The House, Senate, and President's Budgets: A Comparison

As we mentioned on Wednesday, budget season can often be as confusing as it is clarifying. While it would seem that both chambers and the President presenting their budgets would be easily compared, the headline savings numbers that often show up in articles can be misleading. The numbers are not necessarily comparable because budgets often use different baselines against which they measure their savings.

In our analysis of the President's budget, we measured the effect of the budget relative to five different baselines in order to show the different possible ways to think about the budget. In this blog, we compare the President's Budget on a semi-like basis to the Senate Budget Resolution and the House Budget Resolution. We looked both at the entirety of the President's Budget, and in isolation at his "deficit reduction offer."

The table below compares savings from all four plans relative to the CRFB realistic baseline generated in February and relative to a current law baseline as CBO would construct it (read about the differences here). Note that even this comparison is not strict apples-to-apples, because different economic and technical assumptions between CBO and OMB lead to different savings levels.

The President's budget would save $1.8 trillion relative to CRFB realistic and $1.3 trillion relative to current law. His offer alone would save $1.7 trillion relative to CRFB realistic and when combined with the sequester repeal about $200 billion relative to current law. By comparison, the budget proposal from Congressman Paul Ryan (R-WI) puts forward the most deficit reduction of the three, with savings of $6.2 trillion (including interest) relative to CRFB Realistic and $5.7 trillion relative to current law. The budget from Senator Patty Murray (D-WA) proposes $2.3 trillion in deficit reduction compared  to CRFB Realistic and $1.8 trillion from current law.

For reference, we recommended earlier this year that lawmakers put forward a plan that contains $2.4 trillion in deficit reduction against the CRFB Realistic baseline.

Savings in House, Senate, and President's Budgets (2014-2023, billions)
  Current Law (CBO Convention)
CRFB Realistic
  President's Budget President's Offer House Senate President's Budget President's Offer House Senate
Health $152 $152 $2,722 $137 $401 $401 $2,722 $275
Other Mandatory $22 $145 $962 $76 $22 $145 $962 $76
Discretionary $174 $174 $249 $382 $174 $174 $249 $382
Chained CPI $230 $230 $0 $0 $230 $230 $0 $0
Revenue $746 $629 $0 $811 $907 $629 $164 $975
Sequester -$1,018 -$1,018 $0 -$995 $0 $0 $995 $0
War and Sandy Drawdowns $1,036 $0 $931 $1,268 $98 N/A $47 $384
Jobs Measures -$216 -$50 $0 -$100 -$216 -$50 $0 -$100
Subtotal $1,126 $262 $4,864 $1,579 $1,616 $1,529 $5,139 $1,992
Interest $180 -$42 $869 $195 $160 $197 $1,023 $310
Total $1,306 $220 $5,733 $1,774 $1,776 $1,726 $6,162 $2,302

Source: CRFB calculations

But beyond the total savings, it is helpful to see how revenues, spending, and debt compare, since those numbers cannot be obscured by baseline differences. The President's budget continues the trend of putting debt at least on a gradual downward path. Debt under the President's budget would rise to a peak of 78.2 percent of GDP in 2014 and 2015 before falling gradually to 73 percent of GDP by 2023. Under the Murray budget, debt would fall to 70 percent by 2023, while the Ryan budget is the most aggressive, lowering it to 55 percent. Note again that because economic and technical assumptions differ, these are not strictly comparable.

Source: HBC, SBC, OMB
Note: President's Budget based on OMB assumptions. HBC and SBC based on CBO assumptions.
On spending, the Ryan budget particularly stands out, as it is projected to reduce federal spending from 21.2 percent of GDP in 2014 to 19.1 percent in 2023. Spending under the Murray budget would fall from a higher level of 22.3 percent of GDP in 2014 to 21.9 percent in 2023. The President's budget puts forward slightly lower levels of spending than the Senate Democrats, falling from 22.2 percent of GDP to 21.7 percent over the same period.
Source: HBC, SBC, OMB
Note: President's Budget based on OMB assumptions. HBC and SBC based on CBO assumptions.

Revenues increase under all three budgets in the early years as the economy recovers from the downturn and tax revenues rebound. The House budget instructs the Ways and Means Committee to undertake revenue neutral tax reform, and thus the Ryan budget mimics current law, with revenue rising from 17 percent in 2013 to 19 percent by 2023. The Senate budget includes additional revenue and increases it to 19.8 percent of GDP by the end of the decade, while the President's budget has revenue slightly higher at 20 percent.

Source: HBC, SBC, OMB
Note: President's Budget based on OMB assumptions. HBC and SBC based on CBO assumptions.

We will have to wait until CBO scores the President's budget in order to do a true apples-to-apples comparison, but in the meantime, it's revealing to see how the three budgets roughly stack up. A final compromise will likely differ from all three of these proposals. However, they do show the variety of different approaches that can be taken to reduce the deficit. Ideally, lawmakers will look for a bipartisan compromise that puts the debt on a downward path.