The Trump administration's budget blueprint gives a sense of its priorities, but provides little detail on some of the most prominent and market-driving items on his agenda.
The White House called for a major increase in defense spending in 2018 as well as cuts in nearly every other domestic department in its 2018 budget. While the blueprint provides a sketch of where President Trump would like to see federal money going moving forward, it does little in the way of revealing more information about some his biggest policy proposals, such as tax reform, deregulation and infrastructure.
"It's more of an aspirational document," said Dean Zerbe, former counsel to the Senate Finance Committee and national managing director at Alliantgroup.
From a market perspective, the proposal is more notable for what is not included than what is, said Goldman Sachs (GS) analyst Alec Phillips in a note on Thursday.
"It provides no economic or fiscal projections, and no discussion of tax reform or infrastructure plans, which the White House says will be released 'in coming months,' likely as part of a full budget submission to Congress that we expect to be released around May," Phillips said. "It also includes no discussion of the Obamacare replacement plan."
The promise of major cuts to corporate and individual taxes and a repatriation holiday have spurred an enormous amount of market optimism since the election, and it is nowhere to be found in Trump's budget. It wasn't widely expected to in the first place.
"Although markets remain ravenous for information on fiscal policy, tomorrow's release will do little to satiate that appetite," Nomura analysts said in a note ahead of the budget release on Wednesday. "Although we expect this document to garner a lot of attention, Congress may not agree with the Trump administration on spending priorities. Also, it will be difficult to significantly increase defense spending because of the parliamentary procedures in place coupled with the very small Republican majority in the Senate."
Infrastructure is a bit of a different story, not because of where it adds but because of where it takes away.
Trump campaigned on a pledge to inject $1 trillion in public and private funds into infrastructure projects. His budget, however, reduces spending on the arena.
It calls for a 13% reduction in Department of Transportation spending to $16.2 billion, limiting funding for the Federal Transit Administration's Capital Investment Program and eliminating funding for the TIGER discretionary awards program that awards grants.
"The Budget request reflects a streamlined DOT that is focused on performing vital Federal safety oversight functions and investing in nationally and regionally significant transportation infrastructure projects," the budget document reads.
It also slashes the Housing and Urban Development Department budget by 13% to $40.7 billion.
Mick Mulvaney, director of the Office of Management and Budget, told reporters on Wednesday that some of the programs cut will be made up for by a yet-to-come infrastructure plan. "We believe those programs to be less efficient than the infrastructure package that we're working on for later this year," he said.
The budget retains the $488 billion 2018 deficit estimated by the Congressional Budget Office and and leaves unmentioned Medicare and Social Security, entitlement programs Trump pledged not to touch while campaigning. It leaves much room for uncertainty for those concerned about the United States' growing debt, especially with major tax cuts still to come.
"This budget ignores the 70 percent of spending that is responsible for 90 percent of spending growth over the next decade and tells us nothing about how the Administration will address the nation's unsustainably rising national debt," wrote the Committee for a Responsible Budget in its analysis of the budget.
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"When I think of the relation to tax reform, I'm of the view that they're going to have to look at some deficit spending and debt spending to get there," said Zerbe. He added that having Republicans in control of Congress and, therefore, of spending may ease the minds of GOP debt hawks.
Critics of Trump's budget have emerged on the left and the right -- something the administration is well aware of.
"I've been on the Hill enough to know that some of these will be very unpopular," Mulvaney said in a Thursday press briefing.