Yesterday, we discussed The Good, The Bad, and The Ugly of the Budget Conference, where we showed how the budget conference agreement was a mixed bag when it came to important procedural and policy issues. This blog takes a step back to look at the overall savings the budget intends to produce and how it compares to the original House and Senate budgets.
Like the House budget, the conference agreement proposes bringing the budget into balance starting in 2024. Compared to a baseline that includes the physician payment law (HR 2), a drawdown of war spending, and the removal of one-time emergency spending, the conference agreement assumes savings of $5.3 trillion over ten years, splitting the difference between the House and Senate, which had savings of $5.6 and $5.1 trillion, respectively. The $5.3 trillion total consists of $4.4 trillion of policy savings, $718 billion of interest savings, and $124 billion from the fiscal dividend that incorporates the economic effects of deficit reduction.
These savings would put debt on a clear downward path from 74 percent of GDP this year to 56 percent by 2025, again splitting the difference between the House and Senate. This path would be a clear improvement on current law and well below where the President's budget is. However, the President's budget is much more specific, listing individual policies to claim deficit reduction, while the budget resolution leaves many of its savings unspecified; indeed, the Senate committee allocations put nearly $5 trillion of savings in the "unallocated" category, so no committee is responsible for achieving them.