Trump budget favours navy, missile defense, Boeing

Bloomberg

US President Donald Trump proposed a $4.4 trillion federal budget for fiscal 2019, a plan Congress is expected to all but ignore that would slash entitlements and other domestic programs in favour of higher spending on the military and immigration enforcement.
Trump’s $686 billion defense request for the coming fiscal year would propel the Navy towards a new goal of 355 ships, restore major funding for a Boeing Co. fighter jet favoured by the president and boost missile defense spending to counter threats from North Korea and Iran.
On its voyage to a 355-ship Navy, the budget plan envisions building the fleet to 299 vessels by the end of fiscal 2019, which begins October 1, and 326 by 2023. The Navy has 280 ships today, but some are nearing the end of their useful life.
Missile defense spending, spurred by Trump and supported by lawmakers over fears of North Korea’s accelerated ballistic missile and nuclear programs, would increase about 25 percent over the Obama administration’s last projected numbers for fiscal 2019 — to $9.92 billion, or $1.91 billion more than previously planned.
It would bankroll 20 new interceptor missiles and silos, a new “homeland defense radar” in Hawaii and, for the first time, a “salvo” test to fire two interceptors at once at an incoming target.
Defense contractors advanced as the budget called for military spending increases. Lockheed Martin Corp., Raytheon Co. and Northrop Grumman Corp. each rose at least 1.5 percent at 2:52 p.m. in New York. Tank-maker General Dynamics Corp., which announced a $6.8 billion deal to buy CSRA Inc. earlier in the day, fell slightly.
“We’re increasing arsenals of virtually every weapon,” Trump said.
Emphasising especially plans to modernise the US nuclear arsenal, Trump said of adversaries, “If they’re not going to stop, we’re going to be so far ahead of anybody else in nuclear like you’ve never seen before.”

SUPER HORNET
Trump has praised Boeing’s Super Hornet, which former President Barack Obama’s administration sought to phase out. By contrast, Trump has at times criticized the costs of Lockheed’s F-35, the most expensive US weapons system.
The Trump plan calls for adding 24 Boeing Co. F/A-18E/F Super Hornet jets in fiscal 2019, and 110 jets through 2023, as previously reported by Bloomberg News. The Obama administration had proposed ending purchases of the plane this year.
The Pentagon is requesting funding for 77 F-35s for fiscal 2019, three fewer than projected in the the last Obama plan. The Trump plan projects 84 of the fighters for fiscal 2020, the same as the last Obama plan, and 98 in 2021, or one fewer.
In addition, the Air Force plans $16.8 billion in funding through 2023 for the new B-21 bomber being built by Northrop Grumman, including $2.3 billion next year for continued research.
The $686 billion for includes $617 billion in base defense funding — the most ever if enacted — plus $69 billion in a war-fighting account. A book of budget highlights, distributed but printed before Congress agreed last week to increased defense spending, had projected a greater reliance on the war-fighting account.
The combined total falls short of the Obama administration’s post-Cold War peak of $691 billion in fiscal 2010, which included $163 billion in war spending. Trump’s overall national security package — which includes Energy Department nuclear weapons programs and defense-related activities at the FBI and smaller agencies — would total $716 billion.
“The risk with such a large increase in the defense budget is that policy makers will be reluctant to make hard choices,” Todd Harrison, a defense analyst with the Center for Strategic and International Studies, said in an email. “DoD is still in desperate need of reform in many areas. It has 19 percent excess capacity in US bases, a personnel system stuck in the 1950s, and scores of legacy weapons that need to be retired. If reforms aren’t made in these areas, the military will just get fatter, not stronger.”

‘GROWTH TRAJECTORY’
Even as the Pentagon unveils the administration’s proposed defense budget, Congress has yet to complete a funding bill for the current fiscal year. Last week’s budget agreement removed spending caps in the 2011 Budget Control Act for this year and fiscal 2019, only to have them return in fiscal 2020 and 2021 unless another deal is reached.
Last week’s relief marked the fourth such agreement since the Budget Control Act was passed.
“The real story” of the fiscal 2019 defense request is “the growth trajectory from” the 2017 defense bill that was enacted “as opposed to 2019 in isolation,” Mackenzie Eaglen, a budget analyst for the conservative American Enterprise Institute, said in an email.
Not counting war spending, the base defense budget will have increased 17.4 percent in nominal terms from 2017 to 2019, she said.
Including the war spending, the budget plan approved by Congress provides for an increase of 2.9 percent from fiscal 2018 to 2019, she said.
Fred Bartels, the Heritage Foundation’s defense budget analyst, said in an email that “this budget deal is going to provide a relief for the 18 months between March 24 and September 30, 2019. But as soon as it expires we are back at the same place.”
The new National Defense Strategy “calls for a sustained, predictable and increased budget to be able to execute the strategy,” he said, so “being able to make the defense budget sustained and predictable will be dependent on future Congresses.”
The budget requests $6.5 billion for what’s now being called the “European Deterrence Initiative,” up from $4.7 billion requested last year, to increase the US military presence in Europe, conduct more exercises with NATO partners and preposition equipment.
It was previously called the “European Reassurance Initiative.”
The Pentagon is also seeking almost $9 billion to boost its cyberoperations. It calls for setting up more than 100 teams with missions including countering evolving thre-ats against the US, protecting Def-ense Department networks against attacks and supporting commanders in combat.
The budget proposal also counts on a unlikely mix of faster growth, lower unemployment and tame inflation. Like the spending request itself, the economic assumptions may turn out to be more wishlist than reality.
Inflation, based on the consumer price index, will average 2.1 percent in 2018, 2 percent next year and 2.3 percent in the long run, according to assumptions published in the White House budget proposal.
The economy is seen expanding 3.1 percent this year and 3.2 percent in 2019, following 2.5 percent in 2017. The jobless rate, currently 4.1 percent, may average 3.9 percent in 2018 and 3.7 percent in 2019.

Major shakeup for food-stamp plan
Bloomberg

In what would be one of the biggest shakeups of the US food-stamp program in its five-decade history, President Don- ald Trump is proposing to slash cash payments and subst-
itute them with “100 percent American grown food” given
to recipients.
The changes, outlined in Trump’s budget proposal, would reshape the Supplemental Nutrition Assistance Program, or SNAP, which supports roughly one in eight Americans, by reducing cash spending by about one-third from current levels.
The plan is part of an effort to reform SNAP and save a projected $214 billion over a decade.
It would give all households receiving more than
$90 a month in cash a food-aid package that would “include items such as shelf-stable milk, ready to eat cereals, pasta, peanut butter, beans and canned fruit, vegetables, and meat,
poultry or fish,” according to the proposal.

‘Reciprocal tax’ on imports
Bloomberg

President Donald Trump promised a tax on imports, reviving an idea he floated earlier in his administration that risks escalating tensions with key US trade partners. “We’re going to be doing very much a reciprocal tax,” Trump said at a White House event on infrastructure. “And you’ll be hearing about that during the week and during the coming months.”
Trump didn’t elaborate on his plan at the event. Later in the day, a senior administration official said there is no formal
proposal for such a tax in the works and the president was simply reiterating sentiments he has long held.
Trump shifted during the discussion of infrastructure to blast “very unfair” treatment of the US by “so-called allies, but they’re not allies on trade” that charge tariffs on US producers yet benefit from lower US trade barriers to export to America.
“We cannot continue to be taken advantage of by other countries,” Trump said.

‘Energy saving’ on chopping block
Bloomberg

Months after three major hurricanes devastated Texas, Florida and Puerto Rico, the White House once again proposed slashing spending on government programs to combat climate change and protect communities from the flooding it could unleash.
The White House also suggests cutting the Environmental Protection Agency’s budget by at least a quarter, reducing the EPA to levels not seen since 1991, according to a budget blueprint proposed. The budget request dovetails with an infrastructure plan also unveiled that would pare federal environmental reviews and make it easier to put pipelines on federal land.
“It’s just completely divorced from the reality of the last 12 months,” said Collin O’Mara, head of the National Wildlife Federation, adding that both proposals would force the US to pay for environmental damage after it occurs instead of mitigating impacts in advance. “We’re seeing storms in very liberal and very conservative areas.