Vice President for
Federal Fiscal Policy
One especially stark difference between the recent budgets from President Obama and House Budget Committee Chairman Paul Ryan is in non-defense discretionary (NDD) funding, the budget category that includes key investments in the economy, such as education and basic research; support for low-income families, such as Head Start and housing assistance; and essential services that Americans expect, such as veterans’ medical care and food safety inspections. Obama and Ryan are roughly $1 trillion apart on total NDD funding over the next decade.
First, some background. Since the fall of 2010, when policymakers initiated deficit-reduction efforts, they have cut funding for NDD programs in three waves: first, in the appropriations bills for fiscal year 2011, then again in 2012 through the Budget Control Act’s (BCA) funding caps (which extend through 2021), and then again when sequestration (which automatically lowers the BCA caps on defense and non-defense funding) took effect in 2013.
Last December, the Murray-Ryan budget agreement, which was enacted in the Bipartisan Budget Act, alleviated some of sequestration’s effects in 2014 and 2015. Even so, NDD funding in 2014 under the agreement is roughly 15 percent below the 2010 level, adjusted for inflation, and will be about 17 percent below the 2010 level in 2015.
The President’s budget mitigates sequestration’s effects on NDD programs, adding about $200 billion over 2015-2024 above sequestration’s low levels. The Ryan budget, by contrast, goes well beyond sequestration, cutting funding for NDD programs nearly $800 billion below the sequestration levels. That’s a $1 trillion difference over the decade.
Congress has shown little appetite for re-opening the Murray-Ryan agreement for 2015. The President’s call for more funding that year — offset by entitlement cuts and revenue increases — has gained little traction. But a key issue is what happens starting in 2016.
As the chart shows, even with the President’s proposed level for 2016 — which would eliminate all of that year’s sequestration cuts for NDD programs — NDD funding would remain 12 percent below its inflation-adjusted 2010 level. And over the decade, the President’s proposal wouldn’t erase all of the effects of sequestration.
Moreover, under the President’s proposal, NDD funding will still fall by 2017 to its lowest level on record as a share of gross domestic product (GDP) based on data available back to 1962. That’s true because the BCA’s NDD caps are so tight, even without sequestration.
But the Ryan budget’s NDD cuts go much further. Their depth is staggering — 25 percent below the inflation-adjusted 2010 level in 2016, and 36 percent below that level in 2024. (The Ryan budget is 15 percent lower than the sequestration level in 2016, with the cut growing to 22 percent by 2024.)
Policymakers will have to confront the future of NDD programs next year when the Murray-Ryan deal’s modest relief from sequestration ends. Chairman Ryan’s extremely harsh vision would represent a very large step backward. Even the President’s proposal, while moving in the right direction, likely won’t be sufficient to meet the nation’s needs over the coming decade.