Budget proposals include steep social cuts, rising deficits

MIAMI, FL: Heavy traffic is seen along I-95 on Monday in Miami, Florida. President Donald Trump announced his infrastructure proposal on Monday in which he plans on investing at least $1.5 trillion on new projects, shorten permitting time to two years, invest in rural projects and improve worker training. —AFP

WASHINGTON: US President Donald Trump on Monday unveiled an ambitious proposal to renew American infrastructure as part of a budget that calls for a stunning rise in debt and trillions in cuts to the social safety net and other spending.

The blueprint for the 2019 fiscal year abandons the long-held Republican goal of balancing the federal budget within a decade, with deficits projected to peak in 2020 and persist into the foreseeable future amid an aggressive and costly defense buildup.

The initiative to revive crumbling US roads, bridges and airports includes just $200 billion in federal funds, which the White House says will spur at least another $1.3 trillion in investments from state governments and private investors.

Administration officials tout the infrastructure plan as part of a shift back to national priorities, with $50 billion dedicated to projects in rural areas, many of which favored Trump in the 2016 elections.

Trump said the shift comes in the wake of the wasteful military spending since the terrorist attacks of September 11, 2001. But he also touted a big boost in defense spending, including a revived nuclear arsenal that would leave the US armed forces "far in excess of anybody else."

"We have spent $7 trillion in the Middle East, $7 trillion. What a mistake," Trump said Monday. "And we're trying to build roads and bridges and fix bridges that are falling down and we have a hard time getting the money and its crazy."

Over 10 years, the White House proposal seeks to slash trillions in spending across the much of the federal government, with the knife going especially deep into spending on health and poverty. It would eliminate former President Barack Obama's signature health insurance program and cut more than $200 billion in food assistance for the poor while cutting medical programs aimed at the poor and older Americans.

Reciprocal tax

Trump said he would push for a "reciprocal tax" against countries, including US allies, that levy tariffs on American products, but officials did not provide details on how such a tax would be structured or what goods it would apply to. During his populist 2016 presidential campaign, Republican Trump railed at countries that had trade surpluses "taking advantage of the United States" and he revisited the theme on Monday.

"We cannot continue to let people come into our country and rob us blind and charge us tremendous tariffs and taxes and we charge them nothing," Trump told reporters at a White House event to announce a proposed infrastructure plan. The United States loses "vast amounts of money with China and Japan and South Korea and so many other countries ... It's a little tough for them because they've gotten away with murder for 25 years. But we're going to be changing policy," he said.

Trump said his administration will impose a "reciprocal tax" to charge other countries - "some of them are so-called allies but they're not allies on trade."

He did not specify how such a tax would be structured, or whether he meant that US tariff rates should be raised to equal to those charged by other major trading partners. Administration officials were not immediately able to elaborate on the president's comments.

Trump cited motorcycle maker Harley-Davidson as an example of the problem of unfair trade. Harley is building a factory in Thailand, partly because its US-built bikes face a 60 percent tariff there.

The United States has pledged to the World Trade Organization a relatively low, 3.5 percent applied tariff rate, compared to 9.9 percent for China and 5.2 percent for the European Union. For some products, the gap is much wider, such as in passenger vehicles, where the United States charges 2.5 percent tariffs, versus 25 percent in China and 10 percent in the EU. It was also unclear whether Trump was reviving the idea of a border adjustment tax, an idea rejected by congressional Republicans in last year's tax reform effort. - Agencies