Trump Requests Record-Breaking $1.5 Trillion in Military Spending
Good evening. President Trump is calling for a massive increase in defense spending, and the labor market is showing new signs of health. Details below.
Trump Calls for Massive Increase in Military Spending, Cuts Elsewhere
President Trump wants to increase defense spending by hundreds of billions of dollars in fiscal year 2027, for a total of $1.5 trillion, according to his budget request released Friday. At the same time, Trump is proposing to cut non-defense spending by about 10%, with major reductions in funding for education, science and the environment.
In an overview, the White House said the requested defense spending, which would represent a major jump from the current $1 trillion level, "exceeds even the Reagan buildup by approaching the historic increases just prior to World War II." The White House also said it intends to pass the huge increase in defense spending via the reconciliation process, which would allow Republicans to pass a spending bill without Democratic support.
"For decades in Washington, Democrats have demanded and received corresponding increases in wasteful and harmful programs for every increase in the Defense Budget," the overview says. "This Administration has successfully shifted that paradigm by including a much-needed increase to defense spending in a reconciliation bill passed with only Republican votes - avoiding the traditional spending ratchet. This strategy of decoupling funding for Republican priorities from Democrat waste and use of executive fiscal tools has proven to be a success, and we continue to deploy it in this year's Budget."
Some notable details: The request would cover a pay raise for troops of 5% to 7%, depending on rank; $65.8 billion to build 34 new ships, an effort that includes the creation of "President Trump's Golden Fleet" featuring a "Trump-class battleship"; funding to "rapidly procure twelve critical munitions and invest in our long-neglected defense industrial base"; funding for the "Golden Dome" missile defense system; investments in "critical minerals and domestic supply chains"; and a continued emphasis on the elimination of "woke" programs.
On the non-defense side, the request calls for $73 billion in spending reductions. "Savings are achieved by reducing or eliminating woke, weaponized, and wasteful programs, and by returning state and local responsibilities to their respective governments," the White House overview says.
Cuts include $8.5 billion from K-12 education programs; $2.7 billion from higher education programs; $4.6 billion from the Environmental Protection Agency; $1.3 billion from FEMA community disaster preparedness grants; $5 billion from public health programs, mental health services, and disease prevention; $5 billion from the National Institutes of Health; $1.1 billion from "climate change and Green New Scam" research; $775 million from the Community Services Block Grant program; $768 million from the refugee resettlement program; and $52 million from the Transportation Security Administration as part of a privatization effort.
Some non-defense areas would see increases in spending. Customs and Border Protection would receive $18.5 billion; Immigration and Customs Enforcement would receive $10 billion; the Coast Guard would receive $12.5 billion; and the U.S. Secret Service would receive $3.5 billion. The administration also seeks $481 million to hire more air traffic controllers and improve aviation safety, and $605 million for National Guard mobilizations in Washington, D.C.
Rounding up reactions: Republican House Speaker Mike Johnson praised the proposal, saying it would "restore fiscal sanity, reduce waste, fraud, and abuse in Washington." Sen. Mitch McConnell, who oversees the defense appropriations subcommittee, said he was happy to see "significant growth in annual appropriations for the U.S. armed forces."
Democratic Senate Minority Leader Chuck Schumer offered a very different take. "Donald Trump's budget is rotten to the core, and Democrats will make sure it never passes," he said in a statement.
Rep. Brendan Boyle, the senior Democrat on the House Budget Committee, rejected the White House request and said he looked forward to questioning Office of Management and Budget Director Russell Vought in a hearing on April 15.
"Donald Trump is telling the American people our country somehow can't afford child care, Medicaid, and Medicare, but is never too stretched to fund wars of choice," Boyle said in a statement. "He is wrong. We are the wealthiest country in the world and can absolutely afford to both defend and invest in the American people."
Jessica Riedl, a budget expert at the Brookings Institution, questioned whether the military would even be able to spend all of the extra money, should Congress provide it. "Ramping up defense spending takes time and the proper policy infrastructure," she said on social media. "This is not a serious proposal."
Reidl also noted that the budget request failed to define many important details. "The Trump admin's refusal to release a complete budget - that covers all spending and taxes - is a complete abdication of even minimum standards of fiscal stewardship," she wrote. "There is no real attempt to offer any vision of federal taxes, spending, and deficits."
The bottom line: A White House budget request tells us a lot about a president's interests and values, but it rarely defines the details of the ultimate, real-world budget. Still, Trump's request indicates that Republicans will continue to push hard on an agenda that includes more spending on the military, less spending in non-defense areas, and a continued "war on woke" throughout the federal government.
Quote of the Week
"The United States can't take care of day care - that has to be up to a state. We can't take care of day care; we're a big country. We have 50 states, we have all these other people, we're fighting wars. We can't take care of day care. You've got to let a state take care of day care, and they should pay for it, too. They should pay. They have to raise their taxes. But they should pay for it. And we could lower our taxes a little bit to them to make up for, but we, it's not possible for us to take care of daycare, Medicaid, Medicare, all those individual things. They can do it on a state basis. You can't do it on a federal. We have to take care of one thing: military protection. We have to guard the country."
- President Trump, speaking at a private Easter luncheon at the White House earlier this week.
Labor Market Rebounds, 178,000 Jobs Added in March
U.S. employers added 178,000 jobs during the month of March, and the unemployment rate ticked a tenth of a percentage point lower to 4.3%, the U.S. Bureau of Labor Statistics reported Friday.
Smashing expectations for an increase of about 70,000, the numbers were certainly good news for those worried that the labor market had gone into reverse after a job loss of 133,000 in February (that number was revised higher in the latest report).
As is often the case, though, experts warned that the numbers feel a little different once you look under the hood. Continuing a trend, nearly 90,000 of the new jobs were created in healthcare, but that number was boosted by a strike coming to an end, which added about 32,000 nurses returning to their jobs to the total.
Looking at the average over the last two months, growth is quite a bit weaker at 22,500 jobs per month. Pulling back to a three-month view, average growth is stronger at about 68,000 per month.
In addition, the unemployment rate fell for what economists call the "wrong" reason: People left the labor market, with the labor force participation rate and the share of the population holding a job both moving lower.
Still, the job gains were broad-based, with construction adding about 26,000 workers and manufacturing adding 15,000. Leisure and hospitality employment grew by 44,000. Federal government employment, though, continued to fall, declining by 18,000.
What the experts are saying: The latest numbers suggest that the labor market remains stable - or at least it was prior to the energy shock that many economists say is coming our way due to the war against Iran.
"Wild numbers in the March employment report but it looks like mostly seasonal/statistical noise around a low hiring trend and stable unemployment rate," economist Julia Coronado of MacroPolicy Perspectives wrote on social media.
Michael Pugliese, a senior economist at Wells Fargo, agreed. "If the conflict had not happened in the Middle East, I think the stabilization narrative would be gaining momentum," he told Bloomberg. "The problem though is we now have this new shock working its way through the economy."
Labor economist Guy Berger said the numbers could help make the case that the labor market was actually starting to reaccelerate earlier this year, following a period of uncertainty created by President Trump's tariffs. Growth "was pretty strong before we decide[d] to pound the labor market with high energy prices," Berger said, per The New York Times.
Michael Feroli, chief U.S. economist at JPMorgan, said the numbers were "quite strong" and eased some of the concerns lingering after the February report. "While there are always some caveats with the jobs numbers, we didn't see enough warts on this report to negate the overall rather favorable message," Feroli wrote in a research note. "This gives us a little more confidence that economic growth can weather the ongoing energy price shock without too much enduring damage."
Feroli added that the numbers will make it easy for the Federal Reserve to maintain its benchmark interest rate at current levels at its next meeting in late April.
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Fiscal News Roundup
- Trump Budget Seeks $1.5T in Defense Spending Alongside Cuts in Domestic Programs – Associated Press
- Trump Requests Record-Breaking Budget of $1.5 Trillion for Pentagon – Washington Post
- The Most Head-Turning Elements of Trump's 2027 Budget Proposal – Axios
- Trump Says US Can Take Strait of Hormuz With More Time – Reuters
- US Fighter Jet Downed Over Iran, One Pilot Rescued, Official Says – NBC News
- US Employers Added a Surprisingly Strong 178,000 Jobs Last Month, Rebounding From a Weak February – Associated Press
- US Bonds Fall as Strong Jobs Data Undermines Fed Cut Outlook – Bloomberg
- Amazon to Slap a 3.5% Surcharge on Third-Party Sellers as War Drives – Associated Press
- Trump's DOJ Tells Trump He Can Hold Onto Government Docs When He Leaves Office, Contrary to Watergate-Era Law – CNN
Views and Analysis
- 'We're Fighting Wars. We Can't Take Care of Day Care': Trump's Ill-Timed Rant – Aaron Blake, CNN
- Trump's Budget Breakthrough for Defense – Wall Street Journal Editorial Board
- The US Labor Market Is Still in a Vulnerable Place – Claudia Sahm, Bloomberg
- Trump Tariff Fallout: Some Industries Grapple With Lingering Effects One Year Later – Laya Neelakandan, CNBC
- Trump's Iran Own Goal – Fareed Zakaria, Washington Post
- Trump Has Lost Control of Events in Iran – Ali Vaez, New York Times
- Trump's $400 Million Ballroom Is an Affordability Fumble – Nia-Malika Henderson, Bloomberg
- You Gotta Hand It to Chuck Schumer This Time – Ryan Cooper, American Prospect
- Trump's America Is Slouching Toward State Capitalism – Adrian Wooldridge, Bloomberg
- Never Subsidize a Sports Stadium. And Definitely Not Like This – Washington Post Editorial Board