What in the hell are these GOP fiscal frauds thinking?
The whole point of the 1974 budget act and its mechanism of budget resolutions and reconciliation instructions was to enable elected politician to curb their propensity to spend and borrow, and to thereby put an effective lid on the public debt.
A half century latter, however, the House Republicans are making a sheer mockery of the act with a resolution which actually instructs four leading House Committees to do the opposite. That is, to RAISE the deficit by $6 trillion over the next decade!
You can't make this up! Here are the GOP's budget resolution "instructions" for massive amounts of more red ink.
House GOP's Deficit Increase Instructions-Next 10 Years:
We will get to the largely phony spending cuts and "economic growth" offsets in a moment, but the larger point here is the grotesque insanity of ordering $6 trillion more of red ink, which would come on top of the $22 trillion of cumulative deficits already built into the baseline for the next decade.
That is, even before counting the new flood of red ink depicted above, today's $36 trillion public debt would be nearly $60 trillion by the end of the current 10-year budget window; and by the lights of CBO's rosy scenario, which says the US economy will be recession-free, inflation-free, interest rate flare up-free, energy crisis-free and otherwise performance perfect for the next 25 years, the public debt would hit a staggering $150 trillion by mid-century.
In other words, we are not dealing with a tad too much borrowing or chronically lax fiscal discipline. What is built-in now is a veritable fiscal doom-loop under which soaring debt fuels an eruption of annual interest expense, which, in turn, drives the public debt and interest expense higher still.
During FY 2026, in fact, Federal interest expense will exceed $1.0 trillion and absorb 18 cents from every dollar of Federal revenue. But that interest expense ratio will hit 22 cents per dollar of revenue by 2035 and nearly 40 cents per revenue dollar by 2052.
Of course, the chart below will never happen this smoothly in the real world. Once it is clear to the bond markets that the Fed can no longer monetize massive gobs of US Treasury paper without re-accelerating inflation, bond yields will lurch skyward, far above the 3.4% average yield embedded in the chart below.
In turn, even another 250 basis points of average treasury yield (i.e. to 5.9%) would nearly double debt service to $3.3 trillion per year or to 41 cents on the dollar of revenue by 2035. And thereafter financial catastrophe would be virtually guaranteed.
What this means, of course, is that any political party with even a modicum of fiscal responsibility would write a budget resolution that unequivocally and sharply reduces these baseline deficits for each and every year during the 10-year budget window ahead, and do so through sweeping spending cuts and minimally disruptive revenue gains.
For crying out loud. In light of the debt service chart below alone, the very idea of mandating jurisdictional committees to add even one dime to the baseline deficits, to say nothing of $6 trillion, is a sign of the degree to which the House GOP has degenerated into rank foolishness and cowardice.
That becomes all the clearer when you look at the anemic spending cuts also contained in the GOP resolution. As it happens, the sum of so-called off-setting spending cut instructions to another seven standing committees listed below amounts to, well, a pathetic 1.7% of CBO baseline outlays of $89.3 trillion over FY 2026 to FY 2035. And that's a mere 2.0% of total Federal spending -- even if you set aside the $13.8 trillion of interest expense baked into the CBO baseline.
GOP Resolution Spending Cut Instructions For Next 10 Years:
That's right. If you wanted to be generous you could call the House Republicans the fiscal two-percenters and move on. But what is actually embedded in the above instructions is far worse.
For instance, there is no instruction to cut Social Security, Medicare, Veterans Programs or Federal military and civilian retirement by a single dime -- while, as shown above, defense is to be increased by $100 billion. But these five big budget functions add up to $55 trillion over the 10-year budget window or fully 73% of total baseline outlays excluding interest on the public debt.
In a word, these once and former "watchdogs of the US Treasury" looked at the 10-year budget projections and waved the white flag of surrender on damn near three-fourths of the spending available to cut. Not a single dime of savings in this vast expanse of the budget is embedded in the GOP instructions.
At the program level the story is even more hideous. The USDA budget for FY 2023, for example, totaled $189 billion including $113 billion for the fraud, waste and abuse ridden Food Stamp program, $20 billion for other nutrition-based welfare programs and an equally scandalous $40 billion for farmer price supports, crop insurance, conservation and other totally unnecessary and unjustifiable subsidies.
On a ten year basis, therefore, the USDA complex of food and farmer welfare programs are projected to cost upwards of $2.0 trillion. Yet the purported anti-spenders in the House GOP caucus came up with a mere $230 billion in spending cut instructions over the entire ten-year period.
That's just 11.5% of a massive spending baseline that screams out for sweeping reforms and deep contraction.
Even more scandalous, the CBO baseline spending for Medicaid and Obama Care premium subsidies totals $9.9 trillion over the decade. That is to say, the pure medical welfare component of the Federal budget amounts to nearly $10 trillion over the decade, on top of the $16.4 trillion for the quasi-welfare benefits (i.e. mostly unearned) provided under Medicare.
So, the GOP's spending cut instruction of just $880 billion over the next decade is pretty pale, indeed. It amounts to just 9% of Medicaid/ObamaCare, but more significantly just 3.3% of Federal transfer payments for all medical programs when you include Medicare.
That's right. These GOP fiscal frauds are happy to pass out upwards of $5 trillion of tax cuts, but have no intention whatsoever of earning the right to do that by slashing the single most bloated section of the Federal budget next to the Pentagon.
In fact, spending for Medicaid/ObamaCare/Medicare will total more than $26 trillion over the next decade, meaning that people serious about arresting the nation's calamitous debt spiral would target at least a 20% savings during the decade through FY 2035. That would generate nearly $5.5 trillion of savings or six times more than the meager target in the GOP's new budget resolution.
Actually, however, the balance of the deficit reduction instructions are even more pathetic. For instance, the transportation budget is currently about $155 billion per year, meaning that spending over the next decade will total upwards of $1.8 trillion including inflation allowances. Yet the GOP's instructions call for cuts of, wait for it, 0.6% or just $10 billion.
Can you say, pork-barrels-R-us?
The fact is, within the transportation budget the Amtrak white elephant alone will cost $25 billion over the the next decade, while mass transit grants will amount to a cumulative $200 billion. In truth, these programs should be zeroed-out completely, at a savings of $225 billion over the decade.
Needless to say, that's 25X the GOP target for transportation and infrastructure savings. Yet these blatantly obvious opportunities don't even address an even larger savings opportunity in the transportation function. To wit, a large share of the $900 billion slated for Federal highway construction and FAA airport construction and operating grants over the next decade should be funded by local user fees, not borrowed Federal dollars.
In all, DOT and related infrastructure programs are projected to cost upwards of $1.8 trillion over the next 10 years. At minimum, $400 billion of that should be cut or 40 times more than the rounding error excuse for deficit reduction ($10 billion) contained in the GOP budget resolution in this area.
Alas, it doesn't get any better when you seqway over to what we have termed the Social Pork Barrel portion of the budget, which encompasses the Education Department, Labor Department, HHS and HUD. Baseline spending for these four departments will average about $325 billion per year over the next decade or $3.25 trillion over the 10-year period.
Yet as shown below, the GOP budget plan calls for savings of just $330 billion over the period. That's barely 10% of a budget component that basically represents the Topsy-turvy growth of the Great Society and its spawn over the last 50 years. If the GOP really wanted to fund $4.5 trillion of tax cuts the honest way -- with off-setting spending reductions -- it should have proposed cuts three times larger or more than $1 trillion from the Social Pork Barrel.
Social Pork Barrel Spending Baseline, 2026-2035:
In short, the GOP budget resolution is a complete betrayal of any even minimal notion of fiscal sanity. Upon a fresh CBO report (January 2025) showing massive Federal deficits rising skyward as far as the eye can see, these cats in the GOP caucus have proposed -- apparently with a straight face -- to add a net of $3.3 trillion ($4.8 trillion of tax cuts less $1.5 trillion of spending reductions) of new deficits on top of the $28 trillion of baseline deficits shown below.
The very notion is absurd. This plan needs to be subject to a mercy killing on the US House floor and sent back to committee for a long overdue reckoning with reality.
A key component of that reckoning is the imperative that the GOP stop egregiously faking the budget numbers. To wit, they would have you believe that the cumulative deficits over the 10-years addressed by their resolution for FY 2025 to FY 2034 would total $20.2 trillion, which, of course, is bad enough.
But if you actually examine the details of the House GOP plan you find that even to get to this giant red ink figure it has buried $4.4 trillion of fake deficit cuts in the document. This includes an assumed $1.8 trillion of discretionary spending cuts hidden in the fine print, and also $2.6 trillion of higher Federal revenues due to an assumed increase in the real GDP growth rate from 1.8% per annum over 10 years to 2.8%.
Talk about the elephant in the elephant's caucus room! In order to justify massive tax cuts that its unwilling to back up with politically difficult spending cuts the GOP is just making up the numbers -- sweeping under the rug four times more red ink than the entire $930 billion Federal debt at the time that Ronald Reagan became president.
As to the phantom $1.8 trillion of spending cuts, the smoking gun isn't hard to fine. The GOP plan advertises that it is instructing seven committees to make savings of $1.5 trillion as explained above -- offset by spending increases of $300 billion over the 10-year period for defense, law enforcement and border control. But if you look at the support document labeled "Table 1. Fiscal Year 2-25 Budget Resolution Total Spending and Revenue", for this net spending cut of $1.2 trillion, you won't find it.
Instead, the document actually contains a summary line called "Government Wide Savings", which shows a figure of $2.99 trillion. That's $1.8 trillion more than the reconciliation instructions actually provide for on a net basis. The latter amount, therefore, is lurking deep in the budgetary shadows as an unreconciled savings in discretionary spending. Since there is no enforcement mechanism or even annual tracking target by program and budget function, this figure is sure to be promptly forgotten even before the resolution makes its way accross the Capitol Building to the US Senate.
As to the $2.6 trillion of phantom revenues, the House GOP claims that merely maintaining the existing 2017 tax cuts will raise the CBO real growth figure by a full 100 basis points, from 1.8% per annum to 2.8%.
Alas, CBO's current forecast already embodies a goodly element of Rosy Scenario. For instance, it assumes that inflation averages just 2.0% for the entire ten year period, or only two-thirds of the current actual rise of the 16% trimmed mean CPI, which was up by 3.1% during the 12 months ending in January 2025.
It also assumes that there will be no recession for another full decade, that unemployment will remain at 4.4% or lower during the entire period and that the 10-year UST will average just 3.8% for the next decade -- well under its current level 4.5% level.
Needless to say, the economic weather has never been this good for any 10-year stretch during the first one-quarter of the 21th century. Accordingly, slightly higher inflation than
CBO assumes or a flare-up in interest rates or the inability of the Fed to brake even a mild recession would make the current baseline deficit forecast considerable worse.
Especially given that fact that the US economy is now lugging around $102 trillion of public and private debt, there is simply no reason to assume a better all-in economic performance -- even with GOP tax policies -- than is embedded in the current CBO baseline.
Moreover, if we scroll back to the actual macroeconomic results for the last 18 years, it turns out the real GDP growth rate posted at 1.97% per annum and the GDP deflator rose at 2.24% per year. That proven macroeconomic path reflects barely a dimes worth of difference from the current 10 year CBO forecast, which projects 1.85% real growth and 2.03% inflation.
Stated differently, budget resolutions should have nothing to do with macro-economic guesswork and speculation, and everything to do with focus on the hard revenue and spending numbers which result from concrete policy choices. In fact, they could relieve the GOP entirely of its Laffer Curve obsession by simply stipulating that for purposes of budget projections, the next 10 years will be a clone of the last say two decades.
On that basis, the whole "macroeconomic" flow-back assumption in the GOP plan is purely fanciful. Pretending that the deficit will be $2.6 trillion lower through wishful thinking simply doesn't cut it when the very financial survival of the nation is at stake.
Still, we have re-estimated the GOP 10-year budget plan based on the actual 18 year trend from 2006 to 2024. The impact was a favorable $500 billion reduction in the cumulative deficits otherwise projected.
The result leaves nothing to the imagination, however. It seems that the once and former party of fiscal rectitude is proposing $24 trillion of added public debt during the next 10 years, and crowing about how good it will be for the American public!