Trump's $4 Trillion Budget Proposal - Here Are The Main Highlights

As previewed last night, President Donald Trump has proposed to Congress a $4 trillion-plus budget for next year that projects a $1 trillion or so federal deficit and in the biggest surprise leaked last night, and unlike the plan he released last year, never comes close to promising a balanced federal ledger even after 10 years. On, and that was before last week's $300 billion budget pact is added this year and next, showering both the Pentagon and domestic agencies with big increases.

The spending spree, along with last year's tax cuts, has the deficit moving sharply higher, and spooking interest rates.

Ironically, the original plan was for Trump's new budget to slash domestic agencies even further than last year's proposal, but instead it will land in Congress three days after he signed a two-year spending agreement that wholly rewrites both last year's budget and the one to be released Monday. The 2019 budget was originally designed to double down on last year's proposals to slash foreign aid, the Environmental Protection Agency, home heating assistance and other nondefense programs funded by Congress each year.

Trump will again spare Social Security retirement benefits and Medicare as he promised during the 2016 campaign. And while his plan would reprise last year's attempt to scuttle the "Obamacare" health law and sharply cut back the Medicaid program for the elderly, poor and disabled, Trump's allies on Capitol Hill have signaled there's no interest in tackling hot-button health issues during an election year.

Here are some of the early specifics:

While we await the full release, Bloomberg has noted that Trump’s FY19 budget proposal calls for $1.7t in cuts to mandatory spending and receipts and a 2% yearly reduction in non-defense discretionary budget after 2019. As part of the mandatory spending, the budget projects $237 billion in savings from Medicare over 10 yrs.

Other details:

• Budget request calls for $716b for defense and includes a 2.6% pay raise for troops
• $80b in IT and cyber- funding as well as $210m for a technology modernization fund
• Nearly $17b in opioid-related spending in 2019, including $10b in new funding for HHS
• Requests $18b for border wall construction

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Mick Mulvaney, the former tea party congressman who runs the White House budget office, said Sunday that Trump's new budget, if implemented, would tame the deficit over time, only it wasn't exactly clear how.

"The budget does bend the trajectory down, it does move us back towards balance. It does get us away from trillion-dollar deficits," Mulvaney said on "Fox News Sunday." "Just because this deal was signed does not mean the future is written in stone. We do have a chance still to change the trajectory. And that is what the budget will show tomorrow."

And the punchline: last year, Trump's budget projected a slight surplus after a decade, but critics said it relied on an enormous accounting gimmick — double counting a 10-year, $2 trillion surge in revenues from the economic benefits of "tax reform." Now that tax reform has passed, the math trick can't be used, and the Trump plan doesn't come close to balancing.

As a result, Trump's budget no longer even comes close to balancing over 10 years.

Meanwhile, critics say this year's Trump plan, which promises 3% growth, continuing low inflation, and low interest yields on U.S. Treasury bills despite a flood of new borrowing, underestimates the mounting cost of financing the government's $20 trillion-plus debt.