An Analysis of the President’s 2023 Budget

On March 28, 2022, the Administration submitted 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 in relation to CBO’s most recent baseline budget projections. Those projections extend from 2022 to 2032 and reflect the assumption that current laws governing federal spending and revenues will generally remain in place. CBO’s baseline budget projections and its analysis of the President’s proposals are based on the agency’s economic forecast published in May that reflects developments through early March.

According to CBO’s projections, the President’s proposals would have the following major effects:

• Federal deficits over the 2023–2032 period would total $13.1 trillion. Measured in relation to the size of the economy, deficits would average 4.2 percent of gross domestic product (GDP) over that period.
• The cumulative deficit for the 2023–2032 period would be $2.6 trillion smaller than it is in CBO’s baseline projections because revenues would be higher and spending lower.
• As a result of those smaller deficits, federal debt held by the public in 2032—at 102 percent of GDP—would be 7 percent of GDP lower than it is in CBO’s baseline projections, though it would still be 3 percent of GDP higher than it was in 2021.
• Total revenues over the projection period would be $1.7 trillion (or 3 percent) more than they are in CBO’s baseline projections. About half of that increase stems from a proposal to raise the corporate income tax rate from 21 percent to 28 percent.
• Total outlays over the 2023–2032 period would be $0.9 trillion (or 1 percent) less than they are in CBO’s baseline budget projections. Under the President’s budget, outlays for discretionary programs would be $1.7 trillion less than projected in the baseline, and net outlays for interest would be $0.3 trillion less; mandatory outlays, however, would be $1.0 trillion more.

In total, CBO’s estimate of the cumulative deficit over the 10-year projection period under the President’s proposals is $1.3 trillion less than the Administration’s estimate of $14.4 trillion. That difference is almost entirely attributable to differences in CBO’s and the Administration’s projections of outlays—particularly mandatory outlays—under current law.

CBO conducted this analysis in collaboration with the staff of the Joint Committee on Taxation (JCT). The analysis is based on the two agencies’ budget estimates, not 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 reflect the assumption that funding will grow with inflation after 2022 (or, in the case of advance appropriations, from the amount of the final enacted advance appropriation). This analysis does not take into account the budgetary effects of the student loan forgiveness recently announced by the President or 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. CBO’s baseline budget projections include the effects of legislation enacted through April 8, 2022, and therefore do not reflect the budgetary effects of the 2022 reconciliation act (Public Law 117-169), the Honoring our PACT Act of 2022 (P.L. 117-168), or any other legislation enacted after that date.

Some of the Administration’s proposals were not specific enough for CBO and JCT to assess their budgetary effects. In a few of those cases, CBO used the Administration’s estimates as placeholders because the agency concluded that those estimates were achievable targets for the budgetary effects of detailed policies that might be proposed in the future. The proposals for which CBO and JCT did not include estimates would, according to the Administration’s estimates, reduce deficits by $310 billion, on net, over the 2023–2032 period. Of those proposals, one to impose a minimum tax on the wealthiest taxpayers would result in the largest savings according to the Administration’s estimates—a $361 billion reduction in deficits over the 10-year period.