


For all the talk of cutting government, congressional Republicans and the White House are poised to massively increase annual deficits and long-term debt.
In the midst of the pandemonium created by the president’s tariff debacle, it would be easy to miss the action on the budget in the last couple of days. But there has been some significant action, and it suggests that Republicans are preparing to dramatically worsen the federal government’s fiscal outlook.
The budget resolution making its way through the Senate is largely a way to keep the process of tax reform moving. Rather than resolve some major differences between House and Senate Republicans, it incorporates the House’s already-passed budget instructions to House committees and adds very different budget instructions to Senate committees — basically kicking down the road the task of aligning the two chambers.
But it’s not only House and Senate Republicans that haven’t come to agreement yet. Senate Republicans are internally divided themselves, and this resolution deals with that by creating a massive space for hard decisions to be made in the future. And it sets up a dynamic that makes it very likely that those decisions will lean toward higher deficits and debt.
In essence, a budget resolution sets a floor of deficit reduction and a ceiling of deficit increases, and assigns individual committees specific amounts to pursue on both fronts. The House, for example, set a floor of at least $2 trillion in deficit reduction (mostly through spending cuts) and a ceiling of up to $2.8 trillion in deficit increases (mostly through tax cuts). The Senate resolution looks nothing like that. It sets a floor of just $4 billion in deficit reduction. Yes, that’s $4 billion, not trillion. And it’s over 10 years. That’s about five-thousandths of 1 percent of the federal spending the Senate resolution would permit over that period. It’s roughly how much the federal government spends every six hours.
Meanwhile, the resolution would allow the Senate to add up to nearly $6 trillion (with a “t”) to the government’s deficits over the next ten years, and to accelerate the growth of the debt to levels never seen before in our country.
The bulk of that amount is a function of a transparent gimmick to ignore the cost of the tax policy Republicans want to pursue. This gimmick is known as the “current policy baseline.” Basically, when the Trump tax cuts of 2017 were enacted, they were set to expire this year, because the rules of the budget-reconciliation process prohibit increasing deficits beyond the ten-year budget window. So the revenue reduction projected to result from the cuts over ten years was considered in the cost of that bill, but beyond the ten-year window covered by the bill the cost was projected at zero, because the cuts were mandated to end. That’s what the law now on the books says: that most of the tax cuts end this year. So if next year’s budget was made using the “current law baseline” — which has always been the norm in the budget process — then any extension of the tax cuts would have to be counted as increasing deficits in the coming years.
But Senate Republicans are instead proposing to use not the law now on the books for the coming years but the policy in effect for this year — with the 2017 tax-cut rates still in place — as the baseline for the budget. So, although extending the 2017 tax cuts would change current law, they want to ignore the effect that change would have on future deficits.
In effect, then, the increased deficits that will result from lower revenue in the coming years were not counted when the reduced tax rates first went into effect in 2017 (because everyone pretended they would just end this year), and will not be counted if they are renewed this year (because everyone will pretend they were never supposed to end). They just won’t be counted at all. Congress will pretend they never happened, and so will increase the deficit by about $3.8 trillion over the next ten years but not count that increase as adding to the deficit.
In addition, the Senate resolution allows for about $2 trillion of further increases in the deficit beyond that gimmick, distributed among the jurisdictions of six Senate committees. This creates room in the budget for some additional tax cuts beyond the renewal of the 2017 rates, and for spending increases, largely on defense and on immigration-enforcement.
Now, to be fair, the way the budget rules work means more or less that the deficit-increase number is a ceiling and the deficit-reduction number is a floor — so the Senate budget resolution would allow up to $5.8 trillion in deficit increases and require at least $4 billion in deficit reduction. The final reconciliation bill would increase the deficit by less than that, because it almost certainly will cut spending more than the minuscule amount contemplated in this resolution. That actual tax and spending bill would have to pass the House, after all, and also satisfy nearly all Republican senators, so it will need to cut a lot more than six hours’ worth of spending over ten years.
But the fact that the Senate is advancing a resolution with such a broad window suggests that the final product — the actual tax and spending bill — will increase the deficit by a whole lot, because it will create immense pressure on deficit hawks to give ground by reversing the usual logic of the budget process.
As it’s intended, the budget process is designed to create incentives for deficit reduction by establishing a ceiling for increasing deficits and a floor for reducing them. But by structuring their resolution for this year as they have, Senate Republicans have reversed the direction of these incentives. When the moment of decision comes, they will have a lot of room to massively increase the deficit without violating budget rules, and there will be a lot of pressure to just get something passed so that President Trump’s legislative agenda doesn’t collapse. It will be the deficit hawks who feel that pressure most, and they’ll be pressed to keep the ceiling higher than they’d like and the floor lower than they want.
But won’t the very different House budget resolution, with its higher floor and lower ceiling, counteract this problem? No, it will not.
The budget resolution, with its instructions to committees in each chamber, acts as a kind of enforceable framework on what that chamber ends up doing in any reconciliation bill that follows. But it’s enforceable through what are called “points of order.” Basically, a spending or tax bill that violates the instructions to the relevant committee in the budget resolution can be called out of bounds by a member of the House or Senate on the floor, and then that chamber as a whole has to decide whether to enforce or ignore the point of order. But ignoring a point of order requires only a simple majority in the House, while doing it in the Senate requires 60 votes (with very few exceptions). That means House Republicans can ignore points of order on their own if they want to violate their own budget resolution. But Senate Republicans can’t — they don’t have the votes to do that on their own in the Senate, and they won’t get support from Democrats to do it.
So in effect, in a budget resolution passed by both houses with different instructions to House and Senate committees, the instructions to Senate committees are actually binding but the instructions to House committees can be waived by Republicans alone if they so choose. Here, too, all the pressure to get things done will be pressure to grow the deficit.
The most readily imaginable scenario, then, is that the ultimate reconciliation bill hews much closer to the Senate instructions, with their immense ballooning of the deficit, and when House Republicans balk they’ll be told that making trouble for the bill would kill the president’s tax agenda and they’d better be team players.
The bottom line here looks to be that, for all the talk of cutting government and advancing efficiency and slashing the administrative state, congressional Republicans and the White House are getting ready to massively increase annual deficits and long-term debt.