An Analysis of the Discretionary Spending Proposals in the President’s 2025 Budget

The Administration submitted its latest annual set of budgetary proposals to the Congress on March 11, 2024.1 In this report, the Congressional Budget Office examines how the discretionary spending proposals in that budget compare with CBO’s most recent baseline budget projections, which span the years from 2024 to 2034.2

The President has requested a total of $1.75 trillion in discretionary appropriations for 2025. That amount includes the effects of proposed changes in mandatory programs that would be enacted in the 12 annual appropriation bills; those changes would, on net, reduce budget authority by $44 billion in 2025 (and increase it by $35 billion in 2026), CBO estimates.3 Excluding those effects on mandatory programs, the proposed appropriations for 2025 would total $1.79 trillion (see Table 1). That amount is $68 billion (or 4 percent) less than what has been appropriated for 2024 (also excluding the effect of changes in mandatory programs enacted in 2024 appropriation legislation)—$59 billion less for defense and $10 billion less for nondefense activities. In addition, the President requested obligation limitations of $81 billion for certain transportation programs for 2025, 2 percent more than the amount for 2024.4

In analyzing the President’s budget, CBO compares the spending that would result from the discretionary funding requested by the Administration for each year from 2025 to 2034 with the spending projected in CBO’s baseline. That baseline, which reflects the assumption that current laws governing federal spending and revenues will generally remain in place, is intended to provide a benchmark that policymakers can use to assess the potential effects of future policy decisions on federal spending and revenues and, thus, on deficits and debt. Both CBO’s baseline and its analysis of the Administration’s budget are based on the agency’s most recent economic forecast and its technical assumptions.5

The baseline reflects funding provided to date for 2024 and the caps that were established by the Fiscal Responsibility Act of 2023 (FRA; Public Law 118-5) for 2025. (The Office of Management and Budget, or OMB, has determined that funding enacted to date does not exceed the caps established by the FRA for 2024.) CBO’s baseline incorporates the assumption that after 2025, funding grows with inflation when not constrained by those caps. (In the case of advance appropriations, funding grows with inflation from the amount of the final enacted advance appropriation.)

By contrast, the President’s budget includes specified requests rather than amounts that grow with inflation. In the President’s request, base funding—that is, funding constrained by the caps—grows by an average of about 1.6 percent a year after 2025. Nonbase funding—that is, funding that is not constrained by the caps—proposed for those years is substantially less than what has been provided in 2024 and what is proposed for 2025.

The main differences between the President’s budget and CBO’s baseline are as follows:

• CBO estimates that under the President’s budget, discretionary funding would be $43 billion (or 2 percent) below baseline amounts in 2025 and $1.9 trillion (or 9 percent) below baseline amounts over the 2025–2034 period.
• Nonbase funding in the President’s budget is $95 billion (or 42 percent) less than baseline amounts in 2025 and $2.0 trillion (or 82 percent) less than baseline amounts over the 2025–2034 period.
• Base funding in the President’s budget is $52 billion (or 3 percent) greater than baseline amounts in 2025 and $75 billion (or less than 1 percent) greater over the 2025–2034 period.
• Although the President’s request includes less funding for 2025 than the amount projected in CBO’s baseline, discretionary outlays under the President’s budget would be $34 billion (or 2 percent) larger in that year, CBO estimates. That difference occurs because proposed increases in base funding would translate to increases in outlays more quickly than the proposed decreases in nonbase funding would translate into decreases in outlays. Over the 2025–2034 period, discretionary outlays under the President’s budget would be $878 billion (or 4 percent) less than they are in CBO’s baseline.

As a share of gross domestic product (GDP), discretionary outlays under the President’s proposals would total 4.9 percent in 2034. Defense discretionary outlays would be 2.4 percent of GDP, and nondefense discretionary outlays would be 2.5 percent. Those amounts would be lower than their values in any of the past 50 years and smaller than outlays projected in CBO’s baseline.

Proposals for Discretionary Appropriations in 2025

The President’s budget for 2025 includes base funding of $1.66 trillion, excluding the effects of proposed changes to mandatory programs. That amount is 1 percent greater than was appropriated in 2024 and in 2023. Proposed nonbase funding totals $131 billion, of which $101 billion is designated as an emergency requirement.6 Other nonbase funding, including funding for disaster relief and program integrity initiatives, accounts for the remaining $30 billion of nonbase funding requested for 2025. The total amount of nonbase funding requested for 2025 is 41 percent less than has been appropriated for 2024 and 35 percent less than was appropriated in 2023.

Defense Funding in 2025

The President proposes total discretionary defense funding of $895 billion in 2025, $59 billion (or 6 percent) less than the amount provided for 2024 (see Figure 1). Total defense funding would decrease under the President’s budget because the proposal contains no defense funding designated as an emergency requirement beyond the $20 million already provided under current law for 2025 and 2026. To date, $67 billion of such funding has been provided for 2024 to furnish aid to Ukraine, Israel, and the Indo-Pacific region.

Funding for operation and maintenance (a category that covers day-to-day operations ranging from health care to equipment maintenance) and funding for procurement would fall by $33 billion (or 9 percent) and $26 billion (or 13 percent) respectively (see Table 2). Those decreases are driven by changes to funding designated as an emergency requirement, which is nonbase funding; base funding for operations and maintenance would rise by $11 billion (or 3 percent), and base funding for procurement would fall by $4 billion (or 2 percent). Funding for military personnel would rise by $5 billion (or 3 percent), and funding for research, development, test, and evaluation would fall by $5 billion (or 4 percent) primarily because of changes to base funding. All told, base funding for defense would rise by $9 billion (or 1 percent).

Nondefense Funding in 2025

Under the Administration’s budget, discretionary nondefense funding for 2025 (not including obligation limitations for certain transportation programs) would total $894 billion, $10 billion (or 1 percent) less than the amount provided for 2024. That decrease would be the net result of changes in base funding (an increase of $14 billion), discretionary funding designated as an emergency requirement (a decrease of $25 billion), and other nonbase funding (an increase of $1 billion).

Base Funding. Base nondefense funding in 2025 would rise to $763 billion, 2 percent more than the amount provided for 2024, CBO estimates. The largest total increases under the President’s budget would be $9 billion (or 10 percent) for health programs activities, $6 billion (or 31 percent) for general government programs and activities (including $5 billion for real property activities executed by the General Services Administration, or GSA), and $5 billion for international affairs. A $6 billion reduction in discretionary funding for veterans’ benefits would partially offset those proposed increases.

Including reductions to budget authority resulting from proposed changes to mandatory programs, base nondefense discretionary budget authority under the President’s budget would amount to $719 billion, by CBO’s estimate. That estimate is $8 billion more than the cap on nondefense discretionary funding in section 101 of the FRA.7 OMB—the agency that determines whether sequestration is required—estimates that the President’s request for base nondefense funding complies with that cap.8 CBO’s estimate of such funding is greater than OMB’s, in part because CBO includes in its estimate the $5 billion provided in advance for 2025 by 2024 appropriation acts in its estimate, whereas OMB only counts the amounts the President proposes.9 CBO also estimates that a proposal to allow the GSA to purchase certain properties would require $3 billion more in budget authority in 2025 than OMB estimates.10 Other estimating differences account for small remaining discrepancies.

Nonbase Funding. Nonbase nondefense funding would decrease by $24 billion. Funding designated as an emergency requirement (including funding for 2025 provided in advance by laws enacted before 2024) would drop by $25 billion (or 20 percent) in 2025, from $126 billion provided so far in 2024 to $101 billion, CBO estimates. The largest decline would be a $28 billion reduction in funding for international affairs activities, mostly funding to provide aid to Ukraine, Israel, and countries in the Indo-Pacific region. In addition, emergency funding for community and regional development programs would fall by $17 billion, CBO estimates, driven by less funding for assistance following natural disasters. Furthermore, funding designated as an emergency requirement that was provided in advance by laws enacted before 2024— primarily the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58) and the Bipartisan Safer Communities Act (BSCA; P.L. 117-159)—is set to decrease under current law by $1 billion in 2025, to $69 billion. A $23 billion increase in funding that would typically be categorized as base funding but that would be designated as an emergency requirement in the President’s budget partially offsets those decreases. Nearly half of that $23 billion would be for housing programs.

Funding for other nonbase nondefense categories would increase in 2025 to $30 billion. Such nonbase funding includes certain appropriations for disaster relief, certain program integrity initiatives (which identify and reduce overpayments in some benefit programs), certain wildfire suppression operations, certain funding provided to the Army Corps of Engineers, and programs designated in the 21st Century Cures Act (P.L. 114-255). Although those categories of funding are not constrained by the overall caps on discretionary funding, they are each subject to their own limits.

How Discretionary Spending in the President’s Budget Compares With CBO’s Baseline Projections From 2025 to 2034

Over the 2025–2034 period, both funding and outlays would be less under the President’s budget than they are projected to be in CBO’s baseline. Differences in funding would be split roughly evenly between defense and nondefense: Each would be about $1 trillion less under the President’s budget than they are in the baseline. Reductions in discretionary outlays under the President’s budget would fall more heavily on defense programs and activities mostly because of the effects of unspecified reductions in future funding for nondefense programs and activities discussed below. Outlays for defense programs and activities would be $773 billion less than they are in the baseline whereas nondefense outlays would be $105 billion less.

Total Discretionary Funding

Discretionary funding under the President’s budget in 2025 would be $1.79 trillion, $43 billion less than the amount projected in CBO’s baseline (see Table 3). In 2026 and 2027, appropriations under the President’s budget would decline. After 2027, budget authority would steadily rise, from $1.74 trillion in 2027 to $1.95 trillion in 2034—an amount that is $89 billion more than has been provided for 2024. Proposed changes to nonbase funding (including reductions in IIJA and BSCA funding scheduled to occur under current law) slow the growth in discretionary funding over the 2025–2034 period.

Total Discretionary Outlays

Over the 2025–2034 period, discretionary outlays under the President’s budget would be $878 billion (or 4 percent) less than the amount in the most recent baseline, CBO estimates. The reduction is driven by lower nonbase outlays, offset in part by higher base outlays (see Figure 2). As a percentage of GDP, outlays under the President’s budget would decline in each year of the projection period, from 6.3 percent of GDP in 2025 to 4.9 percent in 2034; in CBO’s baseline, they are projected to fall over that same period from 6.2 percent of GDP to 5.5 percent. Over the past 50 years, total discretionary outlays have averaged 8.0 percent of GDP.

Base Funding and Outlays

Base discretionary budget authority in the President’s budget would be $259 billion greater in 2034 than in 2025, growing at a rate of 1.6 percentage points per year, on average. That rate of increase would be 0.7 percentage points slower than the 2.3 percent average annual growth in base funding in CBO’s baseline. (Funding in the baseline grows with inflation.)

The President’s proposals for base funding would increase total discretionary outlays, relative to baseline amounts, by $468 billion (or 3 percent), even though proposed base funding exceeds amounts projected in CBO’s baseline by much less—$75 billion (or 0.4 percent). That difference arises from how CBO and OMB treat unspecified reductions in budget authority for future years.

Both CBO’s baseline and the President’s budget proposal include unspecified reductions in budget authority for future years in amounts of roughly equal magnitude. In CBO’s baseline, limits specified in the FRA for 2025 are applied, which reduces the amounts projected for subsequent years. The agency’s baseline incorporates the assumption that the reduction would affect funding for all base nondefense discretionary accounts and thus reduce outlays at the average rate for all discretionary accounts, ultimately generating outlay savings roughly equal to the reductions in budget authority.

In contrast, the President’s budget incorporates the assumption that some portion of the reduction in budget authority would not result in reductions in discretionary outlays. That outcome could be achieved by making changes in mandatory programs enacted in appropriation acts or by rescinding funding that was not expected to be fully spent, among other policy options. The Administration’s proposed funding reductions are not specific enough to enable CBO to assess their effects on outlays. Because the budgetary effects are achievable targets for detailed policies that may be proposed in the future, the agency used the Administration’s estimates in this analysis.

Base discretionary outlays under the President’s budget would fall as a share of GDP in each year of the next decade, from 5.9 percent in 2025 to 4.9 percent in 2034, averaging 5.4 percent over the period; in CBO’s baseline, they follow a similar pattern, decreasing from 5.8 percent of GDP in 2025 to 4.9 percent in 2034, and averaging 5.2 percent over the period.

Nonbase Funding and Outlays

Most of the difference between outlays estimated in the President’s budget and those projected in the baseline stems from differences in nonbase funding amounts. In CBO’s baseline projections, nonbase funding (including projections of supplemental appropriations that provided funding for aid to Ukraine, Israel, and countries in the Indo-Pacific region; division J of the IIJA; and division B of the BSCA) rises in each year, from $223 billion in 2024 to $266 billion in 2034. Those projections follow provisions of law that require CBO to project funding for years in which no appropriation exists by adjusting the most recently provided funding for inflation.

By contrast, the President’s budget includes the $223 billion in nonbase funding that has been provided for 2024, followed by reductions in such funding of $91billion in 2025, an additional $39 billion in 2026, and an additional $65 billion in 2027, by CBO’s estimate. From 2027 to 2034, such funding averages $28 billion a year. All told, over the 2025–2034 period, nonbase funding in the President’s proposal would total $447 billion, compared with $2.4 trillion in CBO’s baseline. (Discretionary funding provided by the IIJA and BSCA accounts for $132 billion of the nonbase funding in the President’s proposals; those amounts, and the projected continuation of such funding, account for $713 billion of discretionary funding in CBO’s baseline.)

The smaller amount of nonbase funding in the President’s budget reduces outlays relative to amounts in CBO’s baseline by $1.3 trillion over the 2025–2034 period. Of that reduction, $1.1 trillion results from the effect of projecting funding provided by laws enacted for 2024 (primarily the 2024 supplemental appropriations) through 2034 in CBO’s baseline. Differences in funding provided in advance by laws enacted before 2024 (mainly the IIJA and BSCA) further reduce outlays under the President’s budget compared with CBO’s baseline, by $266 billion. The difference in outlays from those laws is smaller than the difference in their budget authority because much of the funding translates to outlays at a very slow rate.

Defense Spending

Under the President’s budget, base discretionary outlays for defense programs and activities would be about the same as the amount in CBO’s baseline through 2030 and $176 billion (or 4 percent) lower over the following four years. (The supplemental table accompanying this report shows the totals in Table 3 split into the categories of defense and nondefense discretionary spending.)

As a share of GDP, total discretionary outlays for defense programs and activities would decrease under the President’s proposals, from 3.0 percent in 2025 to 2.4 percent in 2034, when they would be 0.4 percentage points lower than the amount in CBO’s baseline in that year. The smallest percentage recorded for defense discretionary outlays as a share of GDP in the past 50 years was 2.9 percent.

Nondefense Spending

Outlays for base nondefense activities under the President’s budget would be $646 billion (or 7 percent) larger over the 2025–2034 period than the amount in CBO’s baseline. Most of the increase comes from the differences in estimates of unspecified reductions in funding discussed above, although base outlays for the Department of Veterans Affairs would be $225 billion larger under the President’s budget. Base outlays for the Department of Homeland Security and the Department of Health and Human Services would be $124 billion smaller, in total, with the difference split roughly equally between the two agencies. Spending for nonbase activities would be $751 billion (or 54 percent) less.

All told, outlays for nondefense discretionary programs and activities as a share of GDP would decline from 3.3 percent in 2025 to 2.5 percent in 2034 and would be 0.2 percentage points lower than the amount in CBO’s baseline in 2034. The smallest percentage recorded for those outlays as a share of GDP in the past 50 years was 3.1 percent. Excluding outlays that result from emergency funding, nondefense discretionary outlays would be slightly higher under the President’s budget than in the baseline, falling from about 3.0 percent in 2024 to 2.5 percent in 2034.

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