House Spending Cuts Would Not Be Largest in History
The House recently adopted its Fiscal Year (FY) 2025 budget resolution, which includes reconciliation instructions allowing a net $2.8 trillion of deficit increases over the next decade. Consistent with the reconciliation instructions, House leadership has said this would come from $4.0 to $4.5 trillion of net tax cuts partially offset by $1.2 to $1.7 trillion of net spending cuts.
Proponents of the House budget have claimed that the spending cuts called for in its reconciliation instructions would represent the largest spending cut to ever pass Congress. However, a survey of spending cut legislation over the past quarter century shows otherwise.
Assuming the House achieves $1.7 trillion of net spending reductions, it would be the second largest spending cut in nominal terms (after the Budget Control Act of 2011) and – at 0.5 percent of Gross Domestic Product (GDP) – the third largest relative to the size of the economy, going back to 1990. However, $500 billion of those spending cuts are unspecified and could instead come in the form of fewer tax cuts. If the House passes $1.2 trillion of net spending cuts, it would be the fourth largest in nominal terms and – at 0.3 percent of GDP – the seventh largest as a share of the economy.
It’s also worth noting that all other instances of recent large spending cuts have been associated with deficit reduction deals, while the House budget’s spending cuts would be part of a larger package that would make the deficit worse. Our analysis does not include effects on interest spending, which would increase the size of cuts for the other bills and reduce the savings from the House budget’s reconciliation instructions. Furthermore, all of the other spending cuts were enacted when the national debt was lower than it is today.
Major Spending Cut Legislation and Debt Levels at Time of Passage
| Debt % GDP | Spending Cut % GDP | |
|---|---|---|
| FY 2025 House Reconciliation* | 99% | 0.3% - 0.5% |
| Fiscal Responsibility Act | 96% | 0.4% |
| Budget Control Act w/ Sequester | 65% | 1.0% |
| OBRA 1993 | 48% | 0.4% |
| Personal Responsibility and Work Opportunity Reconciliation Act of 1996 | 47% | 0.1% |
| Balanced Budget Act of 1997 | 45% | 0.4% |
| OBRA 1990 | 41% | 0.8% |
* Spending cuts would be part of a larger bill that would increase deficits on net.
Source: Congressional Budget Office, Committee for a Responsible Federal Budget
Given our unprecedented fiscal situation, lawmakers should be seeking an equally unprecedented level of deficit reduction.
