President Biden’s budget was released this week with a myriad of policy proposals and detailed tables outlining the proposed expenditure. Given the seriousness and industry of the professionals who create them, one might expect that presidential budgets accurately reflect the trajectory of federal spending, revenue, and the deficit. However, a detailed review of past presidential budgets shows that they rarely align with actual spending. The reason is straightforward: presidential budgets have no legal force, and they merely serve as a request for Congress to follow instructions. Congress does not always do the president’s bidding, particularly when the party in power does not control both houses of Congress.
Furthermore, unexpected, catastrophic events can significantly alter the path of federal spending more than any shift in a line item in a budget table. The September 11 attacks, the Great Recession, and the COVID-19 pandemic all drastically reshaped spending, revenue, and deficits in ways no presidential budget could have predicted. “The economy is much more powerful than the budget,” said Richard Kogan, a veteran congressional and White House budget staffer who is now a senior fellow at the left-leaning Center on Budget and Policy Priorities.
Looking back at the past 30 years, President Clinton’s budgets matched the actual spending and revenue more than those of the presidents who followed him, owing to a stable, growing economy as the internet took off. Clinton’s budgets also cooperated with Republicans to trim government spending and reduce the deficit. However, President Bush’s first budget could not have anticipated the economic recession and the September 11 attacks, which led to significant government expenditure on the Department of Homeland Security and the wars in Afghanistan and Iraq, above and beyond what was budgeted.
President Obama’s budgets incorrectly estimated how long the Great Recession would depress tax revenue and overestimated how much the government would spend. President Trump’s first budget called for the repeal of the Affordable Care Act and major cuts to Medicaid, which Congress rejected, and overestimated economic growth. Still, its effect on the deficit was dwarfed by the impact of the COVID-19 pandemic, which has caused a significant increase in the federal deficit.
President Biden’s early budgets did not get everything he requested, but he benefited from unified Democratic control of government in his first two years, passing many programs. This year’s proposal includes many things that the Republican House may not embrace, and his calculations assume that Mr. Trump’s tax cuts will expire in 2027, which conflicts with his promise not to raise taxes on Americans earning more than $400,000. While unforeseeable economic shocks such as an avian influenza epidemic or a military conflict could change his projections, his budget office, at present, is not planning for a significant recession, despite continued actions by the Federal Reserve that make some economists warn of a slowdown.
Undoubtedly, presidential budgets have their shortcomings, but they remain a key component of governance. Beneath the big new policy proposals are detailed requests from agencies for every program they operate. Those numbers serve as the source of information that appropriators rely upon when it comes time for Congress to set spending levels. Budgets are also crucial because they tell us about a president’s goals and values. Campaign promises tend to be vague and ambiguous, but budget proposals are specific, measurable, and written down.
In conclusion, while presidential budgets are not always predictive of future spending, they play a crucial role in governing. They assist members of Congress in setting spending levels and establishing a framework for policy goals and values. Even if unforeseeable events alter the trajectory of federal spending significantly, presidential budgets remain an essential tool for policymakers.