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 Seeks Antitrust Boost Amid Probe of Google

The Justice Department’s proposed budget includes a 13% increase for the antitrust division to fund 87 positions. That compares to an 11% increase for the civil division.

The funding increase will support the division’s ongoing probes into whether technology platforms like Google and Facebook are violating competition laws, the department’s No. 2 official Jeff Rosen said.

The Justice Department in July announced a broad review of tech companies to determine whether they are using market power to thwart competition in online search, social media and retail. As part of the review, the division is investigating Alphabet Inc.’s Google.

The budget increase for the antitrust division will also help with an expected uptick in merger investigations. “When the economy is going well there tends to be a lot of deals,” Rosen said. --David McLaughlin

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 Wadhams

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

Trump seeks to remove tobacco oversight from FDA

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 and his advisers say they plan to roll out ahead of the 2020 election. Trump has promised a new wave of tax cuts focused on the middle class that members of his administration refer to as “Tax Cuts 2.0.” Larry Kudlow, Trump’s top economic adviser, has said the plan will be released later in the summer for Republicans to use as they campaign in the fall. -- Laura Davison

Trump seeks national uranium reserve for power plants

The budget request seeks $150 million for the creation of a national uranium reserve -- a move that could be a boon to domestic uranium miners such as Ur-Energy Inc. and Energy Fuels Inc.

The reserve is needed to “provide additional assurances of availability of uranium in the event of a market disruption,” the White House said in its budget.

It comes after Trump rejected a market quota for foreign uranium imports sought by domestic miners and instead formed a presidentially appointed working group to analyze other options. The creation of a domestic reserve through purchases by the Energy and Defense departments was one of them. -- Ari Natter

Energy and environment programs targeted for deep cuts

Trump is proposing deep cuts to the federal government’s work on energy and the environment, including a 26% reduction at the EPA and a 8.1% drop at the Energy Department.

The administration said it wants Congress to “eliminate almost 50 wasteful programs that are outside of EPA’s core mission or duplicative of other efforts,” as part of its $6.7 billion plan for the agency.

The Energy Department, buoyed by recent funding increases, would see its clean energy office cut roughly 70%, as part of an overall $35.4 billion budget. The administration is also asking Congress to spike loan programs for advanced technology vehicles and other initiatives -- including one eyed to help revive a former General Motors Co. factory in Ohio.

At the same time, the National Nuclear Security Administration, an Energy Department agency that oversees the nation’s nuclear weapons stockpile, would see a 19% increase. The administration justifies the proposed increase by saying the investments would “extend the life of warheads in the stockpile and modernize the supporting infrastructure.”

Conservationists blasted the president’s budget plan, saying it would put communities at risk while ignoring climate change.

“It is unconscionable to take such drastic cuts to EPA, the Energy Department and other agencies that keep us safe, protect our kids and grow our clean energy economy,” said Natural Resources Defense Council President Gina McCarthy. -- Jennifer A. Dlouhy, Ari Natter

Budget plan would move Secret Service back to Treasury

Trump’s budget calls for the Secret Service to move to the Treasury Department from the Department of Homeland Security, a change DHS officials have previously resisted. The budget proposal says the transfer would “create new efficiencies in the investigation” of financial crimes and “prepare the nation to face the threats of tomorrow.”

Homeland Security, however, would still see an increase. The spending plan calls for $49.7 billion in fiscal year 2021 funding for the agency, $1.6 billion more than it received for 2020 (without Secret Service included). Including the Secret Service, the budget request is $52.1 billion, also a $1.6 billion increase from 2020 spending levels.

The Secret Service, established for the dual purpose of protecting the president and combat currency counterfeiting, was housed inside Treasury until 2003 when it was moved to the newly created Homeland Security department. The Trump administration aims to restore it to Treasury in part to enhance efforts to fight cybercrime, which has grown increasingly complex since crypto-assets entered the international financial marketplace.

Treasury is also home to the Financial Crimes Enforcement Network, or FinCEN. -- Jordan Fabian, Saleha Mohsin

More for wall, detention and border protection

The budget requests $2 billion to build approximately 82 miles of additional wall along the U.S.-Mexico border, down from $8.6 billion requested last year. But the administration says that with spending allocated from 2017 to 2020 plus the new funding, it could pay for the construction of about 1,000 miles. It would also spend $3.1 billion to add 60,000 detention beds each day. Last summer, U.S. Immigration and Customs Enforcement hit an all-time high of 56,000 people in detention.

The administration asks for $182 million to hire 750 more Border Patrol agents plus 300 processing coordinators and support staff. It also requests $544 million to hire an additional 4,636 ICE enforcement officers, immigration court prosecuting attorneys. It would bring ICE staffing total to as many as 6,000 workers. -- Jordan Fabian

Budget calls for $30 million for 737 Max-related safety

The White House wants to add $30 million to the Federal Aviation Administration’s budget to strengthen safety in the wake of errors made in how Boeing Co.’s 737 Max was approved.

The budget proposal says the money is designed to “improve aviation oversight, following recommendations from the Boeing 737 Max investigations and reviews.”

The FAA has been under fire for approving a feature on the plane that was linked to two fatal crashes that killed 346 people and led to its grounding.

In the redesign process the agency has refused to delegate any approvals to Boeing employees, who signed off on more than 90% of the original plane. If FAA wants to take a more direct role in assessing aircraft designs, it would need more manpower and technical expertise.

Lawmakers including Representative Peter DeFazio, the chairman of the House Transportation and Infrastructure Committee, have also said they would look for ways to add to FAA’s resources.

The spending plan would allow the FAA to hire 13 new employees to set up an office to oversee the organizations at companies such as Boeing that perform approvals in the name of the agency, said Daniel Elwell, the agency’s deputy administrator.

Because some investigations into the 737 Max’s approval haven’t been completed yet, the FAA may make additional proposals for change in later budgets, Elwell said in a telephone briefing on the budget plan. -- Alan Levin

--With assistance from Ari Natter, Ryan Beene, Jennifer A. Dlouhy, Mike Dorning, Saleha Mohsin, Alan Levin, Nick Wadhams, Justin Bachman, Ben Bain and David McLaughlin.

To contact Bloomberg News staff for this story: Jon Morgan in Washington at jmorgan97@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, John Harney

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