LDN - Business

Trump seeks to slash government spending in budget plan

[May 23, 2017] By Roberta Rampton

WASHINGTON (Reuters) - The White House on Tuesday will ask Republicans who control the U.S. Congress - and federal purse strings - to slash spending on healthcare and food assistance programs for the poor as they push ahead on plans to cut taxes and trim the deficit.

President Donald Trump is set to propose a raft of politically sensitive cuts in his first full budget, for the fiscal year that starts in October, a proposal that some analysts expected would be put aside by lawmakers as they craft their own budget and spending plans.

Trump, who is traveling overseas and will miss the unveiling of his plan, wants lawmakers to cut $3.6 trillion in government spending over 10 years, balancing the budget by the end of the decade, according to a preview given to reporters on Monday.

More than $800 billion would be cut from the Medicaid program for the poor and more than $192 billion from food stamps.

Republicans are under pressure to deliver on promised tax cuts, the cornerstone of the Trump administration's pro-business economic agenda, which would cut the business tax rate to 15 percent from 35 percent, and reduce the number of personal tax brackets to three from seven.

But their policy agenda has stalled as the White House grapples with the political fallout from Trump's firing of former FBI Director James Comey.

Comey had been leading a probe of alleged Russian meddling in the 2016 U.S. election.

Trump's biggest savings would come from cuts to the Medicaid program made as part of a Republican healthcare bill passed by the House of Representatives.

The bill aims to gut the Obama administration's signature 2010 Affordable Care Act, known as Obamacare, that expanded insurance coverage and the government-run Medicaid program for the poor. But it faces an uncertain future in the Senate, which is writing its own law.

The White House proposed changes that would require more childless people receiving help from the Supplemental Nutrition Assistance Program, better known as food stamps, to work.

STEEP CUTS

The plan would slash supports for farmers, impose user fees for meat inspection and sell off half the nation's emergency oil stockpile. Another politically fraught item is a proposal for cuts to the U.S. Postal Service, a goal that has long eluded lawmakers and administrations from both political parties.

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President Donald Trump's FY2018 budget is seen printed at the Government Publishing Office in Washington, U.S. on May 19, 2017. REUTERS/Yuri Gripas/File Photo

The first look at the plan came in a "skinny budget" released in March - a document that received a tepid response from Congress.

Most departments would see steep cuts, particularly the State Department and the Environmental Protection Agency.

There is some new spending. The Pentagon would get a boost, and there would be a down payment to begin building a wall on the southern border with Mexico, which was a central promise of Trump's presidential campaign.

The budget includes $25 billion for a plan to give parents six weeks of paid leave after the birth or adoption of a child, and $200 billion to encourage state and local governments to boost spending on roads, bridges, airports and other infrastructure programs.

The plan drew immediate fire from lobby groups, including from the Committee for a Responsible Federal Budget, which said it relied on "rosy assumptions," gimmicks and unrealistic cuts.

"While we appreciate the administration's focus on reducing the debt, when using more realistic assumptions, the president’s budget does not add up," Maya MacGuineas, the group's president, said in a statement.

Trump's plan relies on forecasts for economic growth of 3 percent a year by the end of his first term - well beyond Congressional Budget Office assumptions of 1.9 percent growth.

"That assumes a pessimism about America, about the economy, about its people, about its culture, that we’re simply refusing to accept," White House budget director Mick Mulvaney told reporters on Monday.

(Additional reporting by Yasmeen Abutaleb, David Shepardson, Timothy Gardner, Ginger Gibson, Jason Lange and Julia Edwards Ainsley in Washington, and PJ Huffstutter in Chicago; Editing by Peter Cooney)

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