Debt-to-GDP Growth Could Double with a $5.5 Trillion Bill

According to press reports, House lawmakers were recently considering a budget resolution with reconciliation instructions to allow up to $5.5 trillion of net deficit increases, largely through tax cuts. With interest, we estimate it would add $6.5 trillion to the debt by Fiscal Year (FY) 2035.

As a result, debt would rise from 100 percent of Gross Domestic Product (GDP) at the end of this year to 133 percent by 2035. This 33 percentage point increase is nearly double the current projected growth of 18 percentage points under current law.

In nominal dollars, the government is currently projected to borrow roughly $22 trillion over the next ten years. A $5.5 trillion reconciliation package would increase that by 30 percent, with debt nearing $59 trillion by 2035.

Although these figures do not include potential dynamic effects, that feedback is likely to be modest – no more than $600 billion based on the most generous outside estimate, and possibly even deficit increasing.

At a time when our debt is already on an unsustainable path and interest is growing at a record pace, lawmakers should use the reconciliation process as an opportunity for deficit reduction and not as a means to put our debt on an even more dangerous trajectory.  Our Budget Offsets Bank includes plenty of options.