An Analysis of Certain Proposals in the President’s 2022 Budget

On May 28, 2021, the Administration submitted the full details of its annual set of budgetary proposals to the Congress. In a typical year, the Congressional Budget Office undertakes a comprehensive examination of how those proposals, if enacted, would affect budgetary outcomes over the next 10 fiscal years by comparing its projections of outcomes under those proposals with its most recent baseline budget projections. This year, however, the need for CBO to support ongoing legislative activity made it difficult to complete a comprehensive analysis in the usual time frame.

To manage competing priorities, CBO focused on completing its analysis of the Administration’s request for discretionary funding. (Discretionary funding is the authority provided in appropriation acts to incur financial obligations that will result in immediate or future outlays of federal government funds.) In addition, the agency has completed analysis of some of the proposals that would affect mandatory spending (which is generally governed by statutory criteria and not normally constrained by the annual appropriation process).

The budgetary effects of implementing the President’s policies are estimated by answering two questions: What would the budgetary outcomes be if current laws governing spending and revenues remained unchanged? How would the proposed policies affect those outcomes? This file provides answers to both of those questions.

Table 1 shows CBO’s most recent projections of budgetary outcomes under current law (its baseline projections) alongside the corresponding projections made by the Administration. (CBO’s projections were published in brief on July 1, 2021, and described in greater detail shortly thereafter.) CBO’s analysis of the Administration’s proposals is based on the agency’s baseline budget projections and on its most recent economic forecast, both of which were developed in May of this year. Those projections incorporate the budgetary and economic effects of legislation enacted through May 18, 2021, as well as technical adjustments that were made on the basis of new information (such as program details released in conjunction with the President’s budget). They do not take into account any other economic or budgetary information.

Tables 2 and 3 show CBO’s estimates for policies proposed in the President’s budget: The estimated effects on discretionary spending are presented in Table 2, and estimates for some proposals that would affect mandatory spending—namely those estimates that CBO completed by July 19, 2021—are in Table 3. Table 4 shows the Administration’s estimates for the proposals listed in Table 3, and Table 5 shows the differences between the estimates in Tables 3 and 4. The estimates that CBO has completed account for only a small share of the budgetary effects projected by the Administration; thus, the tables presented here do not include CBO’s assessment of how all of the President’s proposals—taken together—would affect deficits and debt in the coming years.

CBO conducted this analysis in collaboration with the staff of the Joint Committee on Taxation. The analysis is based on those agencies’ budget estimates, rather than on the Administration’s. For discretionary programs, CBO incorporated the funding levels requested by the President rather than using the amounts in its baseline projections, which generally reflect the assumption that funding (except for certain emergency funding provided in response to the 2020–2021 coronavirus pandemic) will grow with inflation once the caps on such funding expire after 2021. 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 incorporated in CBO’s baseline. In addition, the analysis excludes any feedback from the macroeconomic effects of the President’s policies.

Some of the Administration’s proposals were not specific enough for CBO to assess their budgetary effects. CBO used the Administration’s estimates in its analysis when the agency concluded that those estimates were achievable targets for detailed policies that might be proposed in the future.

Key Results

For the current fiscal year, CBO’s estimate of the deficit—$3.0 trillion—is $0.7 trillion less than the Administration’s baseline estimate.

CBO’s key findings for the 2022–2031 period include the following:

• Deficits under current law are $1.1 trillion less in CBO’s projections than they are in the Administration’s baseline projections (see Table 1). Most of the difference stems from estimates for 2022 to 2024.
• Under the President’s proposals, discretionary spending would be $225 billion (or 1.3 percent) more than it is in CBO’s baseline projections (see Table 2).
• The proposals that CBO has analyzed would increase mandatory outlays by $1.2 trillion, $14 billion less than the Administration estimates (see Tables 3–5).
• The proposals that CBO and JCT have not yet analyzed would, according to the Administration, add $3.6 trillion to revenues and $3.2 trillion to mandatory outlays (see Table 4).