Comparing Debt Under the FY2015 Budgets

Apr 9, 2014 | Budgets & Projections

Budgets for the upcoming fiscal year have been released from the White House, House Republicans, House Democrats, the Republican Study Committee, the Congressional Progressive Caucus, and the Congressional Black Caucus. All of them offer competing visions for the size and scope of government over the next decade.

Encouragingly, all of the budgets include some deficit reduction and would result in lower debt as a percentage of Gross Domestic Product (GDP) in 2024 than today, ranging from the Congressional Black Caucus that only has debt declining by 1 percent of GDP over the decade to the Republican Study Committee, which dramatically slashes the debt over ten years.

 

Source: Budget documents, Congressional Budget Office. This chart shows debt numbers as reported by each document, and therefore incorporate each budget's estimates for economic growth. Current law baseline represents CBO's current law baseline plus a drawdown of war spending.

However, the numbers above are not strictly comparable, because the percentages are based on different-sized economies. Many of these plans include significantly different projections based on assumptions about how their policy proposals would affect economic growth. For instance, the House Democrat's budget and the President's assume immigration reform has been signed into law, which CBO estimated could increase GDP in 2023 by 3.3 percent and 5.4 percent by 2033. The House Republican budget included savings stemming from assumed economic feedback due to the impacts of lower deficits on interest rates and revenues, known as a "fiscal dividend." The same fiscal dividend could apply to the notable savings in the other budgets, although the others did not choose to incorporate those savings. In order to compare these budgets, CRFB also calculated what these budgets would look like if they all used the same baseline projections for the amount of economic growth.

If the budgets are re-estimated using the same baseline for economic growth, three of the budgets look less optimistic: 1) debt under President Obama's budget would stay relatively constant at 73 percent of GDP, rather than fall to 69 percent of GDP; 2) the House Republican budget would produce debt more than 1 percent of GDP higher than they projected; and 3) debt under the House Democrat's plan would be nearly 2.5 percent of GDP higher. The three other budgets (the Congressional Black Caucus, Republican Study Committee, and Congressional Progressive Caucus) would remain the same because they did not rely on dynamic scoring to achieve deficit reduction.*

Source: Budget documents, Congressional Budget Office, CRFB calculation. This chart shows debt numbers as if they were measured under CBO's baseline, excluding gains from economic growth and fiscal dividends. Current law baseline represents CBO's current law baseline plus a drawdown of war spending.

The Republican Study Committee budget includes the most deficit reduction ($7.4 trillion of net savings), sufficient to balance the budget in four years. The other budgets find smaller amounts of deficit reduction, but all would decrease the debt in 2024 relative to where it is today.

Deficit Reduction in FY 2015 Budgets (2014-2024)
Budget New Savings New Costs Net Deficit Reduction
Republican Study Committee $7.9 trillion $0.5 trillion $7.4 trillion
House Republicans $5.6 trillion $0.5 trillion $5.1 trillion
Congressional Progressive Caucus $5.9 trillion $3.6 trillion $2.7 trillion
Congressional Black Caucus $2.1 trillion $0.9 trillion $1.2 trillion
Obama Budget $2.0 trillion $1.3 trillion $0.7 trillion
House Democrats $1.5 trillion $1.0 trillion $0.5 trillion

Note: Excludes savings from economic growth and "fiscal dividends" from deficit reduction. Measures all proposals against a current law baseline including a drawdown of overseas war spending. Savings represent either new tax revenue, lower spending, or reduced interest costs. Costs represent either tax cuts or higher spending.


*The Republican Study Committee did include a nod to dynamic scoring, suggesting that tax reform should be revenue-neutral on a dynamic basis (a provision we find troubling because it relies on uncertain estimates and could unintentionally worsen our fiscal situation). However, the RSC budget did not incorporate any growth estimates into their budget.