WASHINGTON — The Trump administration’s fiscal 2021 budget request would add $5.4 trillion more to the cumulative 10-year deficit than the White House originally estimated, according to a Congressional Budget Office analysis released Monday.
That would mean increased deficits during the next decade to roughly $11 trillion, though neither the budget proposal nor CBO’s analysis of the request takes into account the roughly $2.5 trillion in new spending enacted during the last month to address the coronavirus.
That spending 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 to continue bolstering 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 with what has since been appropriated to address the virus.
Specifically, 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%, less in revenue than predicted by the White House, with outlays being $1.3 trillion, or 2.4%, higher.
The five-year deficit, from fiscal 2021 through fiscal 2025, 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% of gross domestic product in 2024, before rising to 4.4% by 2030, according to CBO.
The agency also expects workers will earn less than OMB 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% lower than the Administration estimates. As a consequence of those lower wage projections, 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,” the report states.
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