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On Tuesday night, President Donald Trump is scheduled to give a high-profile speech to Congress laying out his budget proposals for the year to come. It’s the equivalent of a State of the Union address in a year when one didn’t happen (as is tradition in a presidential transition year).
Very few details have been released to the press as to what topics and legislative priorities Trump plans to discuss. But five foreign policy issues have already proven important to the early Trump era, and seem critical to watch for: the defense budget, trade, ISIS, the US border with Mexico, and Russia. Here’s what the Trump administration has said and what to listen for in tonight’s speech.
The defense budget
The initial headlines about Trump's budget blueprint focused on a single purported change: The president was going to call for boosting defense spending by an eye-opening $54 billion while cutting equivalent amounts from the State Department and the Environmental Protection Agency.
That isn't quite true. Trump's team is making apples-to-oranges comparisons that wind up giving a deeply misleading view of what they're actually calling for.
Talking to reporters yesterday, Trump’s OMB head, Mick Mulvaney, said the administration’s fiscal year 2018 budget would include $603 billion in defense spending. That sounds like, and would be, a lot of money.
Except the comment was interpreted as referring to money literally and exclusively going to the Pentagon. It doesn’t: The figure also includes defense-related spending at other agencies like the Department of Energy, which manages the nation’s nuclear arsenal.
The second and bigger problem is that the White House was making an apples-to-oranges comparison in terms of how the increase was actually being calculated.
When he submitted his final Pentagon budget proposals, then-President Barack Obama projected spending $557 billion in fiscal year 2018. Trump, accurately, says that his proposed $603 billion in defense spending is far higher.
The problem is that Trump’s math doesn’t make sense, because he and his aides are comparing the wrong figures. The $603 billion in defense spending includes both Pentagon spending and spending by other agencies, like the Department of Energy, which manages the nation's nuclear arsenal. Those agencies stand to get around $28 billion, so Trump's proposed increase for the Pentagon alone is just $18.5 billion more than Obama's — an increase, sure, but a relatively small one for an agency as enormous as the Defense Department.
Trump is certain to use his speech Tuesday night to boast about how he will boost defense spending by historic amounts of money. Just be sure to understand that, as with so much else the new president says, the truth is significantly different. And that's bad news for a Pentagon that has been hoping Trump would open the spigots.
Trade
Trade has been one of the most persistent economic themes of Trump’s presidency, so it’s hard to imagine it won’t come up. Yet despite the fact that it’s supposed to be a big priority for him, he’s provided no clarity on his specific policy positions outside of pulling out of the Trans-Pacific Partnership. Watch for any kind of development on what he actually wants to get out of renegotiating NAFTA, the big free trade deal that the US has with Canada and Mexico. He could also champion bilateral trade deals as a superior alternative to big multilateral ones.
What trade observers will be watching for most closely is an issue that isn’t technically a trade issue: corporate tax reform. In particular, they’ll be looking to see if Trump takes a strong stance on one element of it called “border tax adjustment.”
Border tax adjustment is a huge priority for House Republicans, who want overall, fundamental change to the US corporate tax system. As Chad Bown, a senior fellow at the Peterson Institute for International Economics, explains, they want to change the code “from a corporate income tax, where you tax the profits of companies, to a tax on their cash flow, which ends up looking much like a consumption tax or a sales tax.”
Under the new proposed system, taxes would be imposed based on where something is sold — which means a company’s domestic sales will be taxed but its sales abroad won’t. It also means that the tax will apply to foreign companies’ sales in the US.
The issue is that, theoretically, this might end up acting as a tariff: essentially imposing an extra tax on foreign goods that would discourage imports into the US. The Trump administration has taken that position at times, suggesting a border adjustment tax would allow the US to take money from Mexico in order to pay for the wall along the US-Mexico border.
Its proponents on Capitol Hill insist this isn’t true; that the policy would cause the value of the dollar to rise, which would make foreign goods cheaper and thus prevent it from functioning as a tariff. They also think it would help crack down on corporate tax avoidance in the US.
Ultimately, though, we aren’t quite sure what the Trump administration thinks about a border tax. House Speaker Paul Ryan will be watching closely for any movement on this.
ISIS
It’s likely the president will discuss terrorism in general. But when it comes to the most significant ongoing front in the war on terrorism, the military campaign against ISIS, it’s unclear what he’ll have to add.
The war on ISIS is at a crucial inflection point. The group’s time as a state-like entity controlling territory in Iraq and Syria may be rapidly coming to a close. Last Friday, Iraqi troops moved into the western half of Mosul, the Islamic State’s last major holding in the country. US allies in Syria are prepping for an assault on Raqqa, ISIS’s de facto capital city. ISIS’s caliphate may soon be a thing of the past
“The fall of the Islamic State is going to happen, and it’s going to happen on this president’s watch,” Andrew Exum, a former Obama administration Pentagon official who helped plan the ISIS war, writes at the Atlantic. He also notes, however, that this won’t end America’s war with the Islamic State.
The group is already re-forming as an insurgent organization, hiding among Iraqi civilians and taking advantage of Iraq’s weak institutions to avoid detection. Reporters on the front lines have seen this process firsthand, with ISIS members infiltrating areas that had (according to the Iraqi government) been freed of their presence.
“The Islamic State is nearing defeat on the battlefield, but away from the front lines its members are seeping back into areas the group once controlled, taking advantage of rampant corruption in Iraq’s security forces and institutions,” the Washington Post’s Loveday Morris writes. Basically, America will soon be shifting to a different kind of war on ISIS — one centering on the slow and painstaking work of counterinsurgency and institution building, rather than bombing raids.
There are various ideas in government now for adjusting the war effort. The Pentagon has given Trump a proposal that would, for the first time, put regular (meaning not special forces) US troops on the ground in Syria. The White House is reportedly considering loosening the military’s rules of engagement, regulations that limit the military’s use of force in order to, among other things, minimize civilian casualties when fighting in populated areas.
Whether the president commits to one of these proposals, or demonstrates any understanding of the new nature of America’s war with ISIS, will shape America’s spending on the ISIS fight. Any one of these could be a big deal.
The US/Mexican border wall
Trump campaigned on a promise of a “big, beautiful wall” between the US and Mexico. His crowds got used to a call and response — “Who will pay for it?” he’d ask, and they’d shout back, “Mexico!” Just before taking office, Trump mused that he could wait to put it up, but said, “I don’t want to wait.”
Mexico has never been on board with that plan. President Enrique Peña Nieto has made several blunt public statements to that effect, flatly stating earlier this month that “Mexico will of course not pay.” How Trump will make Mexico pay for it in spite of this opposition is very far from clear.
The stakes are high: The theoretical 1,000-mile wall is far, far more expensive than Trump originally promised. Candidate Trump used to throw around the number $8 billion. By the time he entered the Oval Office, the Trump administration’s estimates were up to $10 to 12 billion. An estimate from Senate Majority leader Mitch McConnell’s office came out to about $15 billion. In early February, a leaked Department of Homeland Security report put that cost higher still — at $21.6 billion.
When the news broke that the wall would cost more than double Trump’s early estimates, he took to Twitter to promise he would get the price way down:
I am reading that the great border WALL will cost more than the government originally thought, but I have not gotten involved in the.....
— Donald J. Trump (@realDonaldTrump) February 11, 2017
...design or negotiations yet. When I do, just like with the F-35 FighterJet or the Air Force One Program, price will come WAY DOWN!
— Donald J. Trump (@realDonaldTrump) February 11, 2017
What kind of negotiations could actually get costs down on such a massive project is a mystery. It’s worth seeing if he updates either his plan to lower costs on the wall or his plan to make Mexico pay for it.
Russia
This one is likely to be conspicuous by its absence.
The Trump administration is currently mired in a number of separate scandals involving Russia. This includes, but isn’t limited to: evidence that the Trump campaign was speaking with Russian intelligence officers during the election (after Russian intelligence had hacked Clinton allies); what the president really knew (and when) about former National Security Adviser Michael Flynn’s discussions on sanctions with the Russian ambassador; and the still mostly unproven dossier alleging that Russia has blackmail material on the president.
Investigations inside the US government and by the press are still ongoing. This is the foreign policy issue with the most potential to derail Trump’s presidency, especially given Trump’s oddly pro-Russian stances on issues like Syria and NATO.
The White House response to these allegations has mostly been to ignore them when possible, and to give confusing and at times contradictory responses when they can’t. Nothing has been settled, the risk of an even bigger scandal is still very high, and yet the president is very likely going to speak tonight as if everything on this front is normal.
