How Would Competing House Budget Resolutions Address the Long-Term Debt?

While the House of Representatives proceeds with consideration of the budget for FY 2018 and beyond, competing priorities for federal spending, along with the escalating federal debt are the main challenges in the ongoing debate. If the budget continues on its current trajectory, the Congressional Budget Office (CBO) projects that federal debt will grow by $11 trillion by 2027. The ultimate figure could turn out to be even worse as CBO has a long track record of underestimating the level of debt that actually occurs.

Lawmakers pondering how to address the long-term fiscal imbalance, many also seek to boost short-term spending for defense and infrastructure, should remember that the current debt load would be even heavier if were not for the spending restraints in the Budget Control Act of 2011. Yet, there is bipartisan support to jettison these savings: each of the following budget blueprints would seek to roll back the enacted spending limits.

The chart below shows the actual total spending expected for FY 2017 compared with the spending levels in the budget proposals released so far by President Trump, the House Budget Committee, the Republican Study Committee, and the Progressive Caucus against the CBO’s baseline projection.

  • The CBO sets the table with its baseline projection of spending over the next ten years based on current law. It is intended “to provide a neutral benchmark that policymakers can use to assess the potential effects of policy decisions.” Under this baseline, spending would increase by an annual average of 5.2 percent from FY 2018 through FY 2026. Over the ten-year period, revenues would total $43 trillion and outlays would reach $53 trillion.
  • Under President Trump’s budget (separately we analyzed its discretionary savings and the  pitfalls on its path to balance), outlays would see annual increases of 3.6 percent. Relative to the spending baseline, the President’s plan would save $4.2 trillion over ten years. With revenues amounting to $45.8 trillion, the Administration estimated its budget would lead to a small surplus of $16 billion in 2027. However, CBO’s analysis of the President’s proposal found lower net savings over the next decade.
  • The budget drafted by the Republicans on the House Budget Committee (which we analyzed its pros and cons in more depth) would slow the growth in spending to an average of 2.9 percent annually. Over ten years, spending would total $6.8 trillion less than CBO’s baseline. Under this blueprint, tax revenues would be held to under $42 trillion over the coming decade, leading to a small surplus in 2027.
  • The Republican Study Committee, a caucus of fiscally-conservative Republicans, would slow the annual increase in spending to 2.1 percent. Over ten years, total spending would be $57.3 trillion – $10.8 trillion less than the baseline – generating surpluses starting in 2023.
  • The spending proposed by the Congressional Progressive Caucus (CPC) would exceed CBO’s baseline by $4.2 trillion, with annual hikes of 5.9 percent. The CPC would also raise taxes by $9 trillion greater than CBO’s baseline. Even with this additional revenue, annual deficits would continue to grow, although at a slower rate than the baseline forecast.

Bold action is needed to re-establish fiscal balance and to put an end to the unfair and unsustainable practice of passing the bill for current spending to future generations. As the above charts show, the competing budget visions take different approaches to addressing long-term solvency. Which path will Congress choose?