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President Donald Trump has suggested that a stronger economy under his presidency will help pay for his promise to spend an extra $54bn on the military, ahead of his first speech to Congress later today.
Defence stocks have risen this morning after Mr Trump outlined his military spending plans on Monday, with further details expected when he addresses Congress later today.
Speaking on Fox News, Mr Trump said he would also discuss his healthcare plans to replace the previous administration’s Affordable Care Act, also known as Obamacare, as well as the military and the border.
Mr Trump said spending cuts at the Environmental Protection Agency and State department that he has also promised would not by themselves be sufficient to fund his military spending spree.
He responded by pointing to expected economic growth, saying:
I think the money is going to come from a revved up economy. You look at the kind of numbers we were doing, we were probably GDP of a little more than 1 per cent and if I can get that up to 3, or maybe more, we have a whole different ball game, it’s a whole different ball game and that’s what we’re looking to do.
When questioned about how close the administration was to replacing the ACA and making tax changes, Mr Trump referred to other plans including demanding “a form of reimbursement” from other countries in exchange for military aid currently provided by the US.
He also referred to changes at the EPA and said that “hundreds and hundreds” of deals that were currently held up with environmental protection issues would be approved, leading to the creation of “thousands and millions, actually, of jobs”.
Referring to recent gains in the stock markets, Mr Trump added: “Trillions of dollars of value have been created since I won the election – the stock market is very enthused, and that’s jobs.”
The Organisation for Economic Co-operation and Development predicts that the US economy will grow 2.3 per cent this year, up from last year’s 1.5 per cent, and 3 per cent in 2018, a rate that would outstrip expected global growth of 2 per cent and 2.3 per cent for 2017 and 2018 respectively.