On September 4, the Friday before Labor Day, the Office of Management and Budget (OMB) published its fiscal year 2027 mid-session review (MSR) pursuant to a legal requirement. As with other budget forecasts provided during this administration, the new MSR does not include much useful information about the “condition of the Treasury,” which is one of the reasons Congress requires presidents to submit this report each year. The abandonment of traditional budget process norms may serve short-term political objectives, but it is also contributing to a drift in fiscal policy that the Trump administration might come to regret.
Current law stipulates that presidents are to submit a MSR by no later than July 16 each year and to include in the report information on “substantial changes in or reappraisals of estimates of expenditures and receipts,” along with updates relevant to the current and upcoming fiscal years.
To comply with the law, OMB sent Congress two tables responding to two narrow MSR reporting requirements. The first is a projection of mandatory spending by budget function through fiscal year 2031, which is provided in response to a statutory provision requiring a new forecast of mandatory outlays over five years. The second table provides outlay estimates beyond 2027 for discretionary balances associated with the president’s 2027 appropriation requests, which is also specified in the MSR law as required in the transmittal.
Beyond the numbers in these tables, the MSR offers no other updates. There are no estimates of expected tariff collection in the coming years or the expected defense outlay effects from the conflict with Iran. There are no estimates of changes in Medicaid spending from the administration’s various initiatives to combat waste, fraud, and abuse. There are also no updated economic assumptions or deficit projections or forecasts of cumulative federal debt. In other words, it is not possible from what is provided in the administration’s 2027 MSR to assess “the condition of the Treasury.”
The only hard data that are publicly accessible and can be used to evaluate the evolving state of the federal budget come from actual 2026 outcomes. The picture those data paint is not encouraging.
According to the Congressional Budget Office (CBO), the deficit recorded through July of the current fiscal year (2026) is $71 billion above what it was a year ago after adjusting it for the timing of certain payments. (The full-year deficit in 2025 was $1.775 trillion.) Some of the deterioration is due to the required refunding of tariffs that the Supreme Court ruled were unlawfully imposed. After the decision, the administration imposed a new round of tariffs based on a different legal argument, which is also being challenged. It is possible the new tariffs could improve the budget outlook if they survive in court, but the MSR provides no information to evaluate their potential fiscal effects.
The conflict in Iran is likely to work in the opposite direction, by pushing up outlays beyond what was expected earlier this year. The MSR might have provided a useful update of the conflict’s fiscal effects, both in 2026 and 2027, but instead it offers no new information beyond a restatement of the administration’s $87.6 billion supplemental request, which is still pending in Congress. It is possible that the Defense Department’s funding needs exceed what it is included in the supplemental, which might then lead to a larger bill eventually emerging in Congress.
A year ago, in the 2026 MSR, the administration projected large reductions in future deficits due to its proposed cuts to nondefense discretionary accounts. Over 10 years, the savings were estimated at $4.4 trillion. Not surprisingly, Congress largely rejected these cuts for 2026. In the 2027 budget, the administration renewed its proposals for deep cuts, with aggregate savings equal to about 10 percent relative to 2026 funding. With no indication that Congress has become more open to these reductions, there is little prospect of achieving the $4.4 trillion in savings.
Regarding entitlements, the administration is prioritizing curtailment of waste, fraud, and abuse. In some programs, particularly the Supplemental Nutrition Assistance Program and premium subsidies for Affordable Care Act coverage, the administration’s efforts are on track to produce a nontrivial amount of savings.
However, other factors are pushing costs up for the largest programs. Through the first 10 months of fiscal year 2026, Social Security outlays are up 5 percent relative to 2025, and Medicare and Medicaid spending are both up 8 percent.
The MSR was an opportunity for the administration to push deficit reduction back onto the congressional agenda. Although that might yet occur for other reasons, the administration continues to signal through its budget releases that it has other priorities.
Facts Only
* The Office of Management and Budget published the fiscal year 2027 mid-session review (MSR) on September 4.
* The MSR included a projection of mandatory spending by budget function through fiscal year 2031.
* The MSR provided outlay estimates beyond 2027 for discretionary balances associated with the 2027 appropriation requests.
* The MSR omitted estimates of expected tariff collection in the coming years.
* The MSR omitted estimates of defense outlay effects from the conflict with Iran.
* The MSR omitted estimates of changes in Medicaid spending from administration initiatives.
* The MSR omitted updated economic assumptions or deficit projections or forecasts of cumulative federal debt.
* Deficit recorded through July 2026 was $71 billion above the previous year after adjusting for payment timing.
* Social Security outlays were up 5 percent relative to 2025 during the first 10 months of fiscal year 2026.
* Medicare and Medicaid spending were both up 8 percent during the first 10 months of fiscal year 2026.
Executive Summary
The Office of Management and Budget published its fiscal year 2027 mid-session review (MSR) on September 4, following a legal requirement. The MSR provided two tables to Congress: a projection of mandatory spending by budget function through fiscal year 2031 and outlay estimates beyond 2027 for discretionary balances related to the 2027 appropriation requests. The report did not include updates on expected tariff collection, defense outlay effects from the conflict with Iran, changes in Medicaid spending due to administration initiatives, or updated economic assumptions or deficit forecasts.
The only publicly accessible hard data for evaluating the federal budget comes from actual 2026 outcomes. The deficit recorded through July of fiscal year 2026 was $71 billion higher than the previous year after adjusting for payment timing. Deterioration in the budget is partially attributed to the refunding of tariffs and ongoing conflict effects. While some efforts were made to curtail waste and fraud in programs like SNAP and ACA subsidies, cost increases occurred elsewhere, with Social Security outlays rising 5% relative to 2025, and Medicare and Medicaid spending both increasing 8%.
Full Take
The structure of budget reporting appears designed to limit transparency regarding macroeconomic conditions, prioritizing narrow statutory compliance over comprehensive fiscal assessment. The selective inclusion of data—providing mandatory forecasts but omitting crucial contextual estimates like tariff revenue or conflict-related costs—creates a deliberate information asymmetry regarding the "condition of the Treasury." This structural omission forces the public and Congress to rely on incomplete and lagging indicators, which risks allowing short-term political objectives to supersede long-term fiscal awareness.
The discrepancy between projected savings from discretionary cuts and actual policy outcomes suggests a pattern where stated goals do not translate into realized fiscal change, as evidenced by the lack of anticipated savings from nondefense discretionary cuts. Furthermore, the context surrounding deficit changes—attributing deterioration to tariff refunding while withholding data on potential tariff effects, or failing to quantify defense expenditures related to geopolitical events—suggests a narrative calibration intended to shift accountability away from observable fiscal trajectory toward political dispute management. The persistence of cost increases in major entitlement programs despite stated efforts to combat waste indicates that structural pressures override administrative attempts at efficiency.
The core implication is the prioritization of procedural compliance over substantive fiscal insight. When mandatory reporting deliberately excludes key variables, it establishes a framework where accountability becomes purely procedural rather than evaluative. This suggests an underlying pattern where the formal budget process functions less as a mechanism for objective forecasting and more as a site for negotiating political positions masked by regulatory language. What are the real costs borne by the public when fiscal condition is intentionally obscured by administrative reporting structures? What mechanisms exist to ensure that mandatory reports compel comprehensive analysis rather than mere data delivery?
Sentinel — Human
The text functions as an analytical critique of the limitations of official budget reporting, supported by specific economic data and historical context regarding deficit reduction efforts.