WASHINGTON — The Trump administration on Monday released a proposed 2020 budget that would slash domestic spending for programs important to state and local governments, including a 22% cut of $5.9 billion in discretionary spending by the U.S. Department of Transportation.
Trump also proposed $8.5 billion in cuts to the Department of Education and another $8.6 billion to the Department of Housing and Urban Development, which would bring financial upheaval to school district budgets and public housing authorities.
Among the HUD programs that would be entirely eliminated are Community Development Block Grants, which go to cities and towns throughout the nation.
Speaker Nancy Pelosi described the proposed cuts as “cruel and shortsighted.”
Funding for the Treasury Department, which includes the Internal Revenue Service, would be one of the few to be spared with a proposed increase of $200 million to $13.1 billion. After years of annual spending cuts in the IRS budget, the service received an increase in the current fiscal year to help it implement the 2017 Tax Cuts and Jobs Act.
Congress has ignored President Trump’s proposed domestic spending cuts for each of the last two years and that’s expected to continue, particularly with Democrats in control of the House as a result of the 2018 election.
“President Trump has somehow managed to produce a budget request even more untethered from reality than his past two,” House Appropriations Committee Chairwoman Nita Lowey, D-N.Y., said in a statement. “This irresponsible proposal slashes investments in America’s working families to unworkable budget cap levels, resulting in cuts of 9% to programs like early childhood education, job training, law enforcement, safe drinking water, and scientific and medical research.”
Sen. Richard Shelby of Alabama, the Republican chairman of the Senate Appropriations Committee, recently noted that Congress has ignored presidential budget requests for decades.
Shelby said in a statement Monday he looks forward “to reviewing additional details” and his committee “will conduct hearings and carefully review the president’s proposal” in the next few months.
Senate Republicans will play a key role in upcoming negotiations between the White House and Congress on setting new spending caps for domestic and defense programs. Lawmakers of both parties are rejecting efforts by the White House to increase defense spending in 2020 through the Overseas Contingency Operations fund, which is not subject to the spending caps.
A protracted battle between the White House and Congress over the 2020 budget could lead to another government shutdown after the Oct. 1 start of the new fiscal year.
And Congress has not yet indicated when it might take action to raise or suspend the debt limit, which was reset earlier this month. Treasury began taking extraordinary budget measures earlier this month, including the suspension of the sale of state and local government securities.
SLGS are typically used by state and local governments and other entities that issue tax-exempt municipal bonds because of yield restrictions and arbitrage rebate requirements under the Internal Revenue Code.
In addition, the administration’s proposed funding cuts in transportation programs cloud the prospects for a bipartisan long-term agreement this year on infrastructure.
On the other hand, the administration’s infrastructure fact sheet expressed support for efforts to renew funding for the Highway Trust Fund after the Fixing America’s Surface Transportation (FAST) Act of 2015 expires at the end of 2020.
“A long-term bill is necessary to provide certainty to America’s state, local, and private partners, so they can plan and invest in projects with confidence,” the budget said. “In addition, the 2020 budget includes $200 billion for additional infrastructure investments. The administration will work with the Congress on allocating this funding, to advance projects that provide the most benefit to Americans.”
The budget proposes $2 billion for the Infrastructure for Rebuilding America (INFRA) competitive grant program, which the administration said is $1 billion more than the FAST Act-authorized level.
There’s also $1 billion proposed for the Better Utilizing Investment to Leverage Development (BUILD) grant program formerly known as TIGER, $300 million for a competitive highway bridge program and $300 million for what the administration described as two “innovative” ways to fund water infrastructure.
