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

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. 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.

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. Excluding those effects on mandatory programs, the proposed appropriations for 2025 would total $1.79 trillion. 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.

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.

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.

Originally published at https://www.cbo.gov/publication/60041

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