Trump's proposed budget sets up an 'epic battle' over government spending

President Donald Trump's team is expected to roll out its fiscal 2018 budget proposal this week, starting the process of laying out the government's funding future.

Analysts say Trump's budget proposal is unlikely to resemble what makes its way into law, based on what's reported to be included. It could, however, set up a larger philosophical battle that would reveal the ideological dynamics in Washington.

In the deal

The proposal is expected to include cuts to domestic spending programs across the board, with especially deep slashes to the Environmental Protection Agency and State Department.

According to a report from Axios' Jonathan Swan, the budget proposal is also expected to include deep cuts to spending on Medicaid — the program that provides health coverage for low-income Americans — and other entitlements that would total $1.7 trillion over the next 10 years.

Other proposed entitlement cuts, according to Axios, would be to food stamps, the Children's Health Insurance Program, and disability insurance.

The Washington Post's Emma Brown, Valerie Strauss, and Danielle Douglas-Gabriel reported that the proposed budget would also cut $10.6 billion from federal education initiatives, including college work-study programs and public-service loan forgiveness, while increasing investments in charter schools and school vouchers.

That, according to reports, would allow the federal government to have a balanced budget in 10 years.

At the same time, spending on the departments of Defense, Homeland Security, and Veterans Affairs would increase substantially.

It's unclear whether the proposal would include funding for some of Trump's pet projects, such as the wall along the border with Mexico.

Epic battle

Trump's proposed budget's prioritization of military and defense spending at the expense of many other departments will make for a tough battle in Congress, analysts say.

Greg Valliere, the chief investment strategist and political analyst at Horizon Investments, said in a note titled "An Epic Battle Over Fiscal Policy Begins This Week" sent to clients on Monday that the fight could reveal the fissures among congressional Republicans.

"And make no mistake, this is will be an epic fiscal policy showdown that highlights a fundamental issue: concentrating spending power in Washington versus the states," Valliere wrote. "And it will pit the House, which is dominated by conservatives, against the Senate, which is dominated by moderates and liberals."

Chris Krueger, an analyst at Cowen Washington Research Group, gave an even more blunt take on the White House budget proposal.

"The budget has already been declared DOA on Capitol Hill ... by congressional Republicans," Krueger said in a note to clients Monday. "Budgets are governing documents, and this is no different from a headline and policy-noise perspective."

Valliere said the biggest disagreement would come over the proposed cuts to mandatory entitlements and most likely wouldn't get traction on either side of the aisle.

"This will hit a brick wall in the Senate, and Trump will get the worst of both worlds: scathing criticism from the left for these spending cuts and the inability to get most of them enacted," Valliere said.

Trump repeatedly promised through the campaign to not make cuts to entitlements, including Medicaid.

"I was the first & only potential GOP candidate to state there will be no cuts to Social Security, Medicare & Medicaid," Trump tweeted on May 7, 2015.

In the end, the House and Senate are likely to devise a budget deal, and with competing interests and the pet projects of various lawmakers, deep domestic cuts most likely won't be enacted, said Isaac Boltansky and Lukas Davaz of the political-research firm Compass Point.

"The White House's budget proposal will drive headlines over the week ahead as key administration officials head to the Hill, but this proposal should be viewed as nothing more than an opening move in a long and labored budget process that will shift significantly in the months ahead," the analysts wrote.

Next steps

The budget proposal is expected to be rolled out early this week, and Mick Mulvaney, the director of the Office of Management and Budget, will then testify in a series of hearings.

The degree to which Mulvaney, a former representative from South Carolina and a member of the hardline conservative House Freedom Caucus, is combative during his testimony could indicate how hard the Trump administration will on its budget priorities.

Congress would have to pass a budget resolution by the end of September to keep the government from shutting down.