I’ve been critical of Trump’s record on government spending, particularly with regards to entitlements.
But perhaps he’ll be better in his second term and there is a positive sign in his just-released budget for discretionary spending.
Based on reactions from the media, I should be happy.
Here’s the headline from the New York Times.
Here’s the headline from Reuters.
Here’s the headline from CNN.
Sounds like great news, right?
But I’m usually skeptical of the media’s ability to properly report on fiscal issues, particularly since most of Washington uses the phony definition of a spending cut (not increasing spending as fast as previously planned).
So here’s a chart I prepared based on CBO’s data showing domestic discretionary spending from 1980-2025 and you can see how outlays dramatically jumped during the COVID pandemic.
I then added a yellow line showing what would have happened if spending stayed on the pre-pandemic path.
Last but not least, I added a little yellow dot showing spending for 2026 if Trump actually cuts spending by $163 billion.
The bottom line is that domestic discretionary spending will still be higher than the pre-pandemic trend line.
In other words, Trump is not “slashing” and the supposed cuts are not “unprecedented.” He’s simply proposing some much-needed and long-overdue restraint.
I’ll close with a caveat that Trump’s budget technically deals with something called budget authority (the money that gets put in the figurative checkbooks of government bureaucracies) and my chart shows CBO numbers for budget outlays (how much bureaucracies actually spend out of their checkbooks).
So I’m sure the numbers won’t match exactly once CBO does an estimate of the outlay effects of Trump’s proposed budget. Moreover, CBO and OMB have different numbers for 2025 domestic discretionary spending and perhaps that somehow will effect how CBO scores what is in the Trump proposal.
But when the dust settles and the smoke clears, there’s no doubt that we will see that the White House is merely proposing to bring 2026 domestic discretionary spending down to where it would have been if politicians hadn’t used the pandemic as an excuse for a spending binge.
P.S. And since spending was already too high before the COVID pandemic, Trump’s budget should be viewed as nothing more than a good – but small – step in the right direction.
P.P.S. Keep in mind that discretionary spending is too high, but entitlement programs are the real fiscal threat facing the country.
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Image credit: Gage Skidmore | CC BY-SA 2.0.
