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  • Writer's pictureThe San Juan Daily Star

How 31 presidential budgets compared with reality

A detailed review of past presidential budgets shows that, for all the seriousness and industry of the professionals who make them, they very rarely align with the trajectory of federal spending, revenue or the deficit.

By Josh Katz, Alicia Parlapiano and Margot Sanger-Katz

President Joe Biden’s budget was released this week, with splashy policy proposals and many, many pages of detailed tables of dollars to be spent. Workers in every corner of the federal government toiled to create this document, which has received extensive attention from Congress and news reporters.

But a detailed review of past presidential budgets shows that, for all the seriousness and industry of the professionals who make them, they very rarely align with the trajectory of federal spending, revenue or the deficit.

You have probably heard of the main reason for this: The president’s budget has no force of law. It’s a request for Congress to follow its instructions, and Congress doesn’t always do the president’s bidding. President Donald Trump didn’t succeed in repealing the Affordable Care Act, though he proposed to do so in his budgets. Biden didn’t pass paid family and medical leave, as he proposed earlier in his term. And presidents’ preferred policies are even less likely to become law when their party doesn’t control both houses of Congress — the situation now, but not in the year Trump wanted to repeal the ACA or when Biden wanted to expand paid leave.

But the president’s budget is often not predictive for another reason: Unexpected, cataclysmic events change the trajectory of federal spending far more than shifts in any line item in a budget table. The Sept. 11 attacks, the Great Recession and the coronavirus pandemic radically reshaped the path of spending, revenue and deficits in ways no presidential budget could have foreseen.

“The economy is much more powerful than the budget,” said Richard Kogan, a veteran budget staffer who is now a senior fellow at the left-leaning Center on Budget and Policy Priorities. We examine the proposed budgets and fiscal realities from the last 30 years.

Bill Clinton

Aided by stability and cooperation

Clinton’s budgets matched actual spending and revenue far more than those of the presidents who followed him. He benefited from a stable, growing economy as the internet took off. The major source of error in his budgets was faster-than-expected economic growth that led to high tax revenue. He had policy ideas that never became law because of disagreements with a Republican-led House. But he also cooperated with Republicans to trim government spending and reduce the deficit, changes that were partly reflected in his budgets.

“We did not have any unexpected catastrophes,” said Elaine Kamarck, a senior fellow at the Brookings Institution, who was a top policy aide for former Vice President Al Gore’s 2000 presidential campaign. “Those years were very lucky.”

Of course, the last Clinton budgets didn’t predict the recession that would come after he left office.

George W. Bush

Derailed by recession and war

Bush arrived with a large government surplus, and he wanted to return that money to taxpayers. The large tax cut he proposed was passed. But his first budget couldn’t have anticipated a recession, the Sept. 11 attacks and the accompanying military buildup. The creation of the Department of Homeland Security, and the wars in Afghanistan and Iraq, drove federal spending significantly above budgeted levels, and an economic slowdown depressed tax revenue.

Bush’s budgets also did not foresee the financial crisis that started in 2007 or the Great Recession that followed.

Barack Obama

Hampered by miscalculations

Obama’s budgets were wrong about how long the Great Recession would depress tax revenue — and his early budgets incorrectly assumed that Congress would allow the Bush tax cuts to expire after 10 years, as they were designed to do.

But his budgets also overestimated how much the government would spend, an error that cut in the opposite direction. A chief source of those miscalculations was a sustained slowdown in health care spending growth that economists still struggle to explain. Another was the Budget Control Act, a bipartisan bill that reduced federal spending across the government that Obama had not proposed.

Donald Trump

Hit by slower growth and a pandemic

Trump’s first budget missed big. It assumed outsize economic growth that did not materialize. It called for the repeal of the Affordable Care Act and major cuts to Medicaid that Congress rejected. And it estimated that a large tax cut proposal would pay for itself. Estimates from the Congressional Budget Office suggested the tax bill Congress passed in 2017 would increase the deficit by $1.9 trillion.

But that was dwarfed by the effect of the pandemic. Multiple COVID relief bills expanded public health resources and provided financial assistance to individuals and states. Those dollars helped stave off economic catastrophe. They also caused a huge increase in the federal deficit.

Joe Biden

Helped, somewhat, by Democratic control

Biden didn’t get everything he asked for in his early budgets, but he benefited from unified Democratic control of government in his first two years while passing many programs. Those that didn’t pass included proposed taxes and spending, which have somewhat balanced out in their deficit effect.

But it’s too soon to tell how well his budgets will hold up over time. This year’s proposal includes many things that the Republican House will not embrace. And his calculations assume that Trump’s tax cuts will expire in 2027, which conflicts with his promise not to raise taxes on Americans earning less than $400,000.

There could always be a hard-to-predict economic shock. His budget office is not planning for a big recession, despite continued actions by the Federal Reserve that make some economists warn of a slowdown. An avian influenza epidemic or a military conflict could all throw off his projections by even more.

Overall, unexpected economic changes have tended to make deficits larger than expected, and caused federal debt to grow.

Why the Budgets Still Matter

The various ways a presidential budget can be wrong might make you think they’re not worth publishing or discussing. But even inaccurate budgets are still a key to governance. Underneath the big new policy proposals are detailed requests from agencies for every program they operate. When it comes time for Congress to set spending levels, appropriators rely heavily on those numbers.

“It’s true that there’s a lot of sturm und drang associated with the president’s budget,” said G. William Hoagland, a former Senate Budget director who is now a senior vice president at the Bipartisan Policy Center. “But in the basic work that has to get done every year for government funding, those budgets are critical.”

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