An Analysis of the Discretionary Spending Proposals in the President’s 2023 Budget

On March 28, 2022, the Administration submitted its annual set of budgetary proposals to the Congress.1 In this report, the Congressional Budget Office examines how the discretionary spending proposals compare with CBO’s most recent baseline budget projections, which span 2022 to 2032.2 The agency’s baseline, which reflects the assumption that current laws governing federal spending and revenues will generally remain in place, is intended to provide a benchmark that policymakers can use to assess the potential effects of future policy decisions on federal spending and revenues and, therefore, on deficits and debt.3 Both CBO’s baseline and its analysis of the Administration’s proposals are based on the agency’s most recent economic forecast.

In analyzing the President’s budget, CBO incorporates the discretionary funding levels requested by the Administration rather than using baseline amounts, which incorporate the assumption that funding will grow with inflation after 2022 (or, in the case of advance appropriations, from the final enacted advance appropriation).

Proposals That Would Affect Discretionary Spending in 2023

The President has requested a total of $1.67 trillion in discretionary appropriations for 2023. That amount includes certain changes in budget authority attributable to proposed changes in mandatory programs that would be enacted in the annual appropriation bills; those provisions would, on net, reduce budget authority by $33 billion in 2023 and increase it by $26 billion in 2024, CBO estimates.4 With those effects on mandatory programs excluded, the proposed appropriations for 2023 would total $1.71 trillion (see Table 1). That amount is $38 billion (or 2 percent) less than what had been appropriated for 2022 when CBO’s baseline (which likewise excludes the effects of changes to mandatory programs enacted in 2022 appropriation legislation) was prepared.5 In addition, the President requested obligation limitations of $78 billion for certain transportation programs for 2023.6

2023 Funding for Defense Programs

The President’s proposals would increase total defense funding by $17 billion (or 2 percent) in 2023 over the amount provided for 2022. Funding for research and development would receive the largest increase, rising by $11 billion (or 9 percent), to $130 billion, CBO estimates. In addition, funding for military personnel would increase by $7 billion (or 4 percent) in 2023. The President proposes no defense funding designated as an emergency requirement beyond the $20 million already provided under current law for each year from 2023 through 2026. (At the time CBO’s baseline was prepared, $14 billion in such funding had been provided for 2022, mostly for operations and maintenance.) All told, total defense funding would be $15 billion (or 2 percent) less than projected in CBO’s baseline for 2023.

2023 Funding for Nondefense Programs

Under the Administration’s request, total nondefense funding for 2023 (including obligation limitations for certain transportation programs) would be $54 billion (or 5 percent) less than the amount provided for 2022 (see Table 2). That decline would be the net result of changes for different types of funding.

• Discretionary funding provided in division J of the Infrastructure Investment and Jobs Act (IIJA, Public Law 117-58)—nearly all of which was designated as an emergency requirement—is set to drop under current law by $93 billion in 2023, to $70 billion. The President proposes no other nondefense funding designated as an emergency requirement for 2023. (At the time CBO’s baseline was prepared, $44 billion in non-IIJA emergency funding had been provided for 2022.) Those two factors would reduce total nondefense funding by $138 billion from 2022 to 2023. The programs most affected are those related to commerce and housing credit (funding would fall by $57 billion in 2023) and natural resources and environment (funding would fall by $38 billion).
• All other nondefense funding (that is, funding other than what was provided by the IIJA or was otherwise designated as an emergency requirement), including obligation limitations, in 2023 would rise by $84 billion (or 10 percent) from the amount provided for 2022, CBO estimates. The largest total increases under the President’s budget would be for veterans’ benefits and services ($23 billion, or 20 percent) and education, training, employment, and social services ($18 billion, or 17 percent). In total, such nondefense funding would be $48 billion (or 6 percent) more than projected in CBO’s baseline for 2023.

How Proposals Would Affect Discretionary Spending Over the 2023–2032 Period

Appropriations under the President’s budget would increase by 1 percent per year, on average, over the decade, rising from $1.71 trillion in 2023 to $1.87 trillion in 2032. If not for the reductions in IIJA funding scheduled to occur under current law as well as the proposed changes to emergency funding, discretionary budget authority in the President’s budget would increase by 2 percent per year, on average, between 2023 and 2032.

All told, over that decade, discretionary outlays under the President’s budget would be $1.7 trillion (or 8 percent) less than the amount in the most recent baseline, CBO estimates (see Table 1). As a percentage of gross domestic product (GDP), outlays under the President’s budget would fall in each year, from 6.7 percent in 2023 to 5.3 percent in 2032; in CBO’s baseline, they are projected to fall from 6.7 percent to 6.2 percent, respectively. (Over the past 50 years, total discretionary outlays have averaged 8.1 percent of GDP.)

Much of that difference stems from a difference between how funding provided by division J of the IIJA and other funding designated as an emergency requirement is treated in CBO’s baseline and what the President is proposing. In CBO’s baseline projections, funding attributed to the IIJA or otherwise designated as an emergency requirement rises from $221 billion in 2022 to $265 billion in 2032, totaling $2.4 trillion in additional funding over the decade. Those projections follow provisions of law that require CBO to project funding for years in which no appropriation exists by adjusting the most recently provided funding for inflation. By contrast, the President’s budget includes the $221 billion in such funding that has been provided for 2022 but no additional emergency funding over the following 10 years other than the $285 billion in advance appropriations provided by the IIJA. That smaller amount of funding related to the IIJA and other emergency funding reduced outlays in the President’s budget relative to CBO’s baseline by $1.4 trillion over the 2023–2032 period.

Beyond the effects of those differing treatments, all of the President’s other proposals would reduce total discretionary outlays, relative to CBO’s baseline, by $293 billion (or 2 percent). Discretionary outlays (with those resulting from the IIJA and other emergency funding excluded) under the President’s proposals would fall as a share of GDP in each year over the next decade, from 6.5 percent in 2023 to 5.2 percent in 2032; in CBO’s baseline, they are projected to fall from 6.4 percent to 5.5 percent, respectively.

Under the President’s budget, discretionary outlays for defense programs and activities (again, with those that result from the IIJA and other emergency funding excluded) over the next decade would be $0.4 trillion (or 4 percent) lower than the amount in CBO’s baseline (see Table 3). Outlays for nondefense activities under the President’s budget would be $101 billion (or 1 percent) higher over the period.

As a share of GDP, total outlays for defense programs would fall under the President’s proposals, from 3.0 percent in 2023 to 2.4 percent in 2032, when they would be about 0.3 percentage points lower than the amount in CBO’s baseline in that year. (The lowest percentage recorded in the past 50 years was 2.9 percent.) Outlays for nondefense discretionary programs as a share of GDP would fall from 3.7 percent in 2023 to 2.9 percent in 2032 and would be about 0.6 percentage points lower than the amount in CBO’s baseline in that year. (The lowest percentage in the past 50 years was 3.1 percent.) With outlays that result from the IIJA and other emergency funding excluded, nondefense outlays would be about the same under the President’s budget as in the baseline, falling from about 3.5 percent this year to 2.8 percent in 2032.