White House to increase spending in FY 2019 budget to be released Monday
President Trump’s budget request will be released today after Congress’ approval of significant spending cap increases. These include an additional $85 billion in military spending—primarily to send a message of strength—as well as $68 billion in spending on infrastructure, disaster relief and the opioid epidemic over the next two years.
Coming on the heels of Friday’s brief government shutdown, the budget plan will take effect on October 1, the beginning of the next fiscal year. Congress’ budget committees will draft the final proposal in the next two months. and the Republican majority ensures Trump’s proposal will remain largely intact.
Coupled with the Republican tax bill’s major corporate tax breaks, the US government’s deficit will surpass $1 trillion annually, meaning the treasury will have to borrow more. The Treasury’s borrowing to match the deficit, exacerbating fears of rising interest rates and inflation as a result. Expect interest rates to increase in the next fiscal year, and given last week’s market volatility due to interest rate fears, expect more of the same market behaviour in the coming year.
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