Deficits Could Reach $3.5T With Senate Instructions
The concurrent budget resolution for Fiscal Year (FY) 2025, adopted by the House last week and the Senate the week prior, includes reconciliation instructions allowing the Senate to write legislation adding up to $5.8 trillion to primary deficits through 2034. We estimate that enacting legislation consistent with that figure would result in deficits reaching $3.5 trillion, or 8.2 percent of Gross Domestic Product (GDP), by 2034.
The Senate instructions would allow for more borrowing than any recent legislation and make it much more difficult for policymakers to fix the country’s fiscal situation. Under these instructions, annual deficits could surpass $3.0 trillion by 2031 and rise to $3.5 trillion in 2034, compared to $2.6 trillion in 2034 under current law.
Deficits would rise from 6.4 percent of GDP in 2024 to 8.2 percent of GDP in 2034, over 2 percentage points higher than current law projections for the same year.
Even under current law, deficits are projected to be much higher than the 50-year historical average of 3.8 percent of GDP. Under the Senate’s reconciliation instructions, deficits could more than double that average. While deficits have increased during recessions and emergencies in the past, these deficit levels would be unprecedented during normal economic circumstances and present major risks to the country's economy and ability to respond to crises.
