FY 2018 Federal Budget: Trump's First Budget

Compare Congress' Enacted Budget to Trump's Requests

Trump State of the Union
•••  Photo by Win McNamee/Getty Images

The fiscal year 2018 federal budget outlines U.S. government revenue and spending from October 1, 2017 through September 30, 2018. The budget process began when President Trump submitted his budget. In January 2018, Congress enacted a bill to guide spending for the next two years. On March 23, 2018, it passed the that outlined appropriations for specific departments.

The that revenue will be $3.340 trillion.

That's less than the planned spending of $4.173 trillion. It will create a $833 billion budget deficit

Revenue

Half of the FY 2018 revenue of $3.340 trillion comes from income taxes. They contribute $1.660 trillion. Payroll taxes are $1.179 trillion, and include Social Security and Medicare taxes. Corporate taxes add $218 billion, contributing just 7 percent. Trump's tax plan cut the corporate contribution from 9 percent.

The remaining $283 billion is from excise taxes, estate taxes, interest on Federal Reserve deposits, and other miscellaneous sources. It's also lower than in FY 2017. The tax plan cut estate taxes.  Also, the Federal Reserve is reducing its holdings of U.S. Treasurys

Tax Freedom Day occurs in late April. That's how long taxpayers work to pay for federal state, and local government revenue collected. It's on food, clothing, and housing combined.

Spending

The budget office estimates the federal government will spend $4.173 trillion in FY 2018.

Government spending has three components: discretionary, mandatory and interest on the debt. 

Discretionary: Congress appropriate funds each year for agencies covered by the discretionary budget.

On February 9, 2018, Congress approved a for FY 2018. It guides spending for the fiscal year, which is October 1, 2017 to September 30, 2018.

 It's less than President Trump's $1.244 request. But it's more than the $1.065 trillion allowed by sequestration. It includes $629 billion for defense. That's $80 billion more than the $549 billion allowed by sequestration. It also includes $576 billion for all other non-defense discretionary spending. That's $60 billion more than the sequestration limit of $516 billion. 

The Congressional bill laid out top line spending for two years, FY 2018 and FY 2019. It specified non-defense spending such as $80 billion for disaster relief, $20 billion for infrastructure, and $7 billion for Community Health Centers. It included an additional $6 billion for opioid treatment, $5.8 billion for Child Care block grants, and $4 billion to the Department of Veterans Affairs. 

The spending bill only addressed one of the budget's components. It added funds to the base budget, which pays for standard department operations. Trump's budget kept it within the sequester's limit of $1.065 trillion for FY 2018. 

For FY 2018, the  imposed by sequestration. The bill covered FY 2018 and FY 2019. Republicans increased defense spending by $83 billion a year. Sequestration limited it to $549 billion.

  a year for nondefense discretionary spending. That's above the sequestration limit of $516 billion. The bill included $80 billion in disaster relief and $6 billion to treat opioid addiction. It also included  for two years. Tax provisions added $17 billion. The found that the budget will add $320 billion to the debt over the next 10 years.

The chart below breaks down discretionary spending. The first column shows Trump's budget request. The second column shows OMB's estimate of FY 2018 spending. The third column shows what Congress enacted on September 19, 2018. The fourth column details what the House and Senate appropriation committees allocated. Those details are from the  that President Trump signed on March 23, 2018.

It's clear from the chart that Congressional appropriations could push actual spending above OMB's estimate. It depends on how much Congress allocates for Emergency Funding. Most of that goes toward Overseas Contingency Operations, which pays for military operations. It also goes toward disaster relief. In 2017, Congress added  in emergency funds for Hurricane Harvey and for Hurricane Irma.

In the Omnibus bill, it added $1 billion to address the opioid epidemic,for a total of $4 billion. Congress added $10.6  billion in infrastructure spending for a total of $21 billion. It also dedicates $1.6 trillion to build 90 miles of wall on the U.S. border with Mexico. Congress added $2.3 billion across departments to school safety issues.

FY 2018 Budget: Trump's Budget Request, Estimate, and Appropriation by Congress (in billions)

Department
Defense Dept   $574.5   $574.5    $584.2 
Education     $59.0     $67.8Unknown   $70.9
Energy     $28.0     $30.0     $37.6*   *
    NNSA     $13.9     $12.8      $12.9     
Health     $65.3     $86.3    $157.9*   
Homeland     $44.1     $44.1      $51.1   
HUD     $31.2     $37.4     $56.5*   
NASA     $19.1     $19.5Unknown   
State     $28.2     $38.1      $35.5   
VA     $78.8     $77.3     $88.2*   
All Other Depts.   $131.9     $90.0    $130.0  $184.0
Subtotal$1,065.0$1,065.0 $1,141.0$1,200.0
Emergency Funding     $85.3   $154.1Unknown   $78.1
Total Discretionary$1,150.3$1,219.1 $1,3

* Includes other departments.

Mandatory: The budget office estimates mandated benefits will cost $2.593 trillion. The mandatory budget is an estimate, not an appropriation. Congress can't change it as part of the normal budget process. Congress mandated the benefit payments when it passed the laws that created the programs. The most recent estimates are from the FY 2019 budget.

  • Social Security: $987 billion. Payroll taxes fund 100 percent of the cost.
  • Medicare: $582 billion. Payroll taxes and premiums fund 57 percent of the cost.
  • Medicaid: $400 billion. Paid out of the general fund.
  • All Other: $624 billion. This includes food stamps and Supplemental Security Income. Most are paid out of the general fund. Unemployment Compensation is partially funded by payroll taxes. The Affordable Care Act and TARP are self-funded.

Interest on the DebtInterest payments on the national debt are not officially part of the mandatory budget, but the payments must be made. The budget office estimates it will be $310 billion in FY 2018. It's $50 billion more than 2017 because both the national debt and interest rates are rising

Deficit

The FY 2018 deficit is projected at $863 billion once the Omnibus spending bill is included. It's almost double the $440 billion that Trump originally budgeted. One reason for the discrepancy is that revenue came in $100 billion less than than expected. The other is that spending was $4.203 trillion, almost $110 billion more than budgeted.

The deficit was the fifth-highest U.S. deficit by year. It made Trump the third-highest deficit by president, following Obama and Bush. The CBO projects that the Congressional budget deal could boost the deficit to $1.2 trillion in FY 2019.

FY 2018 (in billions)Budget RequestFinal Budget
SubtotalTotalSubtotalTotal
Revenue $3,654 $3,340
Mandatory$2,535 $2,593 
Interest on the Debt   $315   $310 
Discretionary$1,244$4,094$1,300$4,203
Deficit    $440    $863


Compare to Past Budgets