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UPDATE 5-Trump seeks to slash $3.6 trillion of spending in austere budget

(Adds Sanders, foreign aid details)

WASHINGTON, May 23 (Reuters) - U.S. President Donald Trump wants lawmakers to cut $3.6 trillion in government spending over the next decade, taking aim in an austere budget unveiled on Tuesday at healthcare and food assistance programs for the poor while boosting the military.

Republicans who control the U.S. Congress - and the federal purse strings - will decide whether to make politically sensitive cuts, and the proposal is very unlikely to be approved in its current form.

Although it is not expected to survive on Capitol Hill, the proposal puts numbers on Trump's vision of the role of government: a budget with radical cuts to government assistance to lower-income Americans.

The biggest savings would come from cuts to the Medicaid healthcare program for the poor made as part of a Republican healthcare bill passed by the House of Representatives.

Trump wants lawmakers to cut more than $800 billion from Medicaid, and more than $192 billion from food stamps over a decade. He seeks to balance the budget by the end of the decade, according to the plan.

The Committee for a Responsible Federal Budget, a bipartisan public policy organization, said the plan relied on "rosy assumptions," gimmicks and unrealistic cuts.

The budget is based on forecasts for economic growth of 3 percent a year by the end of Trump's first term - well beyond Congressional Budget Office assumptions of 1.9 percent growth.

"While we appreciate the administration's focus on reducing the debt, when using more realistic assumptions, the presidents budget does not add up," said Maya MacGuineas, the group's president.

There is some new spending in Trump's plan for fiscal year 2018, which starts in October.

The Pentagon would get a spending hike, and there would be a $1.6 billion down payment to begin building a wall along the border with Mexico, which was a central promise of Trump's presidential campaign.

Trump's proposal foresees selling half of the U.S. emergency oil stockpile, created in 1975 after the Arab oil embargo caused fears of price spikes. The announcement surprised oil markets and briefly pulled down U.S. crude prices.

Republicans are under pressure to deliver on promised tax cuts, the cornerstone of the Trump administration's pro-business economic agenda, which would cut the business tax rate to 15 percent and reduce the number of personal tax brackets.

But their policy agenda has stalled as the White House grapples with the political fallout from allegations of Russian meddling in the 2016 U.S. election.

Mick Mulvaney, Trump's budget office director, said the plan is the first one in a long time to pay attention to taxpayers.

Yes, you have to have compassion for folks who are receiving the federal funds, but also you have to have compassion for the folks who are paying it, he told reporters.

Republican leaders in the House said lawmakers would be able to find common ground with the budget plan.

REPUBLICAN VOTERS

Senator Bernie Sanders, who ran a populist campaign during the Democratic presidential primary, said the budget belied Trump's campaign promises to stand up for working people.

This budget exposes all of that verbiage for what it really was: just cheap and dishonest campaign rhetoric that was meant to get votes, Sanders told a news conference.

He predicted Republican House members will struggle in their home districts to defend the cuts to healthcare and education programs. "I certainly dont know too many sane Republicans who want to go home to that dynamic, he said.

While the budget proposal for national defense increases spending, it falls short of campaign promises for a "historic" hike in military spending amid plans to rebuild the U.S. Navy.

Trump is seeking $52 billion more for the Pentagon as part of an overall defense spending increase of $54 billion. That is almost 10 percent higher than current budget caps but only 3 percent more than former President Barack Obama had sought in his long-term budget plan.

The president would reduce nearly a third of funding for diplomacy and foreign aid including global health and food aid, peacekeeping and other forms of non-military foreign involvement.

Trump upheld his promise - for the most part - that he would not cut Medicare and Social Security, two social insurance programs that deficit hawks have long targeted for reforms.

Those so-called entitlement programs may not come out of Capitol Hill unscathed, however. House Majority Leader Kevin McCarthy, a fellow Republican, said lawmakers would have to reform both programs to save them.

The healthcare bill passed by the House aims to gut the Obama administration's signature 2010 Affordable Care Act, known as Obamacare, that expanded insurance coverage and the government-run Medicaid program. But it faces an uncertain future in the Senate, which is writing its own law.

The White House proposed changes that would require more childless people receiving help from the Supplemental Nutrition Assistance Program, better known as food stamps, to work.

Most government departments would see steep cuts, particularly the State Department and the Environmental Protection Agency.

Treasury Secretary Steven Mnuchin said the budget plan will boost economic growth by fostering capital investment and creating jobs for workers who gave up their job hunts during tough times.

(Additional reporting by Susan Heavey, Yasmeen Abutaleb, Amanda Becker, Timothy Gardner, Ginger Gibson, Mike Stone in Washington, and PJ Huffstutter in Chicago; Writing by Alistair Bell; Editing by Andrea Ricci and Cynthia Osterman)