Romina Boccia and Dominik Lett
On April 2, the Senate unveiled a new budget blueprint, a crucial step in using reconciliation to enact President Donald Trump’s agenda. This budget isn’t just a missed opportunity; it actively worsens our nation’s debt trajectory. The resolution abandons the House’s concrete spending reductions desperately needed in today’s high-debt environment, sets a dangerous precedent by adopting a so-called current policy baseline that hides the very real deficit impact of extending tax cuts, and adds hundreds of billions in new deficit spending. The Senate should go back to the drawing board.
Under the amended budget framework, the Senate allows for $1.5 trillion in new tax cuts plus $500 billion in new spending, primarily for immigration and defense. That’s on top of the $3.8 trillion in tax cuts that will be magically waived away by using a current policy baseline—roughly the equivalent of pretending it doesn’t cost anything to extend a streaming subscription because you’ve been paying for it for a few months already. The graph below shows the change to the deficit over ten years under the amended resolution.
Together, the Senate’s amended resolution would add $5.8 trillion in new deficits over ten years. Per the Committee for a Responsible Federal Budget, that would double the growth of the debt-to-GDP ratio, with public debt reaching an astonishing 211 percent of GDP by 2055. To offset new tax cuts and spending, the Senate proposes a paltry $4 billion in spending cuts. Shameful.
For comparison, the current House budget resolution, while allowing $2.8 trillion in new borrowing, provides concrete instructions for $1.5 trillion in spending reductions and contains a binding measure to encourage $2 trillion in savings. That’s hardly a full offset tax package, but at least the House attempts to bend the arc on rampant federal spending. The Senate doesn’t even try.
Fiscal Hawks Should Hold the Line
As the House Appropriations Chair Tom Cole (R‑OK) has said, “[I]t’s time to put up or shut up if you’re serious about spending.” House Budget Committee Chair Jodey Arrington (R‑TX) concurred, noting, “When you’ve got the appropriations chair and the budget chair singing off the same song sheet, people need to pay attention in terms of what is needed in this fateful hour.” Other House deficit hawks, including Reps. Schweikert (R‑AZ), Smucker (R‑PA), and Roy (R‑TX), have rightly warned that the Senate isn’t being ambitious enough with their spending reductions, and it may not pass muster in the House.
Federal spending in fiscal year 2025 is projected to be $7 trillion, or nearly $90 trillion over ten years. Americans cannot afford for Congress to not only kick the fiscal can down the road but, worse, strap it to a rocket and blast it directly into a fiscal black hole.
Cato Scholars Offer Their Perspectives
As with the House and prior Senate budget resolutions, we reached out to our fellow Cato scholars to assess the Senate’s fiscal framework. Here’s what Cato Institute experts had to say in reaction to the Senate’s latest proposal.
The Senate dodges needed spending cuts and accelerates fiscal decline. As Adam Michel, Director of Tax Policy Studies, explains:
The Senate budget avoids making any of the hard decisions that are necessary to ensure permanent tax cuts. This framework doesn’t even bother to cut spending to match the new tax cuts, let alone begin to rationalize the growing gulf between revenues and outlays. The Senate’s framework sets the stage for capitulating to the business-as-usual Washington pastime of cutting taxes and increasing spending—kicking the fiscal can down the road. Without meaningful spending reforms, tax cuts will necessarily be temporary as the pressure of mounting deficits builds.
Permanent, pro-growth tax reform is more necessary now than ever. However, a more than $5 trillion reduction in revenue without any offsetting spending cuts is a recipe for fiscal collapse, not the foundation for an economic revival.
The Senate baseline rescues Biden’s health care spending spree, forcing taxpayers to overpay for low-quality health care. As Michael Cannon, Director of Health Policy Studies, explains:
As the United States government barrels toward a debt crisis, both House and Senate Republicans seem content to keep forcing taxpayers to overpay for low-quality health care. Senate Republicans especially are blindfolding the passengers while slamming on the gas. The Senate GOP budget would rescue Joe Biden‘s spending spree. Obamacare premium subsidies for households earning up to $600,000 per year would stay. Biden‘s 14 percent increase in Medicare spending and 20 percent increase in Medicaid spending over the pre-Biden baseline—that is, new spending above and beyond the typical year-to-year increases—would stay. The House Republicans’ budget could at least reduce annual growth in Medicaid spending from 6 percent to 3 percent; by the 10th year of the budget window, it could just barely eliminate that one portion of the Biden Bump. Meanwhile, Senate Republicans’ phony “baseline” would preserve all of Biden’s unnecessary spending. It is perhaps the largest, most dishonest, and most shameful budget gimmick in U.S. history.
When a debt crisis arrives, it will bring drastic cuts to federal health programs. Not reductions in the rate of growth. Actual, deep cuts. Mostly to Medicaid. Democrats who continually expand government health programs and Republicans who continually expand federal debt are putting the health care of low-income patients in a precarious situation.
The Senate uses budget gimmicks to avoid tough decisions while enabling Trump’s destructive tariff policy. As Policy Analyst Tad DeHaven explains:
The Senate Budget Resolution is the latest evidence that Republicans’ talk about downsizing government and cutting spending to head off a debt crisis is all just talk. Instead, the Republican majority Senate is proposing no serious spending cuts and trillions more in debt, and it intentionally obfuscates the cost by gaming the budgetary score. At the same time, all but a few Senate Republicans are enabling President Trump to usurp Congress’s constitutional responsibility to set tariff policy. As a result, so-called pro-growth tax cuts are set to be undermined by the president’s unilateral imposition of a massive tax hike on American consumers and businesses.
The Current Policy Disaster
The Senate plans to rely on an unprecedented scoring framework under which the extension of expiring tax cuts would score as costing $0 (the deficit will still go up). Extend this framework to a future Democratic Congress. On a party-line vote, the Senate could pass a one-year, temporary Medicare-for-All package and then extend it in the subsequent year, claiming it costs nothing. Are Senate Republicans so short-sighted that they think this won’t come back to haunt them?
The Senate should not be playing budget games with America’s fiscal future. The current policy gambit enables new deficit spending and reduces the pressure to repeal costly laws, such as the Inflation Reduction Act’s energy subsidies. Legislators should reject the current policy baseline gamble.
Go Back to the Drawing Board
The Senate should be stepping up to the present fiscal challenge and embracing spending cuts that are bolder than the House plan as part of a truly pro-growth tax cut strategy. Instead, Senate leadership is dropping the ball, abandoning any semblance of fiscal responsibility. Americans continue to suffer from inflation, high interest rates, and economic uncertainty. Further fueling the rising debt will boost inflation, eroding Americans’ purchasing power and pushing interest rates higher—making mortgages, car loans, and everyday expenses more difficult to afford. To bring about economic stability and unleash opportunity, Congress must rein in spending and pair tax relief extensions with real fiscal discipline. Otherwise, today’s deficits will become tomorrow’s tax hikes and inflationary pain for American families.