What to Know in Washington: Trump Budget Request Set for Release

President Donald Trump will propose a U.S. budget that wouldn’t balance for 15 years, even assuming stronger economic growth than private forecasters expect and with deep domestic spending cuts that have little chance of passing Congress.

Trump’s budget blueprint, to be released today, asks lawmakers to slash funding for most federal government agencies while boosting defense spending and setting aside $8.6 billion for a wall along the U.S.-Mexico border, according to a White House preview. The plan faces certain rejection by Democrats now in control of the House and will kick off a new political battle over spending priorities.

Russ Vought, acting director of the White House Office of Management and Budget, said in a statement the proposal “embodies fiscal responsibility” and “shows that we can return to fiscal sanity without halting our economic resurgence.”

However, Trump’s plan would prolong federal deficits, with the administration estimating it would put the U.S. on track for a balanced budget by 2034. That 15-year timeline breaks with Republican orthodoxy, as GOP lawmakers have pushed to eliminate the federal deficit within 10 years.

The president’s proposal also asks for an additional $5 billion in border wall funding for the Department of Homeland Security and $3.6 billion in new military construction funds. That request is in addition to the funds that Trump is hoping to allocate through executive action after declaring a national emergency in February over the situation on the border, a move likely to tee up a new battle with Congress.

Trump’s budget is also set to include requests to boosting funding for some domestic priorities, including programs to combat abuse of opioids and medical care for veterans. The White House said Trump was seeking more than $80 billion “to ensure our veterans receive world-class health care,” a nearly 10 percent increase from fiscal 2019 levels. Read more from Justin Sink and Jennifer A. Dlouhy.

Photographer: Andrew Harrer/Bloomberg via Getty Images
Copies of the fiscal year 2020 budget sit stacked inside the Government Publishing Office production facility in Washington on March 7, 2019.

Government Reorganization: The administration will also focus on the merger of the two government agencies dealing with the federal workforce as well as federal facilities and services, rather than the panoply of mergers proposed last year, a senior administration official said Friday. Government management is going to be highlighted in today’s request, but the centerpiece will be the follow-up to the sweeping overhaul and reorganization plan put out in June 2018, said the official who is familiar with the budget plan.

Where the 2018 plan listed 34 reorganization proposals, this year will focus on the merger of the Office of Personnel Management into a single entity within the General Services Administration, the agency primarily responsible for federal buildings and support services.Read more from Cheryl Bolen.

Politics & Policy

2020 Candidates Flood SXSW: Eight 2020 Democratic hopefuls took the stage at the annual South by Southwest cultural festival in Austin, Texas, over the weekend, attempting to broaden their appeal and test their message with a millennial-heavy audience. But as the candidates took turns giving lengthy, often policy-weighted interviews, they were eclipsed by two Democrats who aren’t even in the race: Rep. Alexandria Ocasio-Cortez (D-N.Y.) and former Rep. Beto O’Rourke (D-Texas) each commanded huge crowds and dominated the conference buzz.

O’Rourke made a widely expected “surprise” appearance at the premier of a documentary about his close but ultimately failed 2018 Senate race against Republican Ted Cruz. He disappointed fans that hoped he’d use the occasion to announce he’s also entering the presidential contest. Ocasio-Cortez, not old enough to run for the White House, packed a huge ballroom at the Austin Convention Center to answer questions about her vision for a Green New Deal and identity politics.

Their appearances overshadowed sessions with two sitting senators who are candidates for the Democratic nomination, Amy Klobuchar (D-Minn.) and Elizabeth Warren (D-Mass.), although both drew full houses of attentive listeners. Warren inspired an animated response to her proposal, announced on Friday, to break up giant tech companies like Facebook and Google in a bid to ensure a competitive market. Read more from Susan Warren.

‘Irredeemable’ System: Ocasio-Cortez, at her appearance, called capitalism an “irredeemable” system that is to blame for income inequality. The self-described democratic socialist addressed an enthusiastic crowd Saturday about issues that resonate with her fellow millennials, from universal healthcare to combating climate change. She directed some of her sharpest comments at an economic system that she said values profit over people. Susan Warren has more. 

Antitrust Messaging: Meanwhile, the candidates have seized on antitrust as a potent campaign issue to an extent not seen in more than a century. Following Warren’s proposal, Klobuchar said on Saturday at SXSW — in one of her first public appearances as a candidate — that she wants to make antitrust “cool again.” The senators’ populist rhetoric early in the 2020 cycle could drive other candidates to adopt similarly aggressive views and may further amp up political pressure to rein in big tech’s influence. Read more from Victoria Graham. 

Separately, Congress may issue subpoenas in probing whether the White House sought to block AT&T’s $85 billion acquisition of Time Warner, the chairman of a House antitrust subcommittee said. Rep. David Cicilline (D-R.I.) floated the possibility after the New Yorker reported that Trump wanted former aide Gary Cohn to push the Justice Department to sue and block the merger. Trump frequently criticizes Time Warner’s CNN news channel. “If we are compelled to, we’ll issue subpoenas,” Cicilline said yesterday on CNN. “We’ll certainly bring witnesses.” Read more from Ben Brody. 

Cicilline also has anti-competitive behavior in the health-care industry in his cross hairs. The lawmaker told Bloomberg Law in an interview that he is going to start working on legislation allowing the Federal Trade Commission to more easily punish the behavior, based on recommendations from economics professors and researchers at a hearing last week. Read more from Shira Stein. 

2020 Polling: Former Vice President Joe Biden and Sen. Bernie Sanders (I-Vt.) lead the field of prospective and declared 2020 Democratic presidential candidates in an Iowa Poll of voters likely to participate in the first nominating contest 11 months from now. Biden, who is still trying to decide whether he wants to run for a third time, has the support of 27 percent of likely participants in the Iowa caucuses. He’s closely followed by Sanders, who unsuccessfully ran for the nomination against Hillary Clinton in 2016, at 25 percent. Read more from John McCormick. 

Mueller Report: It would be a mistake for Special Counsel Robert Mueller not to subpoena Trump to appear before a grand jury in the investigation of Russian interference in the 2016 election, said House Intelligence Committee Chairman Adam Schiff (D-Calif.). Mueller is constrained by time pressure to conclude his work and also faces a White House that would likely fight a subpoena, Schiff said. Even so, he shouldn’t rely just on written answers from Trump because lawyers help craft them and there’s no chance for follow-up questions, the California Democratic lawmaker said yesterday on NBC’s “Meet the Press.”

There are expectations in Washington that Mueller will wrap up his investigation and send his findings to U.S. Attorney General William Barr within days or weeks. The House plans to vote this week on a measure that would call for the public release of any report from Mueller. Read more from Mark Niquette.

What Else to Know Today

Trump to Meet Brazil President Next Week: Brazilian President Jair Bolsonaro will meet with Trump at the White House on March 19. The two leaders will talk about issues including defense cooperation, trade and restoring democracy in Venezuela, White House spokeswoman Sarah Sanders said in an emailed statement.

U.S. Troops in Europe: Rep. Liz Cheney (R-Wyo.) blasted the Trump administration’s potential demand that countries pay the full cost of hosting U.S. troops and then some, saying it’s a “wrongheaded” move that would jeopardize both national security and relationships with allies. “It would be absolutely devastating,” Cheney, who heads the House Republican Conference and serves on the Armed Services Committee, said yesterday on NBC’s “Meet the Press.” Cheney was responding to a Bloomberg News report on Friday that the administration is developing so-called “cost plus 50” plans to force countries to pay the full price of American soldiers deployed on their soil, plus an additional 50 percent or more for the privilege. Read more from Jennifer A. Dlouhy.

China Trade Deal: The Trump administration is making “headway” in trade negotiations with China, Larry Kudlow, a White House economic adviser, said yesterday, brushing off reports suggesting diminishing prospects for a deal and push-back from Beijing. “We’re making great progress,” Kudlow said on “Fox News Sunday,” adding that he was “optimistic” Trump and President Xi Jinping of China would meet to ink a trade pact at some point — possibly in March or April. Read more from Jennifer A. Dlouhy and Ros Krasny. 

Fed Rethinks Strategy: The policy shift under way at the Federal Reserve will affect new forecasts to be published later this month and also their longer-run strategy. Recent remarks by Chairman Jerome Powell, Vice Chairman Richard Clarida, Governor Lael Brainard and New York Fed President John Williams have all signaled their contentment with letting the policy rate rest at 2.25 percent to 2.5 percent when they meet March 19-20, and perhaps for a few meetings after that. Read more from Craig Torres and Christopher Condon. 

Wall Street Regulations: Trump has repeatedly vowed to loosen Wall Street’s leash, but some of regulators’ most meaningful efforts to revamp post-crisis constraints on big banks are running into problems. Watchdogs, for example, are going back to the drawing board to rethink a controversial method they came up with for determining what trades are banned by the Volcker Rule. That will probably require re-proposing the whole thing, people familiar with the matter said last week, potentially pushing banks’ timeline for get ting relief into next year. Read more from Jesse Hamilton. 

North Korea Standoff: The U.S. is prepared to engage with North Korea again after a failed second summit to end its nuclear weapons program but won’t fall for an “action-for-action ploy,” National Security Adviser John Bolton said. While Trump is open to a third summit, “some time may have to go by” because the marginal benefit to North Korea of getting U.S. sanctions lifted is greater than the benefit to the U.S. of partial denuclearization, Bolton said yesterday on ABC. “The leverage is on our side right now, not on North Korea’s,” Bolton said. Read more from Mark Niquette and Ros Krasny. 

Family Separation Policy: The U.S. government must identify perhaps thousands more families who were separated at the Mexican border as long ago as July 2017, a federal judge said Friday. The judge granted a motion by the American Civil Liberties Union to expand a lawsuit seeking family reunification to include parents whose children were taken from them before the Justice Department implemented a “zero tolerance” policy last year. Read more from Edvard Pettersson. 

To contact the reporter on this story: Zachary Sherwood in Washington at zsherwood@bgov.com 

To contact the editors responsible for this story: Loren Duggan at lduggan@bgov.com; Giuseppe Macri at gmacri@bgov.com

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