Trump’s Bombshell Defense Budget

By Yuval Rosenberg and Michael Rainey Trump’s Bombshell Defense Budget President Trump is due to unveil his 2019 budget next month, and it once again will include a whopping increase in proposed defense spending, [according to The Washington Post](. Trump is expected to ask for $716 billion for defense, an increase of 7 percent over 2018 levels and of 13 percent over 2017 spending. Trump’s budget is just a proposal — and a largely symbolic one at that. But it carries some weight as a political document, setting a White House target for Congress as lawmakers work to [finalize a two-year spending deal]( that would exceed the caps set by the 2011 Budget Control Act. The large increase in military spending also “signals a shift away from concerns about rising deficits,” the Post’s Greg Jaffe and Damian Paletta write. The proposed increase is so large that finding offsetting spending cuts would be improbable if not impossible. The new budget represents a win for Defense Secretary James Mattis, who has been pushing for a large increase in military spending. “As hard as the last 16 years have been, no enemy in the field has done more to harm the readiness of the U.S. military than the combined impact of the Budget Control Act, defense spending cuts and operating in nine of the last 10 years under continuing resolutions,” [Mattis said last week]( in presenting the first new [National Defense Strategy]( in 10 years. His efforts faced some pushback from White House officials including budget director Mick Mulvaney, “who worried that the deficit would explode with a large increase in military spending, combined with the president’s tax cuts,” the Post notes. “If this [$716 billion] is the number,” Todd Harrison, director of defense budget analysis at CSIS, told the Post, “then the battle between Mattis and Mulvaney is over and Mattis won.” [Share]( [Tweet]( [Forward]( Air Force Wants More Money to Keep A-10 Warthogs Flying Although the Pentagon has considered retiring the A-10 Thunderbolt II “Warthog” attack jet, much to the dismay of its many fans in and out of the military, the Air Force says it will request funds in the 2019 budget to expand its efforts to keep the aircraft flying. The A-10 fleet is getting old and many of the jets need new wings. There are 283 A-10s in service, but only 173 have had their wings replaced. Congress has not provided funds for the remaining 110 aircraft to get new wings. The Air Force’s 2018 budget request includes $103 million toward that goal, which would pay for just four wings if or when Congress does appropriate the money. The 2019 budget will request more funds to continue the re-winging project, though the final number still needs to be hashed out between Congress and the Pentagon. [Read more about the A-10 here](. Tweet of the Day Via [Daniel Hemel]( of University of Chicago Law School. Send Us Your Tips and Feedback: Email Yuval Rosenberg at yrosenberg@thefiscaltimes.com and follow me on Twitter [@yuvalrosenberg](. Follow The Fiscal Times on Twitter [@TheFiscalTimes](. Why Good News on the Economy Is Bad News for the National Debt The era of rock-bottom interest rates appears to be over, and the Federal Reserve is expected to continue raising rates this year. That means the “the federal government’s borrowing costs are set to soar,” the American Enterprise Institute’s [James C. Capretta writes](. The Congressional Budget Office already projects that interest payments on federal debt will more than double over the next decade, climbing from 1.5 percent of GDP in 2018 to 3.1 percent of GDP in 2027. Historically low interest rates have kept the cost of federal debt in check in recent years. “In 2008, the federal government made [$253 billion in net interest payments]( on debt that was $5 trillion at the end of fiscal year 2007, for a 5 percent average interest rate on the debt,” Capretta notes. “The government made only $240 billion in interest payments in 2016, although the debt had more than doubled to $13.1 trillion at the end of fiscal year 2015, for a 1.8 percent average interest rate.” Interest rates might not return to historically normal levels over the next decade. “But even a partial normalization of interest rates would dramatically increase federal costs, making it even more difficult for policymakers to get the nation’s fiscal house in order,” Capretta argues. Perhaps rising rates will highlight the importance of tackling the nation’s fiscal problems and prompt lawmakers to act. “It would be far better for the country if political leaders took steps now to head off a potential fiscal crisis that could come with rising debt,” Capretta suggests. “At the moment, though, neither party seems ready to face budgetary reality.” [Read his full piece here](. Your Prize for Making It Through the Week Plenty of people in the U.S are concerned about our collective future, but there's one thing we generally don't have to worry about: Nutella riots. To get a taste of the sweet chaos we Americans have managed to avoid, take a look at the video in "[Chaos spreads in France as Nutella-loving customers battle to get 70 percent off]( News - [US Economy Doing Just Fine but 3% Growth Will Remain Elusive]( – Bloomberg - [Accountants Group Urges Higher Budget for IRS]( – CPA Practice Advisor - [Dems Seek to Undermine Any Good PR for Tax Law]( – The Hill - [Poll: Most Unaware Congress Repealed Obamacare Mandate]( – The Hill - [Financial State of the Cities 2016]( – Truth in Accounting - [New York City, Chicago Top List of Cities with Worst Fiscal Health]( – PJ Media - [Portland Finances Get an 'F' Grade for Hidden Debt; City Officials Disagree]( – The Oregonian - [Hurricane-Torn Puerto Rico Says It Can’t Pay Any of Its Debts for 5 Years]( – New York Times - [Idaho Tells Insurers They Can Charge More for Pre-Existing Conditions]( – Slate - [Why The Gates Foundation Just Paid Off Nigeria’s $76 Million Debt]( – Fast Company - [Bill Gates Wants to Make Cows Great Again]( – The Week Views - [How Mick Mulvaney Is Dismantling a Federal Agency]( – Catherine Rampell, Washington Post - [The Republican Tax Reform Is Achieving Democratic Goals]( – Merrill Matthews, The Hill - [The Increasingly Popular GOP Tax Cuts Will Haunt Dems In November]( – Investor’s Business Daily - [The State of the State’s Pensions Is Not So Strong]( – Kerry Jackson, Pacific Research Institute - [A Disturbing 50 Year Change in Federal Spending]( – Hunt Lawrence and Daniel Flynn, American Spectator - [At Davos, Trump Became a Leader the Global 1% Can Learn to Love]( – Jeet Heer, New Republic - [With Congress Back to Work, It's Time for the Senate to Reform Flood Relief]( – RJ Lehmann, The Hill - [Democrats Paid a Huge Price for Letting Unions Die]( – Eric Levitz, New York Magazine Copyright © 2018 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com. Our mailing address is: The Fiscal Times 712 Fifth AvenueNew York, NY 10019 [Add us to your address book](//thefiscaltimes.us1.list-manage.com/vcard?u=40d2c5373681f5cd830b6d823&id=714147a9cf) If someone has forwarded this email to you, consider signing up for The Fiscal Times emails on our [website](. Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](