The Trump Admin's Latest Budget Is An Important Messaging Document

And the message is, "Sorry, America. You're on your own." Along with rosy economic assumptions that go way beyond the norm.

This may not be widely known, but every year the president must submit a budget to Congress. And every year, Congress ignores it. In this case, we should all be very thankful for that.

I’m referring to the Trump admin’s latest budget. As they say about a famous actor who showed up but didn’t seem to try much, they “phoned it in.” As former CBO director Doug Holtz-Eakin put it, “They’re not even pretending to try.”

As I’ll briefly get into, it’s predictably heavy on defense spending and light on helping people. It backtracks on affordability, a problem the admin is actively making a lot worse with their war of choice. The price of a gallon of gas is up almost 40% since the war began, from $2.98 to $4.14 this AM. And don’t give me “but Jared, you know the president isn’t responsible for the price of gas!” In this case, I know his fingerprints are all over this increase.

The misguided spending proposals are nicely covered by my CAP colleague Bobby Kogan here, and I’m very excited to be hosting Shalanda Young, Biden’s budget director and someone who helped keep me and others at least partly sane back in the day, on today’s edition of Let’s Do Lunch. Tune in at noon at the Contrarian website.

On the heels of what Bobby correctly calls “the largest transfer of wealth from the poor to the rich in a single law in U.S. history”—the budget bill Trump and the Rs legislated last year—these new proposals aggressively cut more spending on human needs, while adding another $445 billion to the defense budget, bringing its total up to $1.5 trillion, close to 5% of GDP.

In terms of offsetting the costs, we get nothing in the budget on the fiscal outlook, beyond massive tariff revenue forecasts, way above CBOs. Since 90%+ of those import-tax revenues are actively being passed forward to American businesses and consumers, we’d all better hope the admin is wrong about these magnitudes.

Why even bother looking into this budget? Like most president’s budgets in recent years, it’s DOA. Even R’s aren’t talking about it.

In fact, there’s no point in dwelling on its fine points or its BS numbers, but we definitely should not ignore its message, which, as Bobby points out and as Trump said out loud:

…is that the government should do less to help struggling Americans and more to conduct immoral and unnecessary wars. As the president said earlier this week, “We can’t take care of daycare … We’re fighting wars … It’s not possible for us to take care of daycare. We have to take care of one thing: military protection.”

As many have said, if Ds can’t use that quote to explain to the decisive block of affordability voters who are neither MAGAs nor never-Trumpers, who swing each election toward the candidate they think will help them make ends meet, then they quickly need to find another line of work.

A word on the economic assumptions in the budget, which I found entertaining, especially as this was a part of my job when I was in gov’t (the CEA runs the forecast process). It is not at all uncommon for these forecasts to be more optimistic than most. In our last budget, our terminal (2034) real GDP growth rate was 2.2%, when most forecasts were—and still are—slightly south of 2%.

But here’s where the Trumpies are:

In their alt reality, real GDP shoots up to >3% before settling in at 2.9%. Now, I think the consensus of 1.8% could be low, and I wouldn’t fault any forecast that factored in higher productivity growth in particular, which is already close to 2% and possibly going higher as AI-use deepens (our 2.2% looks pretty good to me!). But their projection is implausible on its face, and even more so when you consider how tariffs, deportations (the crash in immigration has negative aggregate growth effects), and war are lowering GDP growth.

By how much? I’ll soon have an answer to that as CAP is getting ready to publish analysis by Ernie Tedeschi and me on this very counterfactual: where might the U.S. be if Trump just sat on his hands and simply enjoyed his inheritance of a good economy, instead of making a series of own-goal kicks?

In fact, let me cut this short here so I can get to work getting that out the door!