump to propose US budget cuts to foreign aid and social safety

United States President Donald Trump will propose on Monday a 21 percent cut in foreign aid and slashes to social safety net programmes in his $4.8 trillion budget proposal for fiscal 2021, according to senior administration officials.

The budget will seek an increase in funds to counter developing economic threats from China and Russia, but will also raise funds by aiming for $2 trillion in savings from mandatory spending programmes in the US. The budget assumes revenues of $3.8 trillion.

Trump, a Republican, sought in his budget proposal last year to slash foreign aid but faced steep resistance from Congress and did not prevail.

The president’s latest blueprint for administration spending proposals is unlikely to be passed by the Democratic-controlled House of Representatives, particularly in an election year.

Trump, who campaigned for the presidency in 2016 on a promise to build a wall along the US border with Mexico, will seek $2bn in funding for further construction on that project, substantially less than the $8.6bn he requested a year ago. The administration shifted resources to the project from the military last year after Congress refused Trump’s request. The White House will not seek further funds from the military for the wall, a senior administration official said.

The budget seeks $1 trillion to fund an infrastructure spending bill that Democrats and Republicans have said is a priority. The two sides are unlikely to agree on any significant legislation this year, though, as the two sides fight for control of the White House and Congress in the November elections.

The budget would raise military spending by 0.3 percent to $740.5bn for the fiscal year 2021, starting on October 1 and propose higher outlays for defence and veterans, administration officials confirmed. But former chairman of the Joint Chiefs of Staff Mike Mullen raised concerns about how the foreign aid cuts would affect the US civilian footprint around the world that helps reduce the need for military intervention.

“This is a moment when more investment in diplomacy and development is needed not less,” he wrote in a letter to top congressional leaders.

Trump’s foreign aid proposal seeks $44.1bn in the upcoming fiscal year compared with $55.7bn enacted in fiscal year 2020, an administration official said.

Spending cuts

The White House proposes to slash spending by $4.4 trillion over the next 10 years.

That includes $130bn from changes to Medicare prescription-drug pricing, $292bn from cuts in safety-net programmes – such as work requirements for Medicaid and food stamps – and $70bn from clamping down on eligibility rules for federal disability benefits. Those changes are likely to spur Democrats’ ire.

The US government ended the fiscal year 2019 with the largest budget deficit in seven years as gains in tax receipts were offset by higher spending and growing debt service payments, the Treasury Department said on Friday.

The budget forecasts $4.6 trillion in deficit reduction over the next 10 years and assumes economic growth will continue at an annual rate of roughly 3 percent for years to come, officials said. Trump has taken credit for the strength of the US economy thanks in part to tax cuts he championed and Congress passed earlier in his term. The budget funds an extension of those cuts over a 10-year period with $1.4 trillion.

Aid to Ukraine would remain at its 2020 levels under the new foreign aid proposal. Trump was acquitted last week of impeachment charges that he withheld aid to Ukraine to spur Kyiv to investigate political rival Joe Biden, a Democratic presidential candidate and former US vice president.

Administration officials told Reuters that Trump would request an increase in funding for the US International Development Finance Corporation to $700m from $150m the previous year.