New projections by the Congressional Budget Office (CBO) show that President Trump’s proposed Fiscal Year 2020 budget would increase the debt from 78.2 percent of the economy (GDP) to 87.4 percent of GDP over the next 10 years.
The proposals in the budget would, however, reduce debt relative to CBO baseline projections (91.8 percent of GDP) for current law.
The administration had projected that its proposals would reduce the debt to 71 percent of GDP. The main reason for the difference from CBO’s debt figure is that the budget office’s projected tax revenues under Trump’s plan are 8 percent ($3.8 trillion) lower than the administration’s estimates.
This is consistent with the belief of many independent analysts that the White House is overly optimistic about future revenue that could result from Trump’s policies.
The CBO projects that the federal deficit this year will total $896 billion under current law. Under the president’s budget, CBO projects the deficit would rise to $966 billion in 2020 and exceed $1 trillion in 2022. The cumulative deficit for 2020 through 2029 would be $9.9 trillion, according to CBO’s estimates. That is substantially larger than the administration’s $7.3 trillion estimate.
And CBO cautions that some of the administration’s proposals “were not specific enough” for the budget office staff to prepare its own estimates of the effects of those proposals.
Robert L. Bixby, The Concord Coalition’s executive director, offered this assessment in March: “In the short term, the president’s budget is a roadmap for another government shutdown. The combination of deep spending cuts for non-defense programs and a large increase in defense spending, assisted by a blatant gimmick to avoid existing budget caps, has the potential to induce congressional gridlock on Fiscal Year 2020 appropriations.”
Over the longer term, Bixby said, the administration’s claim that its budget plan would rein in the debt “relies upon very rosy economic assumptions and improbable spending cuts, mostly targeted at portions of the budget that are not projected to see the fastest growth.”
The budget office says the administration hopes to save money by cutting non-defense discretionary spending by $1 trillion over the next 10 years.
Over the same period, CBO notes, the president’s budget would raise deficits in two key ways. Federal revenues would be reduced by $0.9 trillion — mainly because of Trump’s proposed extension of certain tax breaks — and defense spending would be increased by $0.5 trillion.
As The Concord Coalition said earlier this year, Trump’s proposed budget — like its predecessors in 2017 and 2018 — “reflects little real interest in the hard work of addressing the structural issues that drive federal spending projections higher than revenues: population aging, rising health care costs and an inefficient tax code.”