Allies under pressure to follow Trump’s lead

As Trump pushes ahead with plans to slash public service spending, Canberra will soon feel pressure to follow suit.

US President Donald Trump speaks to auto workers at American Center for Mobility in Ypsilanti, Michigan on March 15, 2017. (AFP PHOTO/Nicholas Kamm)

While US Federal Reserve chief Janet Yellen was announcing her anticipated interest rate increase, causing markets to move in the opposite direction to what had been expected, President Trump was preparing Americans for the next step in his revolution — dramatic cuts in the US public service to pay for more defence spending.

And the White House did this by taking the unusual step of circulating around the US and the world an article in the Washington Post.

In Australia, the last time anyone thought about cutting government spending was when Tony Abbott promised big cuts to win office in 2013 but then promptly forgot about the promise as public service spending continued to increase, with more departments being created and extra ministerial jobs.

Fascinatingly, in WA, the new Premier Mark McGowan believes he can slash public service waste and spend the money on education, health and other areas to the benefit of voters. It’s no wonder he was elected by a big margin.

Shadow Treasurer Chris Bowen has a big spending leader in Bill Shorten but clearly also has the option of funding that spending by following the 2013 Abbott blue print, learning from WA or, dare I say it, picking up on some of Trump’s ideas.

More immediately, the White House is going to pressure its allies in Europe, Japan and Australia to follow the US and drain their public service swamps — which are much deeper than the US — and spend the money on defence.

In that context the White House circulated Washington Post commentary has deep meaning for Canberra.

Here are a few extracts:

“President Trump’s budget proposal this week would shake the federal government to its core if enacted, culling back numerous programs and expediting a historic contraction of the federal workforce.

“This would be the first time the government has executed cuts of this magnitude — and all at once — since the drawdown following World War II.

“The spending budget Trump is set to release … prioritises the military and homeland security while slashing many other areas, including housing, foreign assistance, environmental programs, public broadcasting and research.

“Simply put, government would be smaller and less involved in regulating life in America, with private companies and states playing a much bigger role”.

Tony Abbott might accuse Trump of plagiarism because back in 2013 Abbott also worked out he could save many billions by reducing duplication with the states but in office it was easier to increase the duplication and run up the deficit.

Trump looks like he going to actually reduce the Washington public service, although there will be problems getting many cuts through Congress.

According to the Washington Post, the Trump cuts will reduce employment in the region by 1.8 per cent, personal income by 3.5 per cent and lower home prices by 1.9 per cent.

Among Trump’s expected proposals are an increase in military spending of $54 billion, more money to start building a wall along the border between the US and Mexico and the creation of new initiatives that expand access to charter schools and other educational programs.

To offset, Trump will propose steep cuts across numerous other agencies. But many of the cuts will affect a wider group than public servants. For example, one proposal is cutting the Department of Housing and Urban Development’s budget by $6bn, or 14 per cent.

That could “put nearly 8 million Americans in both inner-city and suburban communities at risk of losing their public housing and nearly 4 million at risk of losing their rental subsidy.”

Trump advisers have also looked at cutting the Environmental Protection Agency’s staff by about 20 per cent and tightening the Commerce Department’s budget by about 18 per cent, which would impact climate change research and weather satellite programs, among other things.

Trump and his advisers believe the federal workforce is too big, and that the federal government spends — and wastes — too much money.

The federal workers and contractors, among others — have benefited from government largesse while many other Americans have suffered.

Federal spending, they have argued, crowds the private sector and piles regulations and bureaucracy onto companies.

Politicians in the Western world will be watching and preparing themselves for a Donald Trump message that if they want US defence help, then they also need to lift their defence spending and to fund those outlays by draining their own swamps.