House Budget Allows At Least $2.8 Trillion of Deficit Increases
The House of Representatives will soon consider a budget resolution for Fiscal Year (FY) 2025, which was reported favorably out of the House Budget Committee on February 13. The budget’s reconciliation instructions pave the way for a bill that could add at least $2.8 trillion to deficits through FY 2034, or $3.4 to $4 trillion of debt including interest costs.
In this piece, we explain that:
- The marked-up House budget allows lawmakers to add at least $2.8 trillion to deficits through FY 2034 or $3.4 trillion including interest.
- As a result of this debt increase, debt held by the public would reach 125 percent of Gross Domestic Product (GDP) by FY 2034, compared with 117 percent under current law.
- Deficits under the House budget would average 6.8 percent of GDP over the decade, compared with 5.8 percent under current law.
During its markup of the budget resolution, the House Budget Committee adopted an amendment adding a reserve fund requiring that either the total amount of deficit reducing provisions in the forthcoming reconciliation bill be increased to $2 trillion – $500 billion more than called for in the reconciliation instructions – or the $4.5 trillion in allowable deficit increases assigned to the Ways and Means Committee be reduced by the difference between $2 trillion and the total amount of savings in the bill. It also specifies that any additional savings above $2 trillion can be used to increase the Ways and Means Committee’s instruction by that additional amount.
As we wrote after the budget was introduced, the instructions themselves require at least $1.5 trillion of deficit reduction and allow up to $4.8 trillion of deficit increases, for a total of $3.3 trillion of net deficit increases over a decade – this change brings that figure down to $2.8 trillion.
Potential Debt Impact of House Budget’s Reconciliation Instructions (FY 2025-2034)
| Committee of Jurisdiction | Reconciliation Instruction (billions) |
|---|---|
| Ways and Means | $4,500 |
| Judiciary | $110 |
| Armed Services | $100 |
| Homeland Security | $90 |
| Deficit Increases | $4,800 |
| Energy and Commerce | -$880 |
| Education and Workforce | -$330 |
| Agriculture | -$230 |
| Oversight and Government Reform | -$50 |
| Transportation and Infrastructure | -$10 |
| Financial Services | -$1 |
| Natural Resources | -$1 |
| Unspecified | -$500 |
| Deficit Reductions | -$2,002 |
| Subtotal | $2,798 |
| Interest | ~$600 |
| Total | ~$3,400 |
Sources: House Budget Committee, CRFB estimates.
Based on a potential path of costs and offsets, we estimate this would add $3.4 trillion to the debt by FY 2034, pushing debt held by the public up to 125 percent of GDP compared with 117 percent projected under current law.
It is unclear how enforceable the $2 trillion requirement would be under reconciliation rules, but the insistence from House Budget Committee members for an additional $500 billion in savings may make it at least politically required. The budget also does not specify which committee(s) the extra savings should come from. However, as we noted before, the Ways and Means Committee instruction should be reduced substantially – by at least this $500 billion, but ideally by enough to make it deficit reducing given our currently unsustainable fiscal situation and the vast jurisdiction that Ways and Means has over the largest federal programs – Medicare, Medicaid, Affordable Care Act subsidies, welfare programs, and clean energy credits – not to mention the entire tax code.
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The House budget allows for too much debt via its reconciliation instructions. Lawmakers should amend it to require that deficits be reduced rather than allow for trillions of dollars of new debt.
