Key Takeaways From Trump’s Budget Proposal

(Bloomberg) — President Donald Trump unveiled a $4.8 trillion spending blueprint for the upcoming fiscal year that proposes billions more for defense and a U.S. mission to Mars but would cut deeply into other operations including the Environmental Protection Agency. The proposal, released Monday, is unlikely to get through Congress but does reveal the administration’s policy priorities. It projects economic grown above 3% and would add $5.6 trillion in deficits over 10 years. The 2021 fiscal year begins Oct. 1. Here are some key takeaways: Trump calls for shutting post-Enron fraud watchdog Trump wants to close the U.S.’s main accounting watchdog, eliminating what had been a key part of Washington’s response to the Enron fraud. As part of the White House’s budget plan, the Public Company Accounting Oversight Board’s functions would be handled by the Securities and Exchange Commission starting in 2022. The White House says shutting down the PCAOB would save $580 million through 2030 even though it’s paid for by companies and not taxpayers. While the PCAOB and its board members’ annual salaries of more than $500,000 have long been controversial among Republicans and Democrats, any move to shutter it would likely set off a political firestorm. The PCAOB polices auditors and writes standards for the industry. “Consolidating these functions within SEC will reduce regulatory ambiguity and duplicative statutory authorities,” the White House said its budget plan. — Ben Bain Moonshot to Mars would get boost in budget plan Trump wants a hefty $2.7 billion, or 12%, increase in NASA’s budget to speed work on the goal of landing U.S. astronauts back on the moon by the end of 2024. “NASA’s top-priority mission is to return American astronauts to the Moon by 2024 and build a sustainable presence on the lunar surface as the first step on a journey that will take America to Mars,” the budget proposal says. As part of the overall $25.2 billion National Aeronautics and Space Administration budget, Trump is proposing $3.4 billion for the Artemis program’s lunar lander system, a major jump from last year and a critical area on which NASA will likely require investment by private companies such as Jeff Bezos’s Blue Origin LLC and Elon Musk’s Space Exploration Technologies Corp. NASA would also get $700 million for lunar surface activities and $233 million for robotic missions on the moon ahead of a human arrival. Last year, the agency solicited proposals from private industry for a lunar landing system that NASA would procure for Artemis. That plan is similar to NASA’s commercial efforts for rides to the International Space Station purchased from Boeing Co. and SpaceX, and how it will land cargo on the moon. NASA’s current budget stands at $22.6 billion, which includes $600 million for work on a lunar lander system—the first since the Apollo era—but that amount was $400 million less than the administration requested and below what is considered necessary for a landing in 2024. “This is a 21st century budget worthy of 21st century space exploration and one of our strongest budgets in NASA history,” NASA Administrator Jim Bridenstine said Monday at a talk on the budget proposal in Mississippi. “Everyone at NASA should be happy.” — Justin Bachman State Department, international aid would be cut In what has become an annual ritual, the White House proposed slashing the State Department’s budget by 22% in 2021. Lawmakers on both sides of the aisle regularly say the cuts won’t happen. The White House budget seeks funding of $40.8 billion for the State Department and the U.S. Agency for International Development, down from $52.5 billion approved in 2020. The biggest cuts target diplomatic engagement and funding for international organizations such as the United Nations. Both Democratic and Republican majorities have swatted away similar budgets in past years under Trump, in part because foreign assistance has broad bipartisan support. In a statement Sunday, Democratic Representative John Yarmuth, chairman of the House Budget Committee, called the new proposals “destructive and irrational.” Trump’s budget would combine disaster relief, refugee assistance and food aid into one category, dubbed International Humanitarian Assistance, but cut funding by about one-third, to $6.3 billion. — Nick Waldhams Farmers go from bailout to subsidy cuts under plan After authorizing $28 billion in trade assistance for farmers over the past two years, Trump is targeting farm subsidy programs. He proposes $36 billion in cuts over the next decade to federal funding for crop insurance, conservation and commodity programs. The budget also continues Trump’s campaign to cut food stamps, which his administration has pursued through regulatory changes such as stricter work requirements. He promises savings through “bold proposals” to tighten eligibility. The budget also reprises past Trump proposals to provide more food assistance through “harvest boxes” of American-grown commodities for beneficiaries. The budget would cut the U.S. Department of Agriculture discretionary budget by 8% in the 2021 fiscal year and targets entitlement programs such as food stamps and farm subsidies for an $240 billion cutback during the next decade. The budget also reprises a previous Trump proposal to make it harder for wealthy farmers to receive subsidies. Trump would lower the maximum income for farmers eligible for commodity and conservation subsidies to $500,000 annually from the current $900,000 limit. He would also extend the income limit to subsidized crop insurance, the main farm assistance program. Jonathan Coppess, who headed the federal agency that administers farm subsidies during the Obama administration and is now a University of Illinois professor, called the budget proposal “incoherent in the extreme.” The stricter income limits for farm subsidies fly in the face of the Trump trade bailout, which used looser limits on income than the federal farm subsidy program, he said. — Mike Dorning More for infrastructure, less for Amtrak The proposed budget seeks $1 trillion in direct federal spending on infrastructure over the next decade, without saying how it would be paid for. The plan calls for a 10-year, $810 billion reauthorization of highway, rail, transit and other transportation programs in addition to $190 billion in additional infrastructure investments. Part of the plan would raise contract spending on highway and transit projects by the Highway Trust Fund and eliminate recent discretionary spending appropriated for those programs. For example, nearly $2.2 billion in discretionary highway and bridge infrastructure appropriations would be cut while the Highway Trust Fund sees a $3.6 billion increase in its contract authority. Trump frequently rails on the condition of American infrastructure but attempts to secure a viable deal haven’t been successful. His previous infrastructure plans have sought to use taxpayer funds to leverage private sector capital for the bulk of spending on roads, bridges, tunnels and other public assets, while Democrats favor direct federal spending. Talks between the White House and congressional Democrats 2018 on an infrastructure bill failed to produce a deal. Other discretionary cuts target Amtrak, which would see grants slashed to $936 million from $2 billion in fiscal 2020 as part of a proposed restructuring that would eventually revamp the railroad’s poor-performing long distance routes, replacing them with short-distance service in key corridors. — Ryan Beene The Trump administration is proposing to remove tobacco from the Food and Drug Administration’s regulation and create a new agency within the Department of Health and Human Services to oversee the products. The landmark 2009 Family Smoking Prevention Tobacco Control Act gave the FDA authority to regulate tobacco products after years of lobbying from public health groups and even industry leaders. But one of Trump’s top officials has called regulating tobacco “a huge waste of time” for the FDA. FDA officials are in the midst of trying to curb a teen vaping epidemic and are months away from a deadline when companies must submit applications to the FDA in order to keep selling their e-cigarettes. The proposal would create a new agency with “a singular mission on tobacco,” allowing it to “have greater capacity to respond strategically to the growing complexity of new tobacco products,” the administration said in a fact sheet. Matthew L. Myers, the president of the Campaign for Tobacco-Free Kids, called it “the wrong idea at the wrong time.” “This proposal is yet another giveaway to the tobacco and e-cigarette industry,” he said in a statement. “By disrupting the current structure for regulating tobacco products, this proposal is a recipe for delay and distraction.” — Angelica LaVito Plan assumes Congress will extend expiring tax cuts The budget proposal assumes that Congress will extend tax cuts for individuals and pass-through businesses, which are set to expire at the end of 2025, at an estimated cost of $1.4 trillion over a decade. However, the budget lets several parts of the Trump’s signature 2017 tax law expire: including an incentive for businesses to invest in equipment, more generous accounting rules for corporations to claim research and development expenses, and lower rates on offshore profits. That’s likely to unleash a wave of lobbying as those benefits begin to phase out. The budget doesn’t address any new large-scale tax cuts that Trump […]

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