Under the President’s proposals, deficits would total $9.9 trillion over the 2020–2029 period, $1.5 trillion less than the deficits in CBO’s current-law baseline. Federal debt held by the public would increase from 78 percent of GDP in 2019 to 87 percent in 2029.
On March 18, 2019, the Administration submitted the full details of its annual set of budgetary proposals to the Congress. In this report, the Congressional Budget Office examines how those proposals, if enacted, would affect budgetary outcomes relative to CBO’s most recent baseline budget projections. Those projections extend from 2019 to 2029 and incorporate the assumption that current laws governing federal spending and revenues will generally remain in place. The analysis is based on CBO’s baseline economic projections, which were published in January.
According to CBO’s estimates, the Administration’s proposals would have the following major effects:
Federal debt held by the public would equal 87 percent of gross domestic product (GDP) in 2029 under the President’s budget, compared with 92 percent in CBO’s baseline and 78 percent in 2019 (see figure below).
The federal deficit would be $1.5 trillion smaller under the President’s budget than in CBO’s baseline over the 2020–2029 period, CBO estimates. By contrast, the Administration estimates that the deficit would be $4.1 trillion smaller than the amounts in CBO’s baseline during that period. Differing estimates of revenues—which in turn are largely driven by differences in projected wage growth later in the projection period—account for nearly threequarters of that difference.
Mandatory spending for health care would be reduced, relative to CBO’s baseline, by $1.5 trillion, mainly because of a proposal to repeal certain provisions of the Affordable Care Act (ACA) and instead provide block grants to states. Nondefense discretionary spending would be reduced by $1.0 trillion. Both proposals would result in smaller deficits (see figure below).
Relative to CBO’s baseline, federal revenues would be reduced by $0.9 trillion, primarily because of an extension of provisions in the 2017 tax act (Public Law 115-97), and defense spending would be increased by $0.5 trillion, thereby raising deficits.
CBO conducted this analysis in collaboration with the staff of the Joint Committee on Taxation (JCT). The analysis excludes any feedback from the macroeconomic effects of the President’s policies. Moreover, the analysis is based on both agencies’ budget estimates, rather than on the Administration’s. For discretionary programs, CBO incorporated the funding levels requested by the President rather than using baseline amounts, which incorporate the assumption that funding will grow with inflation once the caps on such funding expire after 2021. Some of the Administration’s proposals were not specific enough for CBO and JCT to make their own estimates of the effects on the budget. Finally, this analysis does not take into account the potential budgetary effects of proposed changes in regulations and other administrative actions included in the President’s budget that are not already included in CBO’s baseline.