On March 30, the Congressional Budget Office (CBO) released its analysis of President Trump’s proposed budget for fiscal year 2021. The president submitted this budget on February 10, 2020, when the pandemic was in its early stages in the US and before the enactment of major relief bills in response to the public health crisis and ongoing recession. CBO estimated that from 2021 to 2030, the federal deficit would be $2.1 trillion less under the president’s budget than under the CBO baseline. These numbers will obviously be revised dramatically and continually as the recession and the corresponding federal response continue to materialize over the next year. Still, the president’s budget needs to be analyzed for what it contains and omits and how it relates to ongoing efforts to deal with the pandemic and recession.
The president’s budget does not propose altering the nation’s preexisting fiscal path whereby health care, Social Security, and interest costs totally dominate the growth in federal spending, though it does propose significantly cutting the share of health-insurance supports for poorer populations through Medicaid and Affordable Care Act-related exchange subsidies. Meanwhile, the budget would dramatically decrease domestic discretionary spending in real terms and as a share of gross domestic product (GDP). It would also moderately decrease defense spending in real terms and cut tax revenues further. Though the economic shock caused by the pandemic entails trillions of dollars of additional spending and revenue losses, those changes, if temporary, still pale in comparison to the long-term permanent growth built into the budget in health, retirement, and interest costs.