WASHINGTON—President Donald Trump released his $4.8 trillion budget proposal on Feb. 10, calling for steep reductions to foreign aid, in line with previous years.
The budget requests $40.8 billion for the State Department and the U.S. Agency for International Development (USAID), a 22 percent decrease from last year.
The savings include the elimination of spending for international development organizations such as the U.S.-based nonprofit The Asia Foundation. Other cuts are proposed to embassy-based small grants for events and programs, including sending American artists to a poetry festival in Finland or supporting a foreign student to attend Space Camp.
Critics argued that the reduction in the international affairs budget increases the risk for critical military operations.
“The president disagrees with the idea that we should continue to have such robust levels of funding in the foreign aid category,” Russ Vought, acting director of Office of Management and Budget, told reporters on Feb. 10.
Despite deep cuts, he said, spending about $40 billion in foreign aid was still substantially higher compared to other countries.
“What we believe that, at the end of the day, it’s time to rethink how we do foreign aid in this country, that we need to move beyond the reality of spending money for a Bob Dylan statue in Mozambique, for the NASA Space Camp in Pakistan, for the professional Cricket League in Afghanistan.”
Trump also proposed fundamental restructuring to humanitarian assistance programs.
Rep. John Yarmuth (D-Ky.), chairman of the House Budget Committee, reacted to Trump’s proposal to cut foreign aid among other things, in a statement. He criticized the president for putting forth “a destructive and irrational budget.”
“He has broken his promises to the American people. Defaulted on the bipartisan budget deal he made with Congress,” he stated on Feb. 10.
Countering China Threat
The administration says spending for international programs will focus on “great power competition” and national security.For example, the proposal expands the budget for the International Development Finance Corp. (DFC), a critical tool for countering China’s “One Belt, One Road” initiative. The new agency, which began operating in January, focuses on investing in emerging markets. It aims to compete with China in funding not only traditional infrastructure projects but also advanced technologies, including 5G.
“We have to be there as an alternative because I could see China take down a whole bunch of emerging countries,” Adam Boehler, chief executive of DFC, told Financial Times in December 2019.
Congress doubled the DFC’s funding in 2019 to $60 billion and allowed the new agency to make equity investments.
The budget also provides $1.5 billion for the Indo-Pacific region to ensure “the region remains free, open, and independent of malign Chinese influence.”
Savings Proposed
Trump’s $4.8 trillion budget proposal, which is slightly higher than last year’s request, calls for increased spending for military, infrastructure, Veterans Affairs, NASA, Department of Homeland Security, and the National Nuclear Security Administration.The blueprint, titled “A Budget for America’s Future,” proposes $4.4 trillion in cuts to both mandatory and discretionary spending over 10 years.
The administration targets $2 trillion in savings from mandatory spending, including $130 billion from lower drug costs within the Medicare program and nearly $300 billion from safety-net cuts, such as work requirements for Medicaid.
The budget also proposes reducing discretionary spending across government by 5 percent to $590 billion next year.
The budget requests $740.5 billion for national defense in 2021, an increase of $2.5 billion over the 2020 enacted level. The plan also proposes to increase defense spending by nearly 2 percent on an annual basis after 2021 for a few more years.
The Overseas Contingency Operations account, however, is expected to go down over years as it “will require less funding as the President works to end endless wars,” Vought said.
According to the plan, the deficit will start to fall, dropping below $1 trillion in the 2021 fiscal year. The administration makes the case that the savings proposed will reduce the deficit each year and that the budget will be balanced in 15 years.
That projection relies on high expectations for economic growth, projecting around 3 percent growth over the next decade. This growth rate is reasonable, according to the White House, if the administration’s economic policies are enacted.
The budget proposal is generally viewed as a political messaging document and is unlikely to become law.
Congress has “certainly ignored this president’s saving proposals for the first three years. That may very well continue this year,” Vought said.
“We’re going to keep proposing these types of budgets and hope that at some point Congress will have some sense of fiscal sanity.”
