President Donald Trump released his 2019 budget proposal which suggests taking revenue from Fannie Mae and Freddie Mac to lower the deficit.

The spending plan released Monday asks Congress to raise the fees the mortgage guarantors charge to back payments on mortgage-backed securities, according to an article by Joe Light for Bloomberg. The proposal would raise these guarantee fees by 0.1 percentage point and reduce the federal budget deficit by $25.7 billion over the next decade.

From the article:

To help pay for a payroll tax cut during the recession, Congress told Fannie and Freddie to add a 0.1 percentage point fee to the guarantee fees, which are paid by borrowers. That increase is set to expire in 2021.

But now, Trump’s proposal would extend the g-fees increase to 2023 and raise it to 0.2 percentage points.

About this time last year, for the second time in two years, the House of Representatives considered a bill that would permanently ban the use of funds raised from Fannie Mae and Freddie Mac’s g-fees to cover federal spending in areas not related to mortgages.

Two years before that, Congress fought over the use of g-fees as budgetary offsets. At the core of that fight was the potential use of g-fee funds to pay for a portion of a massive transportation bill.

That fight led to the removal of a controversial “pay-for” — the mechanism which funds the bill — that would have significantly delayed scheduled cuts in g-fees.

That fight also led to the introduction of the Risk Management and Homeowner Stability Act of 2016, which would have ended the government’s ability to use g-fees for other federal spending measures.

However, as evidenced by the president’s latest proposal, the bills were unsuccessful.

During a Politico Policy Summit in Washington last September, U.S. Department of the Treasury Secretary Steven Mnuchin said GSE reform would be an issue addressed in 2018.

While there, he reaffirmed the administration’s commitment to GSE reform, saying it would first focus on tax reform then move on to fixing the housing finance system in 2018.

However, the first signs of 2018 seem to point toward a greater government dependency on the GSEs, not an attempt to reform the system.

Trump’s 2019 budget proposal also gives 1% back to the U.S. Department of Housing and Urban Development from the 13.2% it took away with last year’s proposal, and slashes the Consumer Financial Protection Bureau’s budget while reducing its enforcement authority.

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