The administration said its budget proposal would lower the deficit by $5.2 trillion over 10 years. But the CBO said the Trump budget — which combines spending reductions on domestic programs with last year’s large tax cut package — would lower the deficit by $2.9 trillion.
In selling the tax law last year, the White House and Republicans said it would lead to broad gains in salaries and wages throughout the economy. But CBO estimated the White House’s forecasts were overly rosy. Ultimately, it said tax revenue would be $1.2 trillion lower over the next 10 years, compared with the White House’s estimates.
White House officials have routinely criticized the CBO’s methodology, accusing the budget office of refusing to factor in the type of economic forecasts that Republicans use when measuring the impact of tax cuts.
During the Obama administration, Republicans fought hard to reduce government spending and eliminate the deficit, which is the gap between how much revenue the government brings in and how much it spends each year on programs.
By 2028, the administration projects a $445 billion deficit if the White House budget were adopted, whereas the CBO says the deficit would top $1 trillion. The deficit is the difference between how much money the federal government takes in and how much it spends. For example, the government is projected to spend $4.1 trillion this year and bring in $3.3 trillion in revenue, leading to a deficit of almost $800 billion. By 2020, the deficit is expected to reach $1 trillion.
The government already has more than $20 trillion in debt according to some measures, but Trump has pushed back on calls from conservatives to sharply reduce the deficit because he has searched for budget deals with Democrats. Trump has demanded more money for the military, and in exchange Democrats have demanded more money for domestic programs like education and housing. Even though Trump has proposed cutting many of these programs in his budget programs, his deals with Democrats have embraced much different visions of how the government should be run.
The CBO report is an annual analysis by Congress’s nonpartisan scorekeeper of the White House’s budget request.
The budget the White House released in February was notable because it did not eliminate the deficit over 10 years, which White House budget director Mick Mulvaney said at the time would have been impossible without implausible gimmicks. CBO’s calculations illustrate a budget that leads to a deficit that’s much larger than the White House has said would occur, in part because it dismissed the White House’s projections of future economic growth.
White House budget proposals don’t become law, but they do serve to lay out the administration’s priorities. Congress often ignores these ideas when making spending decisions, but they can take ideas or work with individual proposals as they prioritize how to spend taxpayer money. CBO’s annual analysis of the budget request serves as a reality check on whether the administration’s economic projections are realistic or overly rosy, and Thursday’s CBO report suggested the latter.
Congress has already struck a bipartisan deal busting budget caps that will serve to set the actual spending levels for 2019, putting the federal government on course for a spending binge that began with a $1.3 trillion “omnibus” spending bill in March for the remainder of the 2018 budget year. Trump signed that bill only reluctantly after initially threatening to veto it, and it’s come under tremendous criticism from conservatives. That legislation will expire at the end of the fiscal year on Sept. 30, when another spending bill will have to pass to stave off a government shutdown. That could set up a government shutdown fight just ahead of the November midterm elections if Trump carries through on threats to demand more money for his border wall with Mexico.