Balancing federal budget in 10 years could require 41 percent cut to programs, when excluding Social Security: CBO
Hopes by lawmakers to balance the federal budget in a decade through reductions in spending could mean significant cuts to programs to achieve that goal, an analysis released by the Congressional Budget Office (CBO) said on Tuesday.
The analysis, requested by Democrats, crunches the numbers behind what achieving a balanced budget in the next 10 years would mean for federal programs. The report comes as Democrats have sought to hammer Republicans over proposals to balance the budget in the timeframe through potentially steep cuts to spending.
In its recent analysis, the nonpartisan budget scorekeeper said its current baseline projections show the nation’s federal budget deficit would reach $2.9 trillion in 2033. To eliminate that deficit through cuts, the agency calculates the impact of various budget roadmaps.
Under one such path, the agency said lawmakers could reach the goal if “all noninterest outlays were gradually reduced starting in 2024 so that they were 29 percent less than the amount in the agency’s baseline projections in 2033.”
However, the agency notes some drastic increases to that percentage, depending what items lawmakers opt to shield from spending reductions, and whether Congress decides to extend the lifetime of tax provisions included in former President Trump’s signature 2017 tax law.
If Congress decides to keep the tax cuts, the CBO projected that, in order for the budget to be balanced in 2033, noninterest spending would have to be gradually reduced in the next 10 years until “it was 35 percent less than the amount in CBO’s baseline projections adjusted to incorporate the extension of the tax provisions.”
When not factoring in the extension of the tax cuts, the CBO projected that all noninterest outlays would have to be reduced by 41 percent to achieve a balanced budget in the same window. That’s if lawmakers also decided to factor out changes to Social Security, which comprises a chunk of federal spending.
The percentage rises to 57 percent when lawmakers take Medicare off the table as well, and then 86 percent when defense discretionary programs, and mandatory veterans’ programs are additionally factored out.
“The corresponding reductions under the budgetary path incorporating extensions of certain provisions of the 2017 tax act are larger: 35 percent, 48 percent, 67 percent, and 100 percent,” the CBO also said.
“Under that path, eliminating all noninterest outlays other than those for Social Security, Medicare, defense discretionary programs, and mandatory veterans’ programs would, according to CBO’s calculations, result in a very small deficit rather than a balanced budget in 2033,” the office added in the report.
The recent report underscores the difficulty Republicans face as some in the party have pushed for a balanced budget in 10 years, particularly as different factions have clashed in the past few months over where ideas to shore up solvency for entitlement programs or potential reductions to military spending also fit into talks.
Top Republicans have said changes to Social Security are off the table in negotiations over how to address the nation’s debt limit, and instead have focused more on efforts that target curbing nondefense spending.
Speaker Kevin McCarthy (R-Calif.) has also vowed no new tax increases on Americans – a sharp contrast to what Democrats are pushing for to reduce the nation’s deficits by raising taxes, with a focus on wealthy Americans and corporations.
In a statement on Tuesday, Sen. Sheldon Whitehouse (D-R.I.), chair of the Senate Budget Committee, said the report showed “no amount of cuts can make their math add up.”
“Today’s analysis from Congress’ own nonpartisan authority on the budget makes it clear: Republican promises not to cut Social Security or Medicare on their way to balancing the budget just don’t add up,” Sen. Ron Wyden (D-Ore.), chair of the Senate Finance Committee, also said in a statement.
Wyden instead applauded President Biden’s recent budget, which seeks to target wealthier Americans with tax increases to achieve roughly $3 trillion in deficit reduction over the next decade, while also including boosts to discretionary spending for nondefense and defense programs next year.
However, the recent rollout has been met with immediate pushback from Republicans who have raised concerns about the impact the tax proposals could have on some small businesses, and argued the proposed spending would threaten efforts to reduce high inflation.
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