An Analysis of Spending Proposals in the President’s 2027 Budget

Each year, the Administration submits a budget request to the Congress, and the Congressional Budget Office estimates the budgetary effects of the proposals in that request using its own economic forecast and estimating assumptions. CBO’s estimate allows the Congress to compare the Administration’s proposals with CBO’s current-law spending and revenue projections using a consistent set of economic and technical assumptions.

On April 3, 2026, the Administration submitted its budget request to the Congress for fiscal year 2027.1 The request included proposals that would affect mandatory and discretionary spending but did not include proposals that would affect revenues.2 In addition, the budget request did not contain any calculations of summary measures, such as budget deficits or federal debt. As a result, this analysis focuses only on CBO’s estimates of how the President’s proposals would affect mandatory and discretionary spending in 2027 and the succeeding nine years.

On net, the proposals in the President’s budget would have the following effects on federal spending over the 2027–2036 period:

• Increase mandatory outlays by a total of $351 billion, primarily for defense programs and activities;
• Increase discretionary outlays for defense by a total of $2.4 trillion; and
• Reduce discretionary outlays for nondefense programs by a total of $2.6 trillion.

In conjunction with analyzing the President’s budget, CBO updated its projections of mandatory and discretionary spending under current law to account for legislation enacted since it completed its most recent full set of baseline budget projections, which were published in February 2026.3 CBO also made small technical adjustments (revisions that do not stem from new laws or changes in its economic forecast) to its projections of discretionary spending over the 2027–2036 period. The effects of the spending proposals contained in the President’s budget are measured in relation to CBO’s updated projections, which reflect the assumption that current laws governing federal spending will generally remain in place. (CBO’s updated spending projections are discussed at the end of this report.)

Proposals That Would Affect Mandatory Spending

The proposals in the President’s budget request would increase mandatory outlays by $351 billion (or less than 1 percent) over the next 10 years measured in relation to the amounts in CBO’s updated spending projections, CBO estimates (see Table 1). In most cases, CBO used its own estimates of the cost of those proposals rather than the Administration’s estimates. However, proposals involving the Maritime Security Trust Fund and the Federal Capital Revolving Fund were not detailed enough for CBO to develop its own estimates. For those proposals, CBO used the Office of Management and Budget’s estimates after determining that they represented achievable budgetary outcomes.

The President’s budget request includes proposals that would do the following:

• Provide $350 billion in mandatory funding for the Department of Defense through the reconciliation process, mainly to enhance the defense industrial base and develop next-generation technology, particularly for drones and artificial intelligence infrastructure.4 That funding would result in $335 billion in mandatory outlays over the 2027–2036 period, CBO estimates. (Funding translates to outlays when the money authorized or appropriated by lawmakers is spent.)
• Reauthorize the Legacy Restoration Fund, which pays for deferred maintenance on utility systems, roads, buildings, and other infrastructure on federal lands. Reauthorizing the fund would increase mandatory outlays by a total of $11 billion through 2036, CBO estimates.
• Provide $10 billion in mandatory funding for a new Presidential Capital Stewardship Program, which would pay for construction, beautification, or rehabilitation projects in Washington, D.C. CBO expects that nearly all of that funding would be spent by 2032.
• Provide $10 billion in mandatory funding for a new Federal Capital Revolving Fund, which would provide funds to federal agencies for large capital projects, such as real estate purchases. CBO estimates that spending from the revolving fund would increase mandatory outlays through 2031 by $10 billion.
• Eliminate the Prevention and Public Health Fund, which was created in 2010 to support activities intended to prevent disease and reduce health care costs. Eliminating the fund would decrease mandatory outlays by $14 billion through 2036, CBO estimates.

If those and other proposals were enacted as outlined in the President’s budget request, total mandatory outlays would average 14.7 percent of the nation’s gross domestic product (GDP) over the 2027–2036 period, CBO estimates. That figure is slightly higher than the 14.6 percent of GDP that mandatory outlays are projected to average during that period in CBO’s updated spending projections.

Proposals That Would Affect Discretionary Spending

The President has requested a total of $1.85 trillion in discretionary appropriations for 2027. That amount includes $29 billion in net reductions from proposed changes to mandatory budget authority that would be enacted in annual appropriation acts.5 With those changes excluded, proposed discretionary appropriations for 2027 total $1.87 trillion—an increase of $115 billion (or 7 percent) from the amount that has been appropriated so far for 2026 (see Table 2). (Amounts of discretionary budget authority and outlays in the rest of this section exclude the effects of changes to mandatory funding.)

Under the President’s budget, base discretionary funding for 2027 would equal $1.86 trillion.6 That amount is 12 percent greater than has been appropriated for 2026. Proposed nonbase discretionary funding—which includes appropriations for disaster relief, funding for program integrity initiatives, and appropriations designated as an emergency requirement—totals $14 billion, a reduction of $89 billion (or 86 percent) from the amount appropriated so far for 2026.7

Proposed Appropriations for 2027

The President’s budget request includes the following broad funding policies for discretionary programs:

• Increase discretionary funding for defense to $1.15 trillion for 2027 (see Figure 1). That amount would exceed the defense discretionary funding provided so far this year by $251 billion (or 28 percent). Most of that increase would result from greater funding for procurement (up by $94 billion); research, development, test, and evaluation (up by $75 billion); and operation and maintenance (up by $48 billion). The President has not proposed any defense funding designated as an emergency requirement.

  Figure 1.

  Discretionary Budget Authority for 2027 Proposed in the President’s Budget

  Billions of dollars

  

  Total discretionary funding for 2027 under the President’s budget would be greater than the funding enacted so far for 2026. Reductions in discretionary funding for nondefense programs in 2027 would partly offset increases in discretionary funding for defense programs.

  Notes

  Data source: Congressional Budget Office. See www.cbo.gov/publication/62385#data.

  Estimates do not include enacted or proposed changes to certain mandatory programs that occur through the appropriation process. In keeping with long-standing procedures, those changes are credited against discretionary spending for purposes of budget enforcement.

  a. Consists of discretionary appropriations that would be constrained by statutory limits in years when such limits are in place.

Under the President’s proposal, total funding for defense—including both discretionary and mandatory resources—would increase by $599 billion (or 66 percent) for 2027.8 In addition to the boost in defense discretionary funding, mandatory funding for defense would increase under the President’s budget by $348 billion in 2027 (measured in relation to the amounts provided so far for 2026). Much of the additional mandatory funding would be for programs and activities typically funded through the annual appropriation process. Taken together, total defense funding for 2027 would equal $1.5 trillion under the President’s budget—more than the previous high of $1.1 trillion in combined funding provided for 2025 by annual appropriation acts and the 2025 reconciliation act (which also provided mandatory funding for defense programs and activities that would normally be funded through the appropriation process). The total amount of defense funding proposed for 2027 is much greater than the amounts requested in the President’s budget for later years (see Figure 2).

• Reduce nondefense discretionary funding (not including obligation limitations for certain transportation programs) to $721 billion for 2027. That amount would be $136 billion (or 16 percent) less than the funding provided so far this year. Base funding would fall by $47 billion, largely because of proposed reductions in funding for international affairs (down by $15 billion); community and regional development (down by $12 billion); general science, space, and technology (down by $11 billion); and natural resources and the environment (down by $11 billion). Those decreases would be partly offset by proposed increases in discretionary funding for veterans’ benefits (up by $14 billion) and the administration of justice (up by $13 billion).9
• Reduce discretionary funding for 2027 designated as an emergency requirement (which is considered nonbase funding) by $89 billion. Nearly all of that reduction stems from a decrease in the amount of advance emergency appropriations provided by the Infrastructure Investment and Jobs Act (IIJA, Public Law 117-58). Including later changes to the original legislation, that law provided emergency-designated funding for the 2022–2026 period (including $64 billion for 2026). The President proposes to rescind $20 billion in funding from that law in 2027.
• Hold all other nonbase discretionary funding fairly stable. Under the President’s proposals, that funding would increase by just $22 million for 2027.

Proposed Appropriations for 2027 to 2036

Under the President’s budget, total discretionary appropriations would range from $1.93 trillion per year to $1.99 trillion per year over the 2028–2036 period. Discretionary funding for defense would increase by 11 percent in 2028, to $1.3 trillion; continue growing after that; and then stabilize at $1.4 trillion per year from 2031 to 2036. Nondefense discretionary funding would decline by 6 percent in 2028, to $674 billion, and then decrease by 2 percent per year from 2029 to 2036, when such funding would amount to $575 billion.

Taken together, defense and nondefense discretionary outlays under the President’s proposals would total $130 billion (or 1 percent) less over the next decade than the amounts in CBO’s updated current-law spending projections (see Figure 3). Under the President’s proposals, discretionary outlays would shrink as a share of GDP in each year of the next decade, from 5.9 percent of GDP in 2027 to 4.3 percent in 2036. In CBO’s updated spending projections, by comparison, discretionary outlays decline from 5.6 percent of GDP in 2027 to 4.8 percent in 2036.10 (Over the past 50 years, discretionary outlays averaged 7.8 percent of GDP.)

Increases in defense spending under the President’s budget would be more than offset by reductions in non­defense spending. Over the 2027–2036 period, outlays for defense programs and activities would exceed the amounts in CBO’s updated spending projections by a total of $2.4 trillion (or 24 percent), whereas discretionary outlays for nondefense programs and activities would be less than CBO projects by a total of $2.6 trillion (or 25 percent).

As a share of GDP, discretionary outlays for defense would initially rise under the President’s proposals, from 3.0 percent in 2027 to 3.4 percent in 2030, and then fall to 2.8 percent in 2036.11 In CBO’s current-law spending projections, by comparison, defense outlays are estimated to decline to 2.4 percent of GDP in 2036. (The smallest percentage of GDP recorded for defense outlays since 1962, the earliest year for which such data are available, is 2.9 percent, which occurred most recently in 2025.)

Outlays for nondefense discretionary programs would decline more sharply as a share of GDP under the President’s budget than they do in CBO’s updated spending projections. Such outlays would fall from 2.9 percent of GDP in 2027 to 1.4 percent in 2036 under the President’s budget, far less than the 2.4 percent of GDP in 2036 that CBO projects under current law. (From 1962 to 2025, nondefense discretionary outlays never fell below 3.1 percent of GDP.)

Comparison of CBO’s and the Administration’s Estimates of Noninterest Spending

Typically, CBO’s analysis of the President’s budget request includes a comparison of CBO’s and the Administration’s estimates of deficits under the President’s proposals. Because this year’s budget request did not include revenue proposals and the summary tables did not include deficits, the current comparison is limited to federal spending, excluding interest payments on federal debt.

CBO’s estimate of total noninterest outlays over the 2027–2036 period under the President’s budget is $3.2 trillion less than the Administration’s estimate (see Table 3). Almost all of that difference, $3.1 trillion, stems from differences in projections of mandatory outlays. In particular, CBO estimates that over the 2027–2036 period, outlays for Medicare would be $1.5 trillion less than the Administration estimates, outlays for Medicaid would be $0.7 trillion less, and outlays for veterans’ compensation and pensions would be $0.5 trillion less. Those differences result largely from differences between CBO’s and the Administration’s underlying baseline projections of the number of beneficiaries each program would have and the amount of benefits they would receive.

CBO’s estimate of discretionary outlays over the 2027–2036 period under the President’s budget is $0.1 trillion less than the Administration’s estimate, mostly because of differing expectations about how quickly budget authority would be spent. Defense outlays account for about two-thirds of the difference between CBO’s and the Administration’s estimates of discretionary outlays.

CBO’s Updated Spending Projections

When CBO completed the baseline budget projections it published in February 2026, most federal agencies were operating under a continuing resolution that provided funding for only part of the fiscal year. For this analysis, CBO updated its spending projections to incorporate the effects of legislation that passed both Houses of Congress after January 14, 2026, and was enacted into law by June 10. Such legislation included laws providing full-year funding for all federal agencies that had been operating under the continuing resolution. It also included the 2026 reconciliation act (P.L. 119-98), which provided $70 billion in funding to Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE) for border security operations and immigration enforcement activities. In addition, CBO made technical adjustments to its projections of discretionary spending and revised its estimates of mandatory outlays in 2026 to incorporate credit subsidy reestimates for this year that were included in the President’s budget.12

The spending projections presented in this report are based on the agency’s February 2026 economic forecast. That forecast reflects CBO’s most recent demographic projections, which are based on laws and policies in place as of September 30, 2025; trade policy as of November 20, 2025; and economic developments and laws in place as of December 3, 2025.

Mandatory Spending

The Balanced Budget and Emergency Deficit Control Act of 1985 requires CBO to construct baseline projections for most existing mandatory spending under the assumption that current laws will generally remain in place.13 In CBO’s updated spending projections, mandatory outlays (net of offsetting receipts) total $4.5 trillion in 2026, or 14.1 percent of GDP.14 Those outlays grow by an average of 4.6 percent a year over the next decade, reaching $7.0 trillion in 2036. Measured in relation to the size of the economy, annual mandatory outlays average 14.3 percent of GDP through 2031 and then rise each year, reaching 15.0 percent in 2036. (Those numbers and the other projections discussed in the rest of this report have been adjusted to exclude the effects of shifts in the timing of payments between fiscal years.)15

Much of the projected growth in mandatory spending after 2026 is attributable to two factors: an increase in the number of people age 65 or older and growth in federal health care costs. Those factors put upward pressure on mandatory spending, particularly for Social Security and Medicare, whose combined outlays would increase from 8.7 percent of GDP in 2027 to 10.1 percent in 2036 under current law, CBO projects. The effects of those two factors on federal spending are expected to continue beyond the next decade.

Mandatory outlays for programs other than Social Security and Medicare are projected to decline from a total of 5.7 percent of GDP in 2027 to 4.9 percent in 2036 under current law. That decrease largely results from four factors:

• Mandatory outlays for defense, homeland security, and other activities that stem from funding that was provided in the 2025 reconciliation act (P.L. 119-21) are expected to wane.
• Other provisions in the 2025 reconciliation act will restrain the growth of outlays, particularly for Medicaid and the Supplemental Nutrition Assistance Program.
• Mandatory outlays for border security operations and immigration enforcement activities stemming from funding provided to CBP and ICE in the 2026 reconciliation act peak in 2029 and decline in subsequent years.
• In many benefit programs, benefit amounts are adjusted for inflation each year. CBO projects that the growth of nominal GDP will outpace inflation, reducing benefits as a percentage of GDP.

Discretionary Spending

Section 257 of the Deficit Control Act requires CBO to project that funding for discretionary programs will grow each year at the rate of inflation. Some funding, such as for salaries and expenses for federal employees, is spent quickly. Other funding, such as for construction contracts, can be spent over several years. CBO estimates how quickly funding will translate into outlays by looking at how long money is available for obligation by federal agencies and at historical patterns of related spending. In any year, some discretionary outlays result from budget authority provided in the same year, and some result from appropriations made in previous years.

In CBO’s updated spending projections, discretionary budget authority for 2026 totals $1.8 trillion. That funding is projected to continue in future years with adjustments for inflation. As a result, total discretionary budget authority grows at an average rate of 2.3 percent a year from 2026 to 2036 in CBO’s projections.

Discretionary outlays total $1.9 trillion in 2026 in CBO’s updated projections and then increase by an average of 1.8 percent per year over the next decade, rising to $2.2 trillion in 2036. Measured in relation to the size of the economy, discretionary outlays total 5.9 percent of GDP in 2026, the lowest percentage since 1962. Because GDP grows faster than inflation in CBO’s February 2026 economic forecast, discretionary outlays decline as a share of GDP, falling to 4.8 percent in 2036.

Discretionary outlays for defense equal 2.8 percent of GDP in 2026 in CBO’s updated projections, and nondefense discretionary outlays equal 3.0 percent of GDP. Those percentages would be the smallest recorded since 1962. Both defense and nondefense discretionary outlays are projected to decline over the next decade to 2.4 percent of GDP in 2036.

Changes in CBO’s Spending Projections Since February 2026

On the basis of laws in place as of June 10, 2026, CBO estimates that noninterest outlays in 2026 will total $6.4 trillion—a decrease of $37 billion (or less than 1 percent) from the amount CBO projected in February (see Table 4). Since then, CBO has also reduced its projections of noninterest outlays over the 2027–2036 period by a total of $58 billion (or less than 1 percent). Those differences from the February baseline reflect new laws and technical changes to projections of discretionary spending. Technical updates to projections of mandatory spending were more limited, accounting only for the Administration’s reestimates of subsidies for federal credit programs.

CBO has decreased its projection of mandatory outlays in 2026 by $26 billion. Reductions by the Office of Management and Budget in the recorded subsidy costs of direct and guaranteed loans made by the federal government in past years reduced outlays by $38 billion. The largest of those changes (which are classified as technical changes to CBO’s projections) was a downward reestimate for federal student loans. Laws enacted since CBO completed its February baseline have increased projected mandatory outlays by $12 billion for 2026 and by $48 billion over the 2027–2036 period.

Incorporating the effects of recent laws that provide full-year funding for all federal agencies has increased discretionary outlays by $11 billion for 2026 and decreased them by $86 billion over the 2027–2036 period. That reduction is the net result of a projected $95 billion increase in defense discretionary outlays over the 10-year period and a $181 billion decrease in non­defense discretionary outlays. The largest reduction in nondefense discretionary spending resulted from the Homeland Security and Further Additional Continuing Appropriations Act, 2026 (P.L. 119-86), which did not include full-year funding for ICE or for border security operations by CBP. In keeping with the rules that govern CBO’s current-law projections of discretionary spending, the lack of such funding continues throughout the 10-year projection period. (As discussed above, $70 billion in funding for those purposes was provided in the 2026 reconciliation act and therefore is recorded as mandatory spending in CBO’s updated projections.)

In addition to new laws, technical changes since February have reduced CBO’s projections of discretionary outlays by $21 billion (or less than 1 percent) for 2026 and by a total of $20 billion (or less than 1 percent) over the following decade. The biggest technical changes to projections of discretionary outlays in 2026 were reductions in outlays for international development and humanitarian assistance, because outlays from prior-year appropriations are now expected to be smaller than previously projected. For the 2027–2036 period, the biggest reduction was in outlays for agriculture programs, because a greater percentage of outlays stemming from funding that is designated as an emergency requirement is now projected to go unspent.

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1. 1. This analysis does not include the budgetary effects of the amendments to the proposed budget that the Administration submitted to the Congress on June 17, 2026.

2. 2. Discretionary spending, which covers a broad array of government activities, is controlled by appropriation acts in which lawmakers specify how much money can be obligated for certain programs in specific years. Mandatory spending (also called direct spending) is generally governed by eligibility criteria and payment formulas in authorization acts rather than in appropriation acts. Mandatory spending consists mainly of payments for benefit programs, such as Social Security, Medicare, and Medicaid, as well as certain other payments to people, businesses, nonprofit institutions, and state and local governments.

3. 3. Congressional Budget Office, The Budget and Economic Outlook: 2026 to 2036 (February 2026), www.cbo.gov/publication/61882.

4. 4. Funding for defense programs and activities is typically provided through the annual appropriation process. The mandatory amounts proposed in the President’s budget would be in addition to the proposed defense discretionary spending discussed below. Other mandatory spending proposals related to defense would boost funding by $3 billion in 2027 and by a total of $17 billion through 2036.

5. 5. In keeping with long-standing procedures, proposed changes to certain mandatory programs that occur through the appropriation process are credited against discretionary spending for purposes of budget enforcement.

6. 6. The President’s budget distinguishes between base funding and nonbase funding. Base funding refers to discretionary appropriations that would be constrained by statutory limits in years when such limits are in place; it excludes certain types of funding that are specifically exempt from such constraints.

7. 7. Program integrity initiatives are activities to identify and reduce improper payments in benefit programs, such as the Children’s Health Insurance Program, Disability Insurance, Medicaid, Medicare, Supplemental Security Income, and unemployment compensation.

8. 8. The amounts in this paragraph exclude funding related to certain retirement and disability payments and mandatory offsetting receipts.

9. 9. In June 2026, lawmakers provided $70 billion in mandatory funding to Customs and Border Protection and Immigration and Customs Enforcement for border security operations and immigration enforcement activities through the reconciliation process. Those activities, which are classified in the budget as the administration of justice, are usually funded through the annual appropriation process.

10. 10. In accordance with section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985, in CBO’s current-law spending projections, discretionary funding related to federal personnel is adjusted for inflation using the employment cost index for wages and salaries of workers in private industry; other discretionary funding is adjusted using the GDP price index.

11. 11. The President’s proposal to provide additional mandatory defense funding through the reconciliation process for programs and activities typically funded through the annual appropriation process would increase total outlays for defense by 0.3 percent of GDP in both 2028 and 2029 and by smaller amounts from 2030 to 2036.

12. 12. A credit subsidy reestimate is a change in the estimated cost of an outstanding group of loans that results from changes in projections of the loans’ future cash flows. The effects of those reestimates are classified as technical changes to CBO’s projections.

13. 13. Each year, some mandatory programs are modified by provisions in annual appropriation acts. Such changes may increase or decrease spending for the affected programs for one or more years. In addition, some mandatory programs (such as Medicaid, the Supplemental Nutrition Assistance Program, and veterans’ disability compensation and pensions) are considered mandatory but require benefits to be paid from amounts provided in appropriation acts.

14. 14. Offsetting receipts are funds that federal agencies receive from the public or from other agencies that generally result from voluntary or businesslike activities that do not involve the sovereign power of the federal government. They are shown in the budget as reductions in spending. The largest source of offsetting receipts is premiums paid by Medicare enrollees.

15. 15. When October 1—the first day of a fiscal year—falls on a weekend, certain payments that are due on that date are made at the end of September instead and thus are recorded in the previous fiscal year. CBO estimates that in the next decade, $118 billion in mandatory outlays will shift from 2029 into 2028, $160 billion will shift from 2034 into 2033, and $172 billion will shift from 2035 into 2034.