WASHINGTON: US President Donald Trump will propose on Monday a 21 percent cut in foreign aid and slashes to social safety-net programs in his $4.8 trillion budget proposal for fiscal 2021, according to senior administration officials.
The budget would spend money to fund infrastructure projects and defense, but would also raise funds by targeting $2 trillion in savings from mandatory spending programs in the United States. It assumes revenues around $3.7 trillion.
Trump, a Republican, sought in his budget proposal last year to slash foreign aid but faced steep resistance from Congress and did not prevail.
The president’s latest blueprint for administration spending proposals is unlikely to be passed by the Democratic-controlled House of Representatives, particularly in an election year.
Trump, who campaigned for the presidency in 2016 on a promise to build a wall along the US border with Mexico, will seek $2 billion in funding for further construction on that project, substantially less than the $8.6 billion he requested a year ago.
During the 2016 campaign, Trump said Mexico would pay for the wall, which it has refused to do.
The administration shifted resources from the military last year after Congress refused Trump’s initial wall funding request. The White House will not seek further funds from the military for the wall, a senior administration said.
The budget seeks money to fund a US infrastructure overhaul that both Democrats and Republicans have said is a priority. The two sides are unlikely to agree on any major legislation this year, though, as they fight for control of the White House and Congress in the November elections.
The budget would raise military spending by 0.3 percent to $740.5 billion for fiscal-year 2021, starting on Oct. 1 and propose higher outlays for defense and veterans, administration officials confirmed.
But former Chairman of the Joint Chiefs of Staff Mike Mullen raised concerns about how the foreign aid cuts would affect the US civilian footprint around the world that helps reduce the need for military intervention.
“In an era of great power competition, cutting these critical investments would be out of touch with the reality around the world,” he wrote in a letter to top congressional leaders. “This is a moment when more investment in diplomacy and development is needed not less.”
Trump’s foreign aid proposal seeks $44.1 billion in the upcoming fiscal year, compared with $55.7 billion enacted in fiscal 2020, an administration official said.
The White House proposes to slash spending by $4.4 trillion over 10 years.
In the fiscal-year 2021 budget, that would include $130 billion from changes to prescription-drug pricing for the Medicare program for older Americans, $292 billion from cuts in safety-net programs — such as work requirements for the Medicaid program for the poor, and food stamps — and $70 billion from clamping down on eligibility rules for federal disability benefits. Those changes are likely to spur Democrats’ ire.
Deficits would remain high but eventually come down.
The US government ended fiscal 2019 with the largest budget deficit in seven years as gains in tax receipts were offset by higher spending and growing debt-service payments, the Treasury department said on Friday.
The budget forecasts $4.6 trillion in deficit reduction over 10 years and assumes economic growth will continue at an annual rate of roughly 3 percent for years to come, officials said. Trump has taken credit for the strength of the US economy, thanks in part to tax cuts he championed and Congress passed earlier in his term. The budget funds an extension of those cuts over a 10-year period with $1.4 trillion.
Trump slashes foreign aid, cuts safety net programs in new budget proposal
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Trump slashes foreign aid, cuts safety net programs in new budget proposal
- The fiscal 2021 budget would spend money to fund infrastructure projects and defense
- Budget seeks money to fund a US infrastructure overhaul that both Democrats and Republicans have said is a priority
Is the United States after Venezuela’s oil?
- Companies from the US have pumped Venezuelan crude from the first discoveries there in the 1920s
- Venezuela exports about 500,000 barrels per day on the black market, mainly to China and other Asian countries
CARACAS: As US forces deployed in the Caribbean have zoned in on tankers transporting sanctioned Venezuelan oil, questions have deepened about the real motivation for Donald Trump’s pressure campaign on Caracas.
Is the military show of force really about drug trafficking, as Washington claims? Does it seek regime change, as Caracas fears? Could it be about oil, of which Venezuela has more proven reserves than any other country in the world?
“I don’t know if the interest is only in Venezuela’s oil,” Brazil’s leftist President Luiz Inacio Lula da Silva, who has offered to mediate in the escalating quarrel, said last week.
The US president himself has accused Venezuela of taking “all of our oil” and said: “we want it back.”
What we know:
- Oil ties -
Companies from the United States, now the world’s leading oil producer, have pumped Venezuelan crude from the first discoveries there in the 1920s.
Many US refineries were designed, and are still geared, specifically for processing the kind of heavy crude Venezuela has in spades.
Until 2005, Venezuela was one of the main providers of oil to the United States, with some monthly totals reaching up to 60 million barrels.
Things changed dramatically after socialist leader Hugo Chavez took steps in 2007 to further nationalize the industry, seizing assets belonging to US firms.
- And now? -
Down from a peak of more than three million barrels per day (bpd) in the early 2000s, Venezuela today produces about a million barrels per day — roughly two percent of the global total.
US firm Chevron extracts about 10 percent of the total under a special license.
Chevron is the only company authorized to ship Venezuelan oil to the United States — an estimated 200,000 barrels per day, according to a Venezuelan oil sector source.
The South American country’s domestic industry has declined sharply due to corruption, under-investment and US sanctions in place since 2019.
Analysts say the high investment required to rebuild Venezuela’s crumbling oil rigs would be unappetizing for US firms, given the steady global supply and low prices.
According to Carlos Mendoza Potella, a Venezuelan professor of petroleum economics, Washington’s actions were likely “not just about oil” but rather about the United States “claiming the Americas for itself.”
“It’s about the division of the world” between the United States and its rivals, Russia and China,” he added.
Venezuela exports about 500,000 barrels per day on the black market, mainly to China and other Asian countries, according to Juan Szabo, a former vice president of state oil company PDVSA.
- Blockade -
Trump on December 16 announced a blockade of sanctioned oil vessels sailing to and from Venezuela.
Days earlier, US forces seized the M/T Skipper, a so-called “ghost” tanker transporting over a million barrels of Venezuelan oil, reportedly destined for Cuba.
Washington has said it intends to keep the oil, valued at between $50 and $100 million.
Over the weekend, the US Coast Guard seized the Centuries, identified by monitoring site TankerTrackers.com as a Chinese-owned and Panama-flagged tanker.
An AFP review did not find the Centuries on the US Treasury Department’s sanctions list, but the White House said it “contained sanctioned PDVSA oil” — some 1.8 million barrels of it.
On Sunday, officials said the Coast Guard was pursuing a third tanker, identified by news outlets as the Bella 1 — under US sanctions because of alleged ties to Iran.
The PDVSA insists its exports remain unaffected by the blockade.
This was critical, according to Szabo, as the company only has capacity to store oil for several days if exports stop.
- Impact -
Whatever Trump’s goal with Venezuelan oil, the blockade, if it continues, is likely to scare off shipping companies and push up freight rates.
Szabo expects Venezuela’s oil exports will fall by nearly half in the coming months, slashing critical foreign currency income from Venezuela’s black market sales.
This would asphyxiate the already struggling economy of Venezuela, piling more pressure on Nicolas Maduro.
The Trump administration has tip-toed around explicitly demanding for Maduro to leave.
While Trump has said he does not anticipate “war” with Venezuela, he did say Maduro’s days “are numbered.”
US Homeland Security Secretary Kristi Noem told Fox News on Monday that the oil tanker seizures send “a message around the world that the illegal activity that Maduro’s participating in cannot stand, he needs to be gone.”
