Trump to Attempt Cutting Back on $1.3 Trillion Spending Deal

(Bloomberg) -- With the federal budget deficit expanding and congressional elections seven months away, the Trump administration plans to ask Congress for cuts in domestic programs that were part of a bipartisan $1.3 trillion spending bill that President Donald Trump signed last month.

The White House doesn’t want to touch extra funding for the military, border security and combating the opioids crisis in a package of proposed cuts it will send to Congress in the coming weeks, according to an administration official, who asked for anonymity to outline the plan.

House Majority Leader Kevin McCarthy of California has been working with the White House on using a budget maneuver called rescission, a Republican aide said. The size of the cuts that might be sought and a timetable for a congressional vote hasn’t been decided.

“The administration is working to identify potential rescissions and at this point, there is no completed list or dollar amount,” White House budget office spokeswoman Meghan Burris said.

Any attempt to roll back spending is sure to trigger a backlash from Democrats who negotiated the extra domestic funding in exchange for agreeing to a bigger budget for the Pentagon. Although Democrats wouldn’t be able to block it, some Republicans expressed reluctance to blow up one of the few bipartisan agreements that have made it through the House and Senate.

Tough Vote

“It probably would be a tough vote over here," with the GOP’s slim 51-49 majority, third-ranking Senate Republican John Thune of South Dakota told reporters.

“It would depend a lot on what’s in it," Thune said. "But I think there are a lot of our members who feel like we’ve litigated these issues over the last couple of years, we came up with budget numbers and everyone agreed to them."

Republican Senator Susan Collins of Maine told reporters the idea was "ill-advised" and would make negotiating next year’s appropriations “very difficult.”

Negotiations

The spending bill passed the House 256-167 and the Senate on a 65-32 vote last month after Republican leaders urged members to support the military increases despite the increases for domestic priorities. The 2,232-page measure was the result of more than a month of negotiations between Republicans and Democrats in Congress to end a cycle of government shutdown threats and stopgap spending bills.

Although the White House was part of the negotiations, Trump called the bill “ridiculous” and fumed over the lack of funding for the $25 billion southern border wall he promised to build during his presidential campaign. He threatened to veto it but backed down under the threat of a March 23 government shutdown.

The bill increased military spending by $80 billion this year above previous spending limits and non-defense spending by $63 billion. Trump’s 2018 budget had sought a $54 billion cut to non-defense spending.

Widening Deficit

Along with the $1.5 trillion tax cut law, the additional spending is likely to balloon the federal budget deficit, which is on track to hit $804 billion in the fiscal year ending Sept. 30 -- a little more than a month before the election -- from a projected $563 billion shortfall forecast in June, according to a new report by the Congressional Budget Office. The CBO forecast the deficit will expand to $1 trillion in 2020, two years earlier than previously forecast.

The widening gap takes away one of the main lines of attack Republicans have used against Democrats in recent years -- runaway federal spending -- as they are trying to fend off a strong challenge to their control of the House in the November elections. Feeling the pressure, House Republicans will vote Thursday on a balanced budget amendment, a largely symbolic gesture because it has no chance of passing.

The rescissions request would make use of an obscure provision in the 1974 Budget Act that allows the president to request the cancellation of some spending and gives Congress 45 days to approve the measure. Under a 1992 precedent in the Senate that limits debate, Republicans likely could pass the bill without any Democratic support.

Democrats warned that future agreements on legislation would be imperiled.

"Advancing a rescission package like the one described would lay waste to the notion that Republican leadership negotiated the omnibus in good faith and poison the well for future responsible, bipartisan legislating," Matthew Dennis, a spokesman for House Appropriations Committee Democrats, said on Friday.

Steve Bell, a former Senate Republican budget aide, of the Bipartisan Policy Center predicted that because of this, the package will face difficulties in the Senate and may not even be introduced.

Bell said he expects the White House will likely attempt to bring non-defense discretionary levels down by $120 billion to put it in line with the Trump 2018 budget.

Steve Ellis of Taxpayers for Common Sense, a spending watchdog group, said the larger the request from Trump, the more difficult it will be.

"Unless it’s a really targeted package that just focuses on some egregious waste, it is going to get enough people ticked off that it won’t go through," he said.

Budget watchdogs say they would welcome the chance to reduce the roughly $150 billion spending increase in the omnibus bill.

"I don’t have a view yet on this particular process, but certainly we overspent for FY 2018 and if we can pare the funds backs a bit -- both on the defense and non-defense side -- that would be an improvement," Marc Goldwein of the Committee for a Responsible Federal Budget said.

--With assistance from Anna Edgerton Laura Litvan and Steven T. Dennis

To contact the reporters on this story: Erik Wasson in Washington at ewasson@bloomberg.net, Justin Sink in Washington at jsink1@bloomberg.net.

To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Laurie Asséo

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