CBO: Deficit savings for Trump budget nearly half of White House estimate
The Congressional Budget Office (CBO) on Thursday contradicted a White House estimate on President Trump’s budget request for 2019, estimating that it would cut the deficit by nearly half the amount the White House has claimed.
“The federal deficit would be $2.9 trillion smaller under the President’s budget than in CBO’s baseline during the 2019–2028 period, CBO estimates,” the CBO said in a report released Thursday. “By contrast, the Administration estimates that the deficit would be $5.2 trillion smaller than the baseline amount during that period.”
According to the CBO, the deficit projections for 2018 under the president’s proposal are nearly identical to the current projected baseline.
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The main reason for the rosier picture painted by the White House Office of Management and Budget (OMB) is that it assumes the economy will grow at a far faster clip than projected by the CBO, according to the nonpartisan Committee for a Responsible Federal Budget (CRFB).
“OMB projects real GDP growth averaging 3 percent over the next decade while CBO’s projects an average of 1.8 percent. Largely as a result, CBO projects $1.95 trillion less in revenue than OMB – which constitutes 85 percent of the total difference over 2019 to 2028,” the CRFB analysis noted.
“The remaining $350 billion difference can be more than explained by CBO’s higher interest and discretionary spending estimates, partially offset by lower mandatory spending projections,” it added.
The White House figures would see overall debt fall to 73 percent of GDP at the end of a decade.
The CBO and the White House have frequently been at odds in their estimates of how policy would affect the economy, making the CBO a frequent target of attacks from the administration and Trump allies in Congress.
The nonpartisan agency recently estimated that the White House plan to claw back spending by more than $15 billion would only prevent $1 billion in spending due to the fact that the plan targeted unobligated funds. By contrast, the White House had estimated that the plan would prevent $3 billion in expenditures.
The White House has also sparred with the CBO over its estimates of how GOP plans to repeal Obamacare would affect the uninsured rate and how the new Republican tax law would affect the deficit.
In its most recent review, the CBO said the tax law would grow the deficit by nearly $1.9 trillion over a decade. Administration officials such as Treasury Secretary Steven Mnuchin have argued that the law would grow revenues, not shrink them.
The report released Thursday also found that the president’s plan would reduce the growth of the federal debt.
Currently, federal debt held by the public amounts to 78 percent of gross domestic product (GDP) and is projected to grow to 96 percent over a decade. The president’s budget would bring that figure down to 86 percent of GDP in the same time frame, mostly by slashing $2.1 trillion in nondefense spending $1.3 trillion in mandatory health spending.
The president’s budget is not expected to seriously affect spending this year. Congressional appropriators are sticking to a bipartisan budget deal struck earlier in the year and are already moving forward with marking up spending bills that largely disregard the president’s proposal.
The administration’s proposal was released before the budget deal was struck, and it was amended to reflect the updated figures for 2018.
Updated: 5:15 p.m.
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