Senate Budget Could Enable Unprecedented Deficit Increase

The Senate’s proposed concurrent Fiscal Year (FY) 2025 budget resolution would allow policymakers to add $5.8 trillion to primary deficits through 2034 via a reconciliation package. Such a bill would be historically unprecedented in its fiscal irresponsibility, adding several times more debt than any reconciliation package or other recent piece of legislation.

In a recent analysis, we showed that the deficit increase in the House budget’s reconciliation instructions would dwarf the cost of recent legislation and most federal spending programs.

As we’ve shown, the Senate’s reconciliation instructions would allow it to add more than twice as much to deficits as the House budget. As a result, a $5.8 trillion reconciliation bill – with nearly all of the borrowing between 2026 and 2034 – would:

• Equal more than all spending programs except for the Social Security retirement program, Medicare, Medicaid, and defense.
• Add as much to deficits as the American Rescue Plan, Tax Cuts and Jobs Act, CARES Act, and bipartisan infrastructure law combined, including more than three times as much as the American Rescue Plan and over 14 times as much as the bipartisan infrastructure law.
• Cost as much or more than a large welfare program, specifically five times as much as all Affordable Care Act health insurance subsidies, 4.5 times as much as Medicare Part D, three times as much as the Social Security Disability Insurance program, and more than three-quarters of all federal Medicaid spending.

How Would the Reconciliation Bill Compare to Recent Legislation?

A $5.8 trillion deficit-increasing bill would be unprecedented. It would add 14 times as much to the deficit than the bipartisan infrastructure law ($400 billion), more than three times as much as American Rescue Plan ($1.8 trillion), three times the 2020 CARES Act ($1.7 trillion), and nearly four times the original score of the 2017 Tax Cuts and Jobs Act ($1.5 trillion). In fact, it would add more to the deficit than all four of these major laws combined.

How Would the Senate Instructions Compare to Current Programs?

The Senate reconciliation instructions cover deficit changes from FY 2025 through 2034, though few spending or tax changes would take place before 2026. Over the nine-year period from 2026-2034, a $5.8 trillion reconciliation bill would be the equivalent of adding a large new welfare program to the federal deficit.

Such a bill could add more to the debt than all projected spending on Medicare Part D ($1.3 trillion), Affordable Care Act health subsidies ($1.2 trillion), and Social Security Disability Insurance ($1.8 trillion) combined. This bill could add 50 percent more to deficits than all spending on mandatory “Income Security Programs,” a catch-all term for all nutrition assistance spending; the refundable portion of the tax credits for Earned Income, Children, and others; Supplemental Security Income (SSI); unemployment compensation; and family support and foster care spending.  

The Senate instructions would allow a reconciliation bill that is nearly as large as the largest federal spending programs. A bill adding $5.8 trillion to deficits would be more than three-quarters (77 percent) as large as all projected Medicaid spending. It would equal 69 percent of base defense spending over the same time period, including being three times as large as projected spending dedicated to the Army. It would even equal half of all net spending on Medicare and a third of all spending on Social Security.

There are tens of trillions in offsets in our Budget Offsets Bank that could be used to both offset the impact of a potential reconciliation bill and reduce deficits at the same time. Instead of passing a bill with an historically large deficit impact, lawmakers should use this opportunity to rein in borrowing with a fiscally responsible package that can set the stage for a permanent package of thoughtful tax extensions and budget savings that grows the economy and improves our debt outlook.