Trump's "big and wonderful" budget was adopted by a minimal margin. Why is this important?

The draft budget of US President Donald Trump, which provides for a reduction in government spending along with tax breaks, has been approved in the House of Representatives. The vote turned out to be quite tense: 218 congressmen supported the initiative, 214 opposed it. Prior to that, the document had passed through the Senate with a slight advantage. What the document will mean for Trump and the future of America is in the Izvestia article.

How will the budget affect Trump's position

• The House of Representatives passed Trump's "wonderful bill," which he himself called the best gift to his country, with great difficulty. In the final vote, the initiative gained 218 votes in favor and 214 against. At the same time, the leader of the Democrats in the House of Representatives, Hakim Jeffries, delayed the vote on the law the most, speaking for almost 9 hours. With this, he set a record for the longest speech in the lower house of Congress.

• The Senate approved the budget the day before, also reluctantly. Despite the fact that Republicans have 53 votes out of 100, the draft passed with a minimal margin: 50 Republican senators and Vice President Jay Dee Vance voted for it, which in cases where the votes are equally divided, has the deciding vote. Trump signed the law on U.S. Independence Day, July 4.

• The adoption of the budget plan, even with significant resistance, will strengthen Trump's position as a leader capable of implementing major initiatives in an unstable political environment. The very fact that the budget has been approved indicates that the levers of influence and the ability to carry out key elements of its agenda through the legislative system have been preserved.

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• Trump's voters and political allies have gained a sense of process control. The budget, as one of the main instruments of public policy, demonstrates the country's priorities, so its adoption, even after long disputes, is perceived as proof of the strength of the executive branch. At the same time, the democratic community fears that pandering to Trump's ideas will lead to authoritarianism.

• In addition, the successful promotion of the budget strengthens the administrative apparatus around Trump, because it proves the ability of the White House to negotiate and compromise while maintaining the basic strategic directions. This can reduce resistance from moderate Republicans and increase confidence from the business community, focused on the predictability of the economic environment and tax stability.

What is the essence of the budget

• The adoption of Donald Trump's bill on the US budget, despite the projected increase in the deficit by $3.3 trillion by 2034, was the result of a complex interweaving of political factors. The budget initiative is based on the idea of stimulating economic growth by reducing the tax burden, especially on corporations and wealthy individuals, as well as increasing the national debt ceiling by $5 trillion. In addition, it is planned to increase government spending on certain priority areas, including defense, infrastructure and industrial production in the country. This model assumes that a temporary increase in the deficit will be justified by a long-term increase in the country's economic potential and employment growth. This is expected to bring more tax revenues to the budget in the future, despite the reduced rates.

• One of the key elements of the budget plan will be a significant reduction in funding for a number of social programs. This includes a $1 trillion reduction in the cost of health insurance for the poor (Medicaid), the Food Stamp Program, as well as federal grants for education and housing assistance. The budget provides that these programs will be reorganized, control over the targeted use of funds will be strengthened, and part of the responsibility for their implementation will be transferred to the state level. Such restructuring should, according to the plan developers, reduce the dependence of citizens on state benefits and stimulate employment.

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• Important attention is also paid to tax policy. Trump's plan provides for tax cuts for individuals and businesses. The main idea is that reducing the tax burden will create incentives for investment, business expansion, increased employment and, as a result, higher tax revenues in the future. It is planned to eliminate a number of tax deductions and benefits that are considered outdated or redundant.

• Defense spending, on the contrary, is increasing to $1 trillion. The plan, in particular, includes a significant increase in the Pentagon's budget, financing the renewal of the nuclear arsenal, strengthening borders, including completing the construction of a wall on the southern border with Mexico by 2029, as well as almost doubling the number of migration police officers. This is justified by the need to ensure global security, restore US military superiority and create internal stability, especially in the face of international threats and the strengthening of competitors' positions on the world stage.

• The plan also includes administrative reforms: stricter spending discipline at the federal level, and stricter accountability for budget funds. Programs that have not passed the economic feasibility test are subject to reduction or elimination.

In general, the United States wants to boost economic expansion by deregulation, repatriation of production and increased consumer activity. This should mitigate the negative effects of the growing budget deficit.

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Where are the main contradictions?

• First of all, the controversy arose around the proposed reduction in funding for a number of social programs. These measures have caused acute tension among representatives of the states that receive a significant share of federal aid for these needs, as well as among organizations serving socially vulnerable groups of the population. There is a risk of reducing the quality of services and destabilizing the social sector. 12 million Americans may lose their health insurance.

• Negotiations on the tax side of the budget, namely, how much taxpayers can deduct from the amount of federal taxes, depending on the amount of state taxes they have paid, also proved difficult. Now this amount reaches $ 10 thousand. The Senate and the House of Representatives approved its increase to $40 thousand. However, after five years, the limit will drop back to $10,000. The proposed tax cuts have sparked debate about the fairness of the distribution of the tax burden, as corporations and well-off groups of the population will receive the main benefits. This has sparked a debate about economic inequality and the sustainability of public finances in the long term. There are risks of government debt growth and possible inflation if budget revenues are not offset by an increase in the tax base.

• The priority increase in defense spending and the allocation of funds for the construction of infrastructure to strengthen the border also caused particular controversy. Financing of these points required the redistribution of significant amounts. Representatives of the states, which do not share the priority of external security at the expense of internal development, insisted on directing part of the funds towards the modernization of roads, water supply systems, schools and clinics.

Why was the budget adopted anyway

• Several points played in favor of the bill. Budget forecasts for the ten-year period, in particular regarding the deficit, are perceived by many as subject to a significant degree of uncertainty. These calculations depend on a variety of variables, including economic growth rates, inflation rates, interest rates, and the internal and external political environment. As a result, during the voting, arguments about the deficit, although they were taken into account, did not become a decisive obstacle. Supporters of the bill emphasized that alternative scenarios could cause social tension and slow down economic recovery in key sectors.

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• At the same time, the approval of the budget was the result of lengthy negotiations and compromises between different groups of influence within the legislative and executive branches. The bill could be supported by including provisions in the text of the document that would benefit various lobbyists. This turns the budget not only into a financial document, but also into an instrument of a political deal.

• The international context turned out to be important. In the context of competition with other global powers, Trump's emphasis on strengthening the national economy, increasing investment attractiveness and military power is seen as a necessary step to maintain the leading position of the United States on the world stage.

When writing the material, Izvestia talked and took into account the opinions of:

• Lev Sokolshchik, a leading researcher at the Center for Comprehensive European and International Studies at the National Research University Higher School of Economics;
• Vladimir Mozhegov, an American political scientist;
• American political scientist Malek Dudakov;
• Pavel Sevostyanov, Associate Professor of the Department of Political Analysis and Socio-Psychological Processes at Plekhanov Russian University of Economics.