What's in the Senate's FY 2027 Budget Resolution?

The Senate Budget Committee released its fiscal year (FY) 2027 budget resolution earlier this month. Most significantly, the resolution would facilitate up to $150 billion of new borrowing over the next decade, requiring no offsets; this is even higher than the $95 billion allowed by the House’s FY 2027 budget resolution. Although the resolution also calls for $3.4 trillion of unspecified savings, it lacks concrete savings proposals or even broad suggestions about where these savings would come from.

The Senate’s FY 2027 budget resolution:

• Includes reconciliation instructions for 11 Senate committees that would allow up to $150 billion in primary deficit increases through FY 2036, which could add more than $200 billion to the debt, including interest, over the coming decade.
• Calls for $3.4 trillion in unspecified non-interest savings, claiming it would lead to an additional $1.7 trillion in interest savings.
• Assumes debt held by the public rises from roughly 100% of Gross Domestic Product (GDP) today to 109% of GDP by FY 2036, compared to 120% under the Congressional Budget Office’s (CBO) February baseline.
• Makes no concrete progress on enacting deficit-reducing policies.

Senate Reconciliation Instructions Could Cost $150 Billion, Plus Interest

The Senate budget includes reconciliation instructions that allow 11 committees to propose allowing a cumulative $150 billion in deficit-increasing changes via reconciliation. This includes allowing up to $60 billion for the Armed Services Committee; $20 billion each for the Homeland Security and Governmental Affairs, Judiciary, and Rules and Administration Committees; $13 billion for the Select Committee on Intelligence; $12 billion for the Agriculture, Nutrition, and Forestry Committee; and $1 billion for 5 other committees.

With interest, that could mean more than a $200 billion increase in debt over the next ten years.

Reconciliation Instructions in the Senate FY 2027 Budget Resolution

Sources: CRFB estimates based on FY 2027 Senate and House budget resolutions.

The Senate’s reconciliation instructions represent a $55 billion increase over the House budget’s $95 billion instructions. Per reporting, Senate Budget Committee Chairman Ron Johnson (R-WI) said that the higher reconciliation instructions are intended to provide maximum flexibility to committees in drafting the reconciliation bill, implying that the full $150 billion of deficit-increasing instructions may not be used. However, it’s worth noting that because the Senate’s instructions are more binding than the House’s, the Senate’s instructions are usually the ones that ultimately determine the deficit impact of the eventual reconciliation bill, as with the One Big Beautiful Bill Act (OBBBA). Legislators may not use the full $150 billion in new borrowing that the Senate’s budget allows, but they will likely use most of it.

Budgetary Totals in the Senate’s FY 2027 Budget Resolution

With the exception of the reconciliation instructions, the text of the Senate budget is nearly identical to the House budget. Like the House budget, the Senate budget assumes the same revenue levels as CBO’s February 2026 baseline, despite several significant tariff changes that have occurred since that baseline was published.

Also like the House budget, the Senate budget purports to reduce non-interest outlays by $3.4 trillion compared to CBO’s baseline and interest outlays by $1.7 trillion. These savings all come in budget functions 930 (government-wide savings) and 900 (net interest), meaning there are no specifics regarding where those savings would come from. Nor is there any narrative discussion explaining or providing examples of how the savings would be achieved. After adjusting for CBO’s more recent spending projections from June, which reflect the Secure America Act and final FY 2026 appropriations, the Senate budget calls for roughly $5 trillion in deficit reduction over baseline.

FY 2027 Senate Budget Resolution Relative to CBO Projections

Sources: CRFB estimates based on FY 2027 Senate budget resolution and CBO projections.

However, unlike the House budget, which assumes $2.6 trillion in additional deficit reduction from macroeconomic feedback, the Senate budget does not assume any macroeconomic feedback. As a result, the Senate budget claims to reduce debt-to-GDP growth in half – with debt held by the public rising from 100% of GDP today to about 109% by 2036. By comparison, the House budget assumes debt levels of 104% of GDP by 2036. Importantly, the entire difference between debt projected under current law, the Senate budget, and the House budget is due to unspecified savings and phony economic growth assumptions.

The Budget Resolution Fails to Lay the Groundwork to Reduce the Deficit

The U.S. faces near record levels of debt, annual deficits far in excess of sustainable levels, rising interest rates, and looming trust fund insolvency. Yet, the Senate budget, like its House companion, fails to propose any concrete steps to bring spending in line with revenue. Instead, the Senate budget sets the stage for more than $200 billion in new borrowing through reconciliation.

Lawmakers should use reconciliation to reduce deficits, as the reconciliation process was originally intended. We recently suggested a $1.5 trillion package that would allow for new spending while also improving affordability, tackling waste, fraud, errors, and abuse, and incorporating several elements of OBBBA that didn’t make it to the finish line.

If lawmakers are unwilling to go that far, they should at least pay for new spending twice over as under Super PAYGO principles.

Unfortunately, the Senate budget would only exacerbate the problem of our unsustainable fiscal trajectory and therefore represents a significant misstep.