What to Know in Washington: Trump’s Budget Would Cut Safety Net

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President Donald Trump’s $4.8 trillion budget for the upcoming fiscal year proposes billions more in funding for defense and a U.S. mission to Mars, but would bring steep cuts to social programs despite almost $1 trillion in deficit spending.

The proposal, scheduled to be unveiled today, is an election-year embodiment of many of the policy priorities Trump has championed over his first three years in office. He proposes continuing his effort to “rebuild” the U.S. military by investing heavily in defense spending — $740.5 billion in the next fiscal year — including the creation of Space Force.

But the president also calls for deep cuts to government programs he believes are unpopular with his base, slashing discretionary spending by 5% — down to $590 billion — in the coming year. That includes major reductions in foreign aid and environmental protection programs, along with stringent new work requirements on welfare programs such as food stamps and housing assistance.

The annual budget produced by the White House reflects the policy aspirations of the incumbent administration but has no binding power, since federal spending is appropriated by Congress. Lawmakers aren’t expected to finish work on 2021 spending levels until after the November election. And the White House move to change two-year budget cap levels negotiated with Democrats last summer could make an eventual spending deal more difficult.

Trump’s budget shows the president drifting further away from his campaign pledge to eliminate the U.S. national debt by the time he leaves office.

U.S. debt has already risen $3 trillion during Trump’s first three years in office, and his plan calls for adding to the debt until 2035.

Some agencies get a boost under the president’s proposal, including NASA, which would see its spending rise 12% in the coming year. That additional funding would be targeted toward the president’s goal of returning to the Moon by 2024, with the aim of later attempting a lunar launch of a manned spacecraft bound for Mars.

Another of the president’s major priorities — the border wall with Mexico — would receive $2 billion in funding next year. That’s down from $8.6 billion requested a year ago, but the senior administration official said that with funding for 1,000 miles of wall already secured, the administration needed less in the upcoming year. Read more from Justin Sink and Erik Wasson.

Photographer: Alex Edelman/Bloomberg
A copy of Trump’s fiscal 2021 budget request.

Budget Boosts Nuclear Weapons Funding: The Pentagon’s budget proposal would boost funding for nuclear weapons systems including intercontinental ballistic missiles, submarines and F-35 jets as well as providing more money for emerging technology research and the Space Force. The budget would shift funding in ways that signal Trump’s evolving priorities. The budget details are part of the Pentagon Comptroller’s 134-page overview obtained by Bloomberg News in advance of its formal release. Tony Capaccio has details.

The Air Force is also seeking $3 billion to pay for 15 Boeing KC-46A tankers in fiscal 2021, even as Gen. David Goldfein, the service’s chief of staff, warned new CEO Dave Calhoun that the Air Force is unhappy with his company’s inability to provide combat-ready aircraft after winning the $44 billion project nine years ago. The Air Force’s request for the midair refueling tanker aircraft is $800 million higher than the $2.2 billion enacted this fiscal year. Roxana Tiron has more.

Elections & Politics

Buttigieg Wins Most Iowa Delegates: Pete Buttigieg appears to have sealed his victory in Iowa after the state’s Democratic Party released corrected results yesterday from its disputed caucuses. Buttigieg now has 14 national delegates from Iowa to 12 for Sen. Bernie Sanders (I-Vt.). Sen. Elizabeth Warren (D-Mass.) got eight, Joe Biden had six and Sen. Amy Klobuchar (D-Minn.) received one.

But the Associated Press said it still can’t declare a winner because the results “may not be fully accurate and are still subject to potential revision.”

The race was so close that Buttigieg won by 0.09% of state delegate equivalents, the official yardstick for victory in Iowa. But Sanders has also declared victory because 6,103 more Iowans caucused for him before the process of eliminating nonviabvle candidates, recounting and converting to state delegates. The Sanders campaign said it was demanding a partial recanvass. Read more from Gregory Korte.

Klobuchar Rises to Third in New Hampshire: Klobuchar, fresh off a strong debate performance, has risen to third place in two tracking polls of New Hampshire voters released yesterday. Sanders still holds a sizeable lead in New Hampshire, which holds its primary tomorrow, with 30% in a 7 News/Emerson College tracking poll. Buttigieg was second in New Hampshire with 23%. The two men have consistently held the first two slots since the caucuses last Monday. Warren had 11% and Biden came in fifth at 10%.

In a Suffolk University/Boston Globe/WBZ tracking poll, Sanders had 27% to Buttigieg’s 19%. Klobuchar was third with 14% and in that poll, Biden and Warren were tied for fourth with 12% each. Read more from Wendy Benjaminson.

Klobuchar’s campaign said it had raised $2 million from donors in all 50 states since Friday night’s debate, in which she went on the offensive against the front-runners for the Democratic presidential nomination. The pace was a sharp uptick from her previous level when she raised $11.4 million in the fourth quarter of 2019. “With proven grassroots support, Amy continues to outperform expectations and punch above her weight,” campaign manager Justin Buoen said in a statement. Read more from Ryan Teague Beckwith.

Democratic Jabs Turn Personal: The Democratic presidential candidates turned their fire on each other ahead of tomorrow’s primary, abandoning a yearlong nonaggression pact as some candidates face defeats that could challenge their ability to go on. Biden called Buttigieg unqualified to be president as a small-city mayor. Buttigieg fired back that Biden is stuck in an old-fashioned Washington mindset. Sanders said he would hammer at Buttigieg’s billionaire donor list. And Warren said she didn’t want to participate in the fight, then criticized Biden’s consultant-driven campaign and Buttigieg’s big-donor strategy.

The change in tone signaled just how important tomorrow’s results could be as Iowa’s delayed split decision gave the lead to Buttigieg and Sanders but failed to produce a clear front-runner. Read more from Magan Crane and Jennifer Epstein.

Biden Sees Problem With Running Mate Who Backs Medicare For All: Biden said yesterday he would be unlikely to choose a running mate who supports Medicare for All, essentially ruling out Sanders and Warren. “There has to be some correlation between their views and mine,” he said, speaking at an event in New Hampshire, which holds its Democratic presidential primary tomorrow. “For example,” he said, “if I pick someone who had a view that they insisted that we do Medicare for all, which costs over $35 trillion and has no chance of becoming law and would not support my plan for Medicare for those who want it building in Obamacare and building the public option, that would be a real problem.” Read more from Jennifer Epstein.

Steyer Says He’s the Democrat Trump Can’t Peg as Socialist: Democratic presidential candidate Tom Steyer said yesterday he can win the White House because he is the contender Trump can’t tar as a socialist. Trump “is going to say Democrats suck on the economy. He’s going to say we’re all socialists,” Steyer said at a reporter roundtable organized by Bloomberg News in Manchester. “Who can he not say that about and who can go after him on the economy and win?” He added: “You can’t be an international investor for 30 years and not be able to answer that.” Read more from Max Berley.

Hollywood Sizzles for Buttigieg: Even before his finish in Iowa, Buttigieg was a favorite of Hollywood heavyweights who have been showering him with cash. But some industry insiders are looking beyond 2020 as they make a long-term investment in the young candidate’s career. The openly gay former mayor of a small city is raking in more money from the entertainment industry than any of his rival Democratic presidential candidates, but has yet to rack up voter support in California, the state with the biggest delegate haul, which votes March 3. Read more from Jeffrey Taylor, Christopher Palmeri and Bill Allison.

Michael Bloomberg also is seeking the Democratic presidential nomination. Bloomberg is the majority owner of Bloomberg Government’s parent company.

Trump Ousts Sondland and Vindman

Trump moved swiftly on Friday to exact retribution on those he blames for his impeachment, purging his administration of two witnesses who testified against him in the House inquiry just two days after his acquittal by the Senate.

Gordon Sondland announced he’d been ousted as U.S. ambassador to the European Union just hours after the White House dismissed Army Lieutenant Colonel Alexander Vindman from the National Security Council. Both offered damaging details about Trump’s pressure campaign on Ukraine.

In his first comment on the matter, Trump on Saturday lashed out at Vindman on Twitter, terming the decorated military veteran “very insubordinate.”

The removal of Sondland and Vindman — two days after Trump’s acquittal in the Senate impeachment trial — suggests Trump is feeling emboldened to retaliate against people he thinks betrayed him.

Reaction to the abrupt departures came swiftly from Capitol Hill. Speaker Nancy Pelosi (D-Calif.) said in a statement that Vindman’s firing “was a clear and brazen act of retaliation that showcases the president’s fear of the truth. The president’s vindictiveness is precisely what led Republican senators to be accomplices to his cover-up.” Read more.

Democrats Press On With Trump Probes: House Democrats are pressing for details about Trump’s private business dealings as they debate how aggressively to pursue loose threads left over from their impeachment probe. The dragnet the House laid for information about the president’s conduct in office remains in place even after the Senate acquitted Trump of the impeachment articles.

House committees are meeting much the same resistance to demands for information on these other probes as they did during the impeachment inquiry, even if these efforts don’t carry the same political risks to the 29 Democratic lawmakers who represent districts the president carried in 2016.

“They have stonewalled us on absolutely everything,” Oversight and Reform Chairwoman Carolyn Maloney (D-N.Y.) said of her committee’s investigation of the Trump administration’s failed effort to add a citizenship question to the 2020 Census. “We are in a court fight to get the documents from the Census Bureau.’’ Read more from James Rowley.

Also Happening on the Hill

Mnuchin, Neal Talk Infrastructure Plans: House Ways and Means Chairman Richard Neal (D-Mass.) signaled cautious optimism towards achieving a compromise with the Trump administration on a broader infrastructure deal this year, despite major political impediments. Neal spoke with Treasury Secretary Steven Mnuchin on Friday to discuss the possibility of moving an infrastructure package that would be broader than the highway bill reauthorization Trump endorsed during his State of the Union address.

“I think we can go well beyond that,” Neal said, adding that he liked the option of reintroducing Build America Bonds to help pay for new projects. Trump would need to address Democrats’ concerns over climate change, he said. “Any bill that includes infrastructure is going to have to include climate consideration,” Neal said. Neal indicated that no specific agreements had been reached. Read more from Colin Wilhelm.

Senator Wants DOJ to Absorb FTC: Sen. Josh Hawley (R-Mo.) released a proposal today to absorb the Federal Trade Commission into the U.S. Justice Department as a way to push back on Big Tech companies such as Google and Facebook. The plan, from one of the GOP’s loudest tech opponents, reflects concern among Republicans about conflicts arising from the agencies’ overlapping responsibility to enforce competition law, as well as frustration with what many critics say is the FTC’s failure to rein in big companies before they become dominant. Read more from Ben Brody.

Democrats Push Back on Global Entry Ban: House Democrats said the Trump administration’s ban on New York State residents participating in U.S. travel pre-screening programs is a “senseless, retaliatory decision” that must be reversed. “Your justification for this sudden policy shift appears to be no more than a pretext,” the Democrats, including Homeland Security Chairman Bennie Thompson (D-Miss.), wrote in a letter to acting Department of Homeland Security Secretary Chad Wolf that was released on Saturday.

The move change “may be an improper attempt to use official DHS policy to punish the people of New York” for a disagreement with the Trump administration, the lawmakers said in the letter, also signed by Maloney. Read more from Jeff Kearns.

House GOP Eyes Multi-Year Carbon Capture Credit: House Republicans are pushing for a multi-year extension of existing tax credits for power plants and oil and gas operations that capture and store carbon dioxide—one climate policy getting rare backing from environmental and industry groups. But the extension of the tax credits, known as 45Q, is only likely to see the light of day if balanced with clean energy incentives sought by Democrats, who control the House but also hold filibuster power in the Senate. For now, House Democrats are looking at a more modest one-year extension. Read more from Dean Scott and Amena H. Saiyid.

What Else to Know Today

U.S. Embassy in China Suspends Regular Visa Services: The U.S. will temporarily suspend regular visa services in mainland China from Monday as the coronavirus epidemic leaves it with “limited staffing.” The U.S. embassy in Beijing and consulates in Chengdu, Guangzhou, Shanghai and Shenyang may not be able to respond to requests on regular visa services but may make available some emergency appointments, according to a statement on its website Saturday.

The death toll from the coronavirus outbreak reached 910, higher than during SARS. Britain reported four more cases and warned of a serious, imminent threat to public health. Globally, 40,626 have been infected so far. Meanwhile, the number of infections among those aboard a cruise liner quarantined off Japan has almost doubled to 136, the biggest outbreak outside China. Follow Bloomberg News’s updates here.

Trump Peace Plan Faces UN Resolution: Arab nations dialed back criticism of Trump’s Middle East peace plan and proposed a more moderate resolution that called for a Palestinian state based on the 1967 borders, but no longer condemned the U.S. proposal directly. Tunisia, which represents Arab countries on the United Nations Security Council, circulated a revised resolution over the weekend along with Indonesia. The proposal emphasizes “respect” for the territorial integrity of the Palestinian territories, while calling Israeli settlements in the West Bank and east Jerusalem “illegal,” according to a copy of the text seen by Bloomberg News. Read more from David Wainer.

Meanwhile, the U.S. envoy to Israel warned Prime Minister Benjamin Netanyahu against annexing territory in the West Bank without the approval of the Trump administration. A joint Israeli-American committee must first complete a mapping process before any steps are taken, Ambassador David Friedman said on Twitter. “Any unilateral action in advance of the completion of the committee process endangers the Plan & American recognition,” Friedman said. Alisa Odenheimer has more.

U.S. Closes Antitrust Probe of Carmakers Over Emissions Pact: The Justice Department has abandoned its antitrust probe of four automakers that sided with California over Trump in a fight over the future of fuel economy and emissions requirements. The inquiry had targeted Ford, Honda, BMW and Volkswagen over their agreement last year with California regulators to voluntarily meet the state’s targets for fuel economy and tailpipe emissions. The decision was seen as undercutting Trump’s plan to relax the national requirements and was decried by the administration at the time as a “PR stunt.”

California Gov. Gavin Newsom (D) cheered the Justice Department’s decision to back down, calling it “a big loss for the president and his weaponization of federal agencies.” “These trumped up charges were always a sham — a blatant attempt by the Trump administration to prevent more automakers from joining California and agreeing to stronger emissions standards,” Newsom said in an emailed statement. Read more from David McLaughlin and Jennifer A. Dlouhy.

Google-Fitbit Deal Poses Test for Merger Cops: Google’s plan to buy Fitbit is running into a wall of antitrust and privacy worries in the U.S., Europe and Australia, where competition officials are increasingly wary of how internet giants can exert control over data to cement their dominance. Google’s $2.1 billion acquisition of the maker of smartwatches and fitness trackers, announced in November, would add wearable devices to the internet giant’s hardware business. In the past, the Fitbit deal probably wouldn’t have raised much concern for competition enforcers because the company doesn’t compete directly with Google. And even with Fitbit, Google would have a minuscule share of the hardware and fitness-tracker market. Today, there’s heightened concern, particularly in the European Union, about how tech companies can leverage their control over data to become ever more powerful. Read more from David McLaughlin and Aoife White.

U.S. Trade Agency Says Solar Duty Has Limited Impact: Trump’s efforts to boost American solar manufacturing via import tariffs can only do so much, according to an official at the U.S. International Trade Commission. That’s because the U.S. is up against a country that significantly subsidizes production, Commissioner Jason Kearns said in a report released Friday, adding that China has built dozens of factories and employs millions of workers to develop, make and distribute solar cells. Read more from Brian Eckhouse and Jennifer A. Dlouhy.

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

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

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