The Trump administration’s fiscal 2021 budget request would result in $5.4 trillion larger deficits over the next decade than the White House originally estimated, according to a Congressional Budget Office analysis released Monday.
The president’s budget would still cut deficits by $2.1 trillion over 10 years compared to the CBO’s “baseline” forecast, or what would occur if Trump’s spending cuts and other proposals aren’t enacted. But Trump’s policies would mean deficits during the next decade totaling roughly $11 trillion, the agency said, or nearly double what the White House budget office estimated in February.
Neither the budget proposal nor the CBO’s analysis of the request takes into account the roughly $2.5 trillion in new spending and tax cuts enacted during the last month to address the coronavirus.
That legislation will add substantially to the deficit, although no CBO score is available yet. The new laws are designed to provide financial assistance to the health care sector to aid workers struggling to absorb the spike in patients with COVID-19. The packages also includes expanded food aid, free testing, small business loans, expanded unemployment insurance and direct payments to Americans.
Members of Congress are already working on a fourth bill in an effort to reduce economic fallout from the virus and continue to bolster a health care sector struggling to keep up with a wave of patients. That too will add to the deficit.
The White House budget request was released in early February, shortly after congressional briefings on the virus began and two weeks before the Trump administration submitted a $1.25 billion supplemental spending request to Congress — a drop in the bucket compared to what has since been appropriated to address the virus.
Specifically, the CBO and the Joint Committee on Taxation estimate in their report that during the 10-year window there would be $4.1 trillion, or 8 percent, less in revenue than predicted by the White House, with outlays being $1.3 trillion, or 2.4 percent, higher.
The five-year deficit, from fiscal 2021 through fiscal 2025, the CBO said, would be $1.1 trillion more than the Office of Management and Budget anticipated in its request.
“After 2025, CBO projects much larger deficits under the President’s proposals primarily because of the increasingly large gap in revenue projections. As a result, CBO projects a cumulative deficit from 2026 to 2030 that is $4.3 trillion larger than the Administration’s estimate,” the report says.
If Congress fully accepts and enacts legislation in line with the budget request — a highly unlikely scenario — the deficit would fall to 3.5 percent of gross domestic product in 2024, before rising to 4.4 percent by 2030, according to the CBO.
The CBO also expects workers will earn less than the Office of Management and Budget estimated in the budget request — a situation that could become much worse as a result of the global pandemic. OMB declined to comment on the CBO report.
“In particular, CBO and JCT estimate that total wages and salaries between 2021 and 2030 would be 9 percent lower than the Administration estimates. As a consequence of those lower wage projections, the CBO and JCT project revenues from individual income and payroll taxes that are lower by $3.4 trillion over the 2021–2030 period than the Administration anticipates,” according to the report.