Trump proposes 21% cut in foreign aid, cuts safety net programs

US president Donald Trump will propose on Monday a 21 per cent 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 would spend money to fund infrastructure projects and defence, but would also raise funds by targeting $2 trillion in savings from mandatory spending programs. It assumes revenues around $3.7 trillion.

Trump 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 U.S. border with Mexico, will seek $2 billion in funding for further construction on that project, substantially less than the $8.6 billion he requested a year ago.

The administration shifted resources from the military last year after Congress refused Trump’s initial wall funding request. The White House will not seek further funds from the military for the wall, a senior administration said.

The budget seeks money to fund a U.S. infrastructure overhaul that both Democrats and Republicans have said is a priority. The two sides are unlikely to agree on any major legislation this year, though, as they fight for control of the White House and Congress in the November elections.

The budget would raise military spending by 0.3% to $740.5 billion for fiscal-year 2021, starting on Oct. 1 and propose higher outlays for defence and veterans, administration officials confirmed.

Spending cuts

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

In the fiscal-year 2021 budget, that would include $130 billion from changes to prescription-drug pricing for the Medicare program for older Americans, $292 billion from cuts in safety-net programs - such as work requirements for the Medicaid program for the poor, and food stamps - and $70 billion from clamping down on eligibility rules for federal disability benefits. Those changes are likely to spur Democrats’ ire.

Deficits would remain high but eventually come down.

The U.S. government ended fiscal 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 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 U.S. 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 Kiev to investigate political rival Joe Biden, a Democratic presidential candidate and former U.S. vice president.

Administration officials told Reuters that Trump would request an increase in funding for the U.S. International Development Finance Corporation (DFC) to $700 million from $150 million the previous year, an effort to counter developing economic threats from China and Russia.

The budget also proposes $1.1 billion for cyber security efforts by the U.S. Department of Homeland Security.