This week the Senate Budget Committee released a plan that would add nearly $6 trillion to the national debt and simply ignore the roughly $4 trillion cost of extending several expiring tax cuts because they are “current policy,” while tacking on $1.5 trillion of additional tax cuts and $500 billion in new spending – because, why not?
All this comes on top of the $24 trillion we are already projected to add to the debt over the next decade and on top of our existing $36 trillion national debt. It is hard to fathom the magnitude of this fiscal recklessness. In total, carrying out the tax and spending plans in this proposed budget resolution would be one of the largest one-time deficit increases ever in American history. The Committee for a Responsible Federal Budget notes that this proposal is “three times as large as the American Rescue Plan, four times larger than the Tax Cuts and Jobs Act, and 75 percent larger than all bipartisan COVID relief combined.”
A key part of the plan appears to be moving forward with a “current policy baseline,” an accounting trick that really fools no one. Instead, it eases the path to using the “reconciliation” budget process, which avoids the filibuster and requires just a simple majority vote. The budgetary sleight of hand allows Congress to ignore the cost of extending tax cuts that are currently set to sunset in 2025, and avoids the (badly broken) congressional guardrails to try to prevent overspending but does nothing to change the bottom line numbers. The cost of extending the tax cuts would still occur. The debt would still go up by just as much. It just wouldn’t be recognized as a cost and no one in Congress would need to be bothered with having to pay for it. A magic trick of the highest order!
Unfortunately, deficits and debt cannot be waved away by tricky accounting and that’s what makes the Senate Budget Committee’s plan so disappointing and frankly, irresponsible. Just last week, the nonpartisan Congressional Budget Office reported that under current law, deficits would “remain large by historical standards over the next 30 years, reaching 7.3 percent of GDP in 2055.” For context, deficits averaged 3.9 percent of GDP over the past 30 years.
The CBO also reported that gross debt, which includes federal trust fund balances, is projected to increase from 123 percent of GDP this year to 169 percent in 2055.
What does it take to get through to Congressional leaders that our fiscal house is in desperate need of repair? Clearly, the Senate doesn’t want to hear it. Not only does the Budget Committee’s plan ignore the cost of extending the expiring tax cuts, it piles on another $1.5 trillion of tax cuts and tosses in $500 billion in new spending for a grand total of $5.8 trillion in new debt over the next 10 years.
Perhaps that would be easier to accept if it were paired with an aggressive agenda of spending cuts, but that is not the case. Unlike the House Budget Committee, which is calling for $2 trillion in spending cuts, the Senate assigns itself the paltry task of finding just $4 billion (that’s with a “b”) of cuts over 10 years. True, this number is deemed a minimum but that’s like saying your minimum homework assignment is to read 10 pages. How many kids will read 100?
The Senate Budget Committee’s plan is a flight of fantasy at a time when we need clear-eyed and realistic budgeting. As the budget process moves forward, lawmakers should work to ensure that new spending and tax cuts are fully paid and that at least a first step is taken to rein in the runaway debt projected in CBO’s long-term outlook.
