The President’s Nano-Budget
Budgets reveal a lot...sometimes, more so, when they reveal very little
Under 31 U.S. Code Section 1105, the president must submit a budget for all spending and taxes to Congress by the first Monday in February each year, while another law requires a ten-year accounting for many budget items. On April 3, the Executive Office of the President and the Office of Management and Budget responded to this requirement by submitting a nano-budget or budget-lite.
The purpose of a government budget is to reflect the preferences of the nation or, at least, its elected officials, within the unavoidable constraints imposed by limited resources and the requirement to pay for expenditures in one way or another. The President’s budget is by far the most incomplete and misleading submission since Code Section 1105 modernized budget reporting laws in 1982 to give the nation a clearer understanding of its financial direction and the new policies supported by the President.
That incompleteness was intentional, serving to conceal problems and the consequences of the unsustainable budget we already have. A budget lite omits the numbers, assumptions, and distribution details that enable evaluation. Like the attack on the scientific method, it removes the evidence that can help increase knowledge and improve results. As Concord Action* (info@concordaction.org) states: “When the White House delivers only partial proposals, lawmakers and the public lack the comprehensive framework needed to make informed trade-offs between competing priorities, or to even know if the president’s proposal would reduce the debt, raise the debt, or keep the budget on its unsustainable path.”
Government by executive whim, of course, is inherently incompatible with detailed planning, programming, and budgeting. It also neglects the authority granted by the Constitution to Congress.
The budget document offers no ten-year accounting and provides very limited data on the three-quarters of spending that is mandated and doesn’t require annual appropriations. As I have previously mentioned, presenting a ten-year budget plan would force the president to identify who will pay higher taxes or lose benefits to cover the shortfall in Social Security and Medicare revenues needed to maintain current retirees' benefit levels within a few years. Rest assured, you will not see a ten-year budget submission during this presidential term as long as the president keeps his promise not to touch Social Security. Let someone else, this Administration implies, address who will be the losers from dealing with a set of unsustainable promises for rapidly increasing spending with no matching revenues.
As identified by the Committee for a Responsible Federal Budget (CRFB),* the document wishes away enormous amounts of additional borrowing necessary to cover the significant and growing gap between outlays and revenues. It achieves this by assuming a substantial increase in revenue due to an unusually high rate of economic growth. CRFB’s estimates show debt as a percent of GDP rising from 100 percent in 2025 to about 125 percent in 2036 under the president’s budget. It also shows little change resulting from the combination of proposals in that budget. However, with the very optimistic economic assumptions, debt could fall to about 94 percent in 2036.
While the President’s budget assumes an average real GDP growth rate of 3.0 percent, there has been only one year since 2005 when it was higher, and that was during the COVID-19 recovery, with only one other year reaching 3.0 percent.
The budget proposes a significant boost in defense spending. Still, it largely overlooks the effects of the ongoing global arms race and the intentional weakening of institutions like NATO and the Voice of America, which supported the Pax Americana established after World War II. The president now turns to them to support his Iranian strategy. The budget also presumes that further cuts in non-defense discretionary spending as a share of GDP—the part of the budget that has already been decreasing over the past few decades—can fund a substantial share of the defense increases.
Meanwhile, the initial release of the budget includes fact sheets to justify proposed cuts and increases, heavily using language associated with cultural warfare, with terms like “weaponized” and “woke” to justify proposed cuts in domestic programs, “drifting crime epidemic,” “invasion,” and “dangerous” to justify aggressive rounding up both undocumented and sometimes documented immigrants, and “dominance” to promote mineral production and “scam” for efforts to develop alternative energy sources.
Now, let’s be clear: many games have always been played within these budgets. Past presidents and political appointees often proposed poorly designed plans and sometimes exaggerated the extent of extraordinary growth that would result if Congress agreed to the President’s agenda. However, OMB has long been one of the most professional agencies, providing honest and unbiased numbers, even when those numbers are made consistent with politically motivated assumptions.
That’s a tough job. Politicians often get frustrated and upset when told that their figures behind their promises and guesses don’t add up. Many political appointees don’t appreciate a civil servant informing them about the costs and unforeseen effects of the actions they support. Still, that exchange with honest and straightforward budget offices has been one of the great, underappreciated strengths of our federal government.
By providing a budget-lite, the Administration does not force OMB to lie with the numbers. It simply prevents it from sharing most of what it knows. At some point, I’ll try to explain how this weakening of budget, economic, and tax offices across the Executive Branch—a process in motion for quite a while—has become a major obstacle to effectively reforming almost anything.
I know, I know. Good budget policy-making is boring. But I wonder how long some people will continue to think that cultural and foreign war-making is more fun.
He’s asking for battleships in a drone world. Wall Street is getting the deregulation it wants. That’s the only explanation I can see for tolerating this craziness. Keep up the good work Gene.