What’s in the Senate’s Concurrent FY 2025 Budget?

The Senate Budget Committee unveiled its proposed concurrent Fiscal Year (FY) 2025 budget resolution yesterday, setting the stage for reconciliation legislation that would allow lawmakers to add up to $5.8 trillion to deficits through 2034.

In summary, the Senate’s proposed concurrent budget resolution would:

• Allow the Senate to write reconciliation legislation that adds up to $5.8 trillion to primary deficits through FY 2034, including up to $1.5 trillion of borrowing from the Finance Committee, more than $500 billion from other committees, and roughly $3.8 trillion from embracing the “current policy” gimmick.
• Require only $4 billion of gross deficit reduction from spending cuts and reform, 0.005 percent of the $86 trillion of total projected spending through FY 2034.
• Allow debt-to-GDP growth to double, reaching 134 percent of Gross Domestic Product (GDP) by 2034 and 211 percent by 2055, versus 117 and 156 percent under current law.
• Allow Congress to add $45 trillion to $60 trillion more to the debt through 2055.
• Allow twice as much borrowing as the House, while requiring only 0.2 percent as much in spending cuts and reforms.

What’s In the Senate’s Proposed Budget Resolution?

The Senate’s proposed concurrent budget would add Senate reconciliation instructions to the House-adopted budget, calling for up to $5.8 trillion of gross deficit increases.

Specific committee allocations are shown in the table below. They include up to $1.5 trillion of borrowing from the tax-writing Finance Committee, which would come on top of an estimated $3.8 trillion of allowable borrowing to extend expiring parts of the Tax Cuts and Jobs Act (TCJA). The budget would allow an additional $521 billion of borrowing from various committees that would mainly come from increased spending on defense and immigration. It also requires at least $1 billion in deficit reduction from each of four other committees.

Potential Debt Impact of Senate Reconciliation Instructions
(FY 2025-2034)

Sources: Senate Budget Committee, CRFB estimates.

The budget resolution would also retain House instructions – which allow up to $2.8 trillion of net borrowing and require at least $2 trillion of spending cuts and reforms. Because enforcement of the Senate budget resolution generally requires 60 votes to overrule while the House requires only a simple majority, the much looser and more irresponsible Senate instructions would be the binding ones.

The budget includes a Senate reserve fund meant to facilitate the use of a “current policy” baseline in order to hide the fiscal impact of extending expiring provisions of the TCJA. Press reports indicate that the Senate Budget Committee Chair intends to declare that roughly $3.8 trillion of tax cut extensions have no deficit impact, contrary to the official score, at the time of consideration. We've explained before how this gimmick would not only expand the debt, but could also undermine budget enforcement. It also includes a reserve fund calling for $2 trillion of spending cuts, but this reserve fund is completely non-binding.

What Would the Senate Instructions Mean for the Debt?

With interest, the concurrent budget resolution would allow policymakers to add nearly $7 trillion to the debt through FY 2034, pushing debt from 100 percent of GDP at the end of 2025 up to 134 percent of GDP in 2034, as opposed to 117 percent under current law. In other words, debt would grow twice as fast as under current law.

That would also be true over the long run. Through FY 2055, we estimate the budget resolution could allow $45 trillion of additional debt and lift debt to 211 percent of GDP. This estimate assumes the increased spending for defense and immigration as well as the new tax cuts on top of TCJA extension are made temporary to comply with the Byrd rule prohibition on adding to long-term deficits (we assume the “current policy” gimmick would allow policymakers to evade the Byrd rule for TCJA extension). If additional tax cuts and increased defense and immigration spending were ultimately extended, there could be $60 trillion of additional borrowing through 2055, pushing debt to roughly 230 percent of GDP.  

In other words, debt could rise to more than double the previous record, setting the stage for a dangerous debt spiral.

Comparing the House and Senate Instructions

Importantly, the Senate’s instructions differ greatly from the House’s; the Senate proposal does not change the House’s instructions at all. As mentioned before, however, the House instructions can be overridden by a simple majority vote.

Compared to the House instructions, the Senate instructions would allow more than double the borrowing – $5.8 trillion versus $2.8 trillion. And they require just 0.2 percent of the spending cuts and savings – $4 billion compared to $2 trillion. Unlike the House, the Senate does not include an aggregate floor on gross deficit reduction.

The Senate’s instructions also allow the Senate to increase the debt ceiling by up to $5 trillion, versus the House’s $4 trillion increase. Previously, lawmakers have often coupled debt ceiling increases with deficit-reducing measures or other budget reforms. This budget, however, would couple a debt ceiling increase with measures that would increase deficits by multiple trillions of dollars. While lawmakers should absolutely raise the debt ceiling – well in advance of the projected “X date" – they should do so in a way that also reduces deficits and slows the growth of debt going forward.

For comparison purposes, below are the House’s instructions, which are based on a current law baseline, require $2 trillion of deficit reductions, and allow up to $4.8 trillion of deficit increases, resulting in $2.8 trillion in net deficit increases.

Potential Debt Impact of House Reconciliation Instructions
(FY 2025-2034)

Sources: House Budget Committee, CRFB estimates.

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With debt approaching record levels and interest costs exploding, lawmakers should be using reconciliation for its originally intended purpose – to reduce the debt. Under current law, we are slated to add $21 trillion to the debt through FY 2034, and both the House and Senate reconciliation instructions would irresponsibly make that worse.

However, there are important differences that would make the Senate instructions far more irresponsible than the House ones. The Senate would allow $5.8 trillion of borrowing compared to the House’s $2.8 trillion. The Senate would require only $4 billion of spending cuts, compared to the House’s $2 trillion. And the Senate relies on a “current policy” gimmick, including by considering a tactic that would allow the Budget Committee Chair to invent his own budget scores – this could undermine future budget enforcement and open the door to trillions or tens of trillions of additional borrowing.

Even under current law, debt is projected to rise from a near-record 100 percent of GDP at the end of FY 2025 to 156 percent by 2055. The Senate instructions would double that pace of debt growth, pushing debt well above 200 percent of GDP. Such high and rising debt would slow economic growth, further explode interest payments, push up interest rates for ordinary Americans, and increase national security risks. It would also likely push us into a debt-interest spiral and put the country at risk of a fiscal crisis.