Trump’s budget is a wily political move

The US president gears up for negotiations with budgets that have no hope of passing. Emily Hohler reports.

939-Trump-634
Trump: not afraid of red ink

Donald Trump's latest budget proposal, which demands billions for a border wall at the expense of social safety nets and environmental protections, was dismissed on Monday as "dead on arrival", says David Smith in The Guardian. His $4.7trn budget for the 2020 fiscal year, which starts in October, includes cuts to domestic programmes of 5% or $2.7trn over ten years in order supposedly to curb America's national debt, which stands at a record $22trn. But budgets released by the White House have "little chance of passing". They are more "starting points for negotiation with Congress".

Thankfully, this budget is going "nowhere anytime soon", says Ben Ritz in Forbes. Despite comically optimistic growth forecasts, it wouldstill produce a bigger national debt than the policies in President Barack Obama's finalbudget proposal. But the worst aspect is the gutting of investments that provide the foundations for long-term prosperity, such as for infrastructure, education and scientific research, including "aggressive cuts" to anything related to climate change. Meanwhile, Trump's 2017 tax cuts would be made permanent, and defence spending increased. This budget is a recipe for greater poverty, inequality and higher national debt.

The "red ink" is a "minor problem" for Trump, saysIrwin Stelzer in The Sunday Times. Deficits in trillions are hard for "ordinary people to imagine". The point of this budget is to reassure Trump's core that he is fighting to redeem campaign promises while widening "fractures" within the Democrats. Democrat moderates fear that a radical and expensive agenda, promoted by the socialist wing of their party, will make voters return to Trump. This budget might be "DOA" in Congress, but it is a "very-much-alive campaign ploy to which Democrats will be hard-pressed to respond without tearing their party apart".

Recommended

Forget austerity – governments and central banks have no intention of cutting back
Global Economy

Forget austerity – governments and central banks have no intention of cutting back

Once the pandemic is over will we return to an era of austerity to pay for all the stimulus? Not likely, says John Stepek. The money will continue to …
15 Jan 2021
Will America’s “healthy reflation” end in inflation?
US stockmarkets

Will America’s “healthy reflation” end in inflation?

Democratic control of the US Congress would give Joe Biden huge scope to stimulate the economy. But willie mean a “healthy reflation” for the economy …
8 Jan 2021
23 December 1913: The US Federal Reserve is created
This day in history

23 December 1913: The US Federal Reserve is created

After much debate, Woodrow Wilson finally signed the bill that would create the US Federal Reserve on this day in 1913.
23 Dec 2020
The return of Janet Yellen
People

The return of Janet Yellen

Janet Yellen, the former US central-bank chief is back, this time as US Treasury secretary. Donald Trump wondered whether she was too short for the jo…
19 Dec 2020

Most Popular

Bitcoin: fool’s gold or the new gold?
Bitcoin

Bitcoin: fool’s gold or the new gold?

With bitcoin hitting new highs last week, and close to becoming a mainstream investment, is it really gold for the 21st century?
15 Jan 2021
Leasehold reforms promise the end of a nightmare for many homeowners
Property

Leasehold reforms promise the end of a nightmare for many homeowners

Horror stories about unscrupulous landlords profiting from a legal relic of the feudal era are about to get a happy ending, says Simon Wilson.
16 Jan 2021
The MoneyWeek Podcast: bitcoin special
Bitcoin

The MoneyWeek Podcast: bitcoin special

Merryn talks to bitcoin experts Dominic Frisby and Charlie Morris to get the lowdown on the cryptocurrency to find out why it's such a huge global phe…
15 Jan 2021