House Budget Allows for Too Much Debt

Committee for a Responsible Federal Budget, Feb 18, 2025- The House Budget Committee reported out a Fiscal Year 2025 budget resolution last week that would facilitate reconciliation legislation permitting $2.8 trillion in deficit increases through 2034. This includes: a ceiling of $4.5 trillion of deficit increases from the Way and Means Committee; a ceiling of $300 billion of deficit increases from committees that oversee spending related to defense, immigration, and border security; a floor of $880 billion of deficit reduction from the Energy and Commerce Committee, which oversees energy policy, electromagnetic spectrum, Medicaid, and parts of Medicare; a floor of $622 billion of deficit reduction from a variety of other committees; and an additional $500 billion that could come from either reducing the Ways and Means Committee’s deficit increase or more savings from the other committees. With interest costs, we estimate this would result in $3.4 to $4 trillion of additional debt by 2034, depending on whether the extra $500 billion savings target is met.

The committee-approved budget resolution may soon face a vote in the full House, where some Members have expressed concern about high levels of borrowing while others have argued for paring back proposed offsets.

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

The $2.8 trillion target is unquestionably too large and an astronomical figure given our massive debt burden. We should not be borrowing another $2.80, let alone another $2.8 trillion. The House should revise the budget resolution to be deficit reducing or at the very least budget neutral.  

There were a number of true fiscal conservatives who fought to increase the savings in this bill, and it’s good to see deficit reduction instructions in many of the committees. But this still falls far short of what is needed.  Over the budget window, the federal government will spend $86 trillion and forgo more than $20 trillion in spending through the tax code. Yet the Budget Committee could only agree to $2 trillion in savings...really? For anyone who has made the case they support lower government spending, this is a pretty puny number, which is pretty darn close to a rounding error.  

Furthermore, given our fiscal situation, it would be far better to use these savings as part of a larger debt reduction deal than to offset tax cuts.  We have cut taxes and increased spending year after year since the last budget surplus in 2001, which is how our debt got so out of control. Lawmakers now need to face the reality that we should be adopting a debt deal rather than pursuing tax cuts or spending increases. It will take $8.1 trillion of savings over this budget window to stabilize the debt, and using these offsets now not only increases the savings needed, it also reduces the spending cuts available to get there.  

But assuming that at least some of the tax cuts are extended, the Ways and Means Committee should not have the authority to add as much as $4.5 trillion to the deficit. Extending all the expiring tax cuts will reduce revenue by $3 to $4 trillion through 2034 in most scenarios—a number that could be much lower with some thoughtful modifications. The Ways and Means Committee also has jurisdiction over Medicare, the Affordable Care Act subsidies, the Inflation Reduction Act energy tax credits, several welfare programs, and the entire tax code. That leaves plenty of room for offsets and deficit reduction.

Under no circumstance should lawmakers increase the borrowing allowed under this budget resolution, but they absolutely should reduce it. 

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