In mid-March, President Trump struck fear in the hearts of scores of government agencies and programs with a budget proposal for the remainder of the fiscal year that would cut practically every area but defense, veteran’s affairs and homeland security.
Trump’s “America First” budget for fiscal 2017 sought $30 billion in additional defense spending this year, $3 billion more for border security and $1.5 billion for an initial down payment on construction of a controversial wall along the southern border that Trump previously promised would be financed by the Mexican government.
At the same time, he demanded $18 billion of offsetting cuts, including a steep reduction in the Environmental Protection Agency (EPA) spending, a $1.2 billion cut in National Institutes of Health (NIH) scientific grants, and elimination of funding for Planned Parenthood, just to name a few.
But what emerged Sunday night from weeks of intense negotiating by Republican and Democratic congressional negotiators was a far cry from what the new president was demanding. The outcome provides a cautionary tale about the limits of the new president’s power to shape future major spending bills as the White House and GOP-controlled Congress continue to work through their strained relations.
Trump, who has long boasted of his bargaining skills, tried to intervene in the ongoing talks between Republican and Democratic bargainers, even as the two sides were close to conclusion. Instead of imposing his will, as he sought to do on spending for the wall and national security, he ended up making most of the concessions to reach a final agreement Sunday night on the $1.1 trillion omnibus spending bill to keep the government operating through the end of the current fiscal year, September 30.
“Trump got shellacked,” Steve Bell, a senior official of the Bipartisan Policy Center and a former Senate Budget Committee adviser, said in an interview Monday. Bell, a seasoned veteran of past budget negotiations dating back to the 1980s, said that Trump is learning the hard way that on spending matters, at least, “The president proposes but Congress disposes.”
Instead of the $30 billion of additional defense spending Trump sought for the final five months of the fiscal year, the Republican president had to settle for roughly half that, or $15 billion, depending on the baseline used to measure the increase.
Trump’s $3 billion request for more border security funds this year also was halved. And there was nothing in the massive spending bill for Trump’s wall, other than strict instructions that none of the additional border security funding could be used for any aspect of planning or building the controversial wall.
As for the president’s call for a total of $18 billion in offsetting cuts to domestic programs, congressional leaders rejected all of them –- a remarkable repudiation of what was widely viewed as an outrageous proposal. Rather than cutting NIH by $1.2 billion, as Trump proposed, lawmakers decided to give the agency an additional $2 billion on top of another substantial increase the previous year. Congress also preserved the Energy Department’s Advanced Research Projects Agency that Trump wanted to kill, and gave it a $15 million increase to boot.
Republican and Democratic leaders loaded up the bill with other goodies that Trump and White House Budget Director Mick Mulvaney didn’t request, as The Washington Post noted. Those included $4.6 billion that Senate Majority Leader Mitch McConnell (R-KY) set aside to permanently extend health benefits to 22,000 retired Appalachian coal miners and their families. Also, $295 million obtained by House Minority Leader Nancy Pelosi of California to enable Puerto Rico to continue making payments to Medicaid for the poor.
White House Press Secretary Sean Spicer insisted that Trump is undaunted by the outcome of the deal which awaits final approval and looks forward to achieving many of his spending goals when Congress begins negotiating a new full-year budget for fiscal 2018. Trump signaled in his March budget proposal that he will seek $54 billion of increased defense spending next year along with $2.6 billion for the border wall.
“Make no mistake, the wall will be built,” Spicer told reporters.
Republicans are likely to back the president on a handful of his key defense and national security initiatives, including some version of the wall that could end up costing $25 billion or more in the coming years. However, they will bridle at other elements of his budget, including his insistence on a nearly dollar-for-dollar reduction in domestic spending to offset the cost of his military and homeland security buildup.
The looming budget debate for the coming year will also have, as a backdrop, Trump’s drive to pass major corporate and individual tax cuts that analysts warn could add between $3 trillion and $7 trillion to the national debt over the coming decade unless there were offsetting tax increases or spending cuts.
Trump, Treasury Secretary Steven Mnuchin and other top-level administration officials insist that the tax cuts will ultimately pay for themselves by expanding the economy by 3 percent or more annually in the coming years. Former Federal Reserve Board chair Ben Bernanke called 3 percent “a pretty long shot” during an appearance on CNBC yesterday.
The GOP is sorely divided between traditional deficit hawks who are worried about the mounting debt and champions of supply-side economics and dynamic scoring who believe tax cuts are an economic elixir.
Ryan Alexander, president of Taxpayers for Common Sense, a spending watchdog, complained yesterday that the latest spending deal breaches legally binding budget caps by using more than $100 billion in off-budget spending.
Senate Minority Leader Chuck Schumer (D-NY) urged the White House and GOP lawmakers to learn from the latest deal and work with them on upcoming big-ticket spending and tax issues. “If they just try to do things on their own, they aren’t going to be able to accomplish anything,” he said.