The Trump Administration released its Fiscal Year 2021 – $4.8 trillion budget on February 10. The budget proposes steep reductions in domestic spending programs and increases defense spending, rehashing previously rejected spending cuts while leaving Social Security and Medicare benefits untouched. However, the budget does call for $2 trillion in savings from mandatory programs over a decade including $130 billion in savings from drug pricing under Medicare plus $292 billion from cuts to safety-net programs. The budget includes a five percent cut to non-defense spending to $590 billion. This is below the $632 billion level the White House and Congress agreed to last summer. The budget increases military spending three percent to $740.5 billion for the new fiscal year beginning October 1.
Among some of the provisions in the new spending plan, NASA would see an increase of $3 billion to $25 billion; the plan includes $2 billion for the border wall; about $30 billion to modernize the nuclear arsenal while it eliminates the Advanced Research Projects Agency-Energy; a ten-year $1 trillion infrastructure proposal which is mostly for surface transportation reauthorization. In addition, the budget slashes the Northeast Corridor and state-supported lines over 50 percent. The administration wants to restructure Amtrak by focusing on better-performing routes and substituting bus service for lower-ridership routes. The restructuring plan would provide $550 million to states and Amtrak in transitional grants. The budget also proposes to enact a railroad safety user fee. The proposal seeks to eliminate a credit for electric vehicles. EPA is reduced to $6.7 billion, a 27 percent cut from current funding, and under the Department of Health and Human Services, the Low Income Home Energy Assistance Program would be eliminated.
According to the summary tables, the new budget reflects a $1.08 trillion deficit for the ongoing budget year and a $966 billion deficit gap for the new fiscal year. As a share of the economy, debt held by the public is projected to be 81 percent of the gross domestic product over the next two years, gradually declining to 66 percent in 2030. The president’s budget plan assumes more robust economic growth than what most economic experts predict, at three percent over the next decade. Ultimately, Congress will make the final decision on FY2021 spending levels.
In a statement released by Speaker Pelosi, she said, “Year after year, President Trump’s budgets have sought to inflict devastating cuts to critical lifelines that millions of Americans rely on. Less than a week after promising to protect families’ health care in his State of the Union address, the President is now brazenly inflicting savage multi-billion-dollar cuts to Medicare and Medicaid – at the same time that he is fighting in federal court to destroy protections for people with pre-existing conditions and dismantle every other protection and benefit of the Affordable Care Act.”