President Trump unveiled a $4.8 trillion budget proposal for the 2021 fiscal year, thought to be a taste of his re-election strategy, notable for steep reductions in social services like Medicaid, disability insurance, and higher budgets for defense, including the president’s promised southern border wall. The plan seeks to reduce deficits by $4.6 trillion in the next 10 years.
The plan, which needs Congressional approval, proposes increasing military spending slightly and lowering non-defense spending by nearly 5 percent, which seems to buck the agreement made by Congressional leaders and the White House this summer that passed both chambers with bipartisan support.
Trump’s budget proposal cuts spending on federal disability benefits, student loan forgiveness, foreign aid spending, and eliminates funding for the Corporation for Public Broadcasting. It will also further extend the income tax cuts that are currently set to expire in 2025. Other departments receiving a big cut: the Environmental Protection Agency, whose budget would be slashed by 26 percent, and a 9 percent reduction for the Health and Human Services department, which includes the National Institutes for Health and the Centers for Disease Control and Protection. CDC cuts would not be expected to include funding for infectious disease activities
Senator Mike Enzi (R-Wyo.), Chairman of the Senate Budget Committee, said in a statement that “presidents’ budgets are a reflection of Administration priorities, but in the end, they are just a list of suggestions, as the power of the purse rests with Congress. Bipartisan consensus will be necessary to bring our debt and deficits under control.”
The plan would also cut more than $5.5 billion in spending for the Education Department, which is slightly less than what was proposed last year. Those domestic spending slashes will likely be rejected by lawmakers and stand in contrast to messaging from the eventual 2020 Democratic nominee.
Trump also promised to send astronauts to the moon by 2024, a promise he presumably hopes to fill with a 12 percent budget increase in NASA funding.
Congressman John Yarmuth (D-Ky. 3rd District) who chairs the House Committee on the Budget said in a statement that the plan, by a “destructive and irrational president,” is backpedaling on a bipartisan deal. “He has broken his promises to the American people. Defaulted on the bipartisan budget deal he made with Congress. And we will stand firm against this warped ‘vision’ for our nation’s future,” Yarmuth said.
Though the president’s budget plan sheds light on his policy ambitions, a Democrat-controlled House means a spending bill in the Senate would require bipartisan support, which looks unlikely.
Senate Minority Leader Chuck Schumer tweeted, “With his latest budget proposal, it’s hard to imagine that President Trump could do any more to double-cross the very American workers and middle-class families he promised to help just last week in his State of the Union address.” He noted that by proposing “severe cuts to Medicaid and Medicare, President Trump’s latest budget is simply a continuation of his war to rip away health care from millions of Americans.”
The budget plan carries weight for the president’s platform heading into an election year, although it’s a shift from his 2016 campaign when he promised to protect funding for Medicare and Medicaid. The president even stated via a tweet as recently as the Saturday that he would not be "touching" Medicare before the release of the proposed budget that does just that.
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2021 saw markets continue to be impacted by the onslaught of the coronavirus pandemic -most recently in the form of the Omicron variant- in addition to the global supply chain shortage, and increased inflation. But it wasn't all bad news, as crypto soared throughout the year, and meme stocks continued to have a moment. With the year coming to a close, investors are keeping an eye out to see if they should expect more of the same in the new year. Chris Vecchio, Senior Analyst, at DailyFX tells us what market trends to be on the watch for in 2022.
