Trump Budget Hikes Defense Budget to $750B, Cuts Health Funding

U.S. President Donald Trump's budget proposal for Fiscal Year 2020 (FY20) delves deeper into his political priorities: more spending on defense and sharp social cuts.

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The so-called "Budget for a Better America" cuts 5% from general federal expenses, which add up to US$2.7 trillion in the next 10 years. This cut, however, does not affect military spending.

On the contrary,  defense is the only budget category that would see its funding increased to US$750 billion, which is 4.7% more than Fiscal Year 2019 (FY19).

This amount does not include other security-related items such as US$40 billion to CIA and US$20 billion to NASA, of which approximately half will be used for military purposes.

Of the US$ 750 billion requested, US$733 billion will go to the Department of Defense and US$17 billion will be assigned to research and maintenance of atomic bombs at the Department of Energy.

"These figures are a surprise because in Dec. 2018... Trump declared that the US$716 billion planned spending for the Pentagon that year was 'crazy'. The president's team soon after spearheaded the idea that the military budget would be reduced to US$700 billion in FY20," based on an analysis by El Mundo. 

The idea "is to invest in national priorities while restricting spending to give taxpayers the best value for every dollar in taxes," Russell Vought, director of theWhite House Office of Budget and Management said. 

In addition, Trump is asking Congress for an additional US$8.6 billion for the U.S-Mexico border wall.

Following the fiscal philosophy dominant in the last two years, President Trump proposes a 5% cut of non-military spending.

Among the programs that would see their funds reduced are Medicare, the health system that cares for the elderly. It would include a reduction of US$845 billion over the next decade. During this period, Medicaid will receive $1.5 trillion less and Social Security $25 billion less.

Many federal agencies will also be affected. For instance, salary cuts will affect  31 percent in the case of the Environmental Protection Agency (EPA) by 31% and by 10% at the Department of Education (DOE).

Broadly speaking, some economists have said that President Trump's budget proposal does not have sound macroeconomic grounds.

If Trump's FY20 proposal is approved, the U.S. government could reach a balanced budget after 15 years, that is, in 2035. The U.S. national debt would increase from US$22 billion in 2019 to US$31 billion in 2029, which means an increase of 29 percent in less than 10 years — all in a context of a deceleration of the economy.

Although the White House believes that the U.S. economy will keep on growing at a 3 percent annual average rate over the next decade, the International Monetary Fund (IMF) estimates that U.S. Gross Domestic Product (GDP) will grow 2.5 percent in 2019 and 1.8 percent in 2020.

These short-term projections are enough to break with the Trump administration's optimism, which expects the U.S. economy to grow by 2.8 percent in 2026.