THURSDAY: What happens to deficits if the bill passes?

THURSDAY, MAY 29, 2025

All in all, don't ask: As you know, President Trump's budget bill passed the House in a landslide vote. The vote was as overwhelming 215 yeas versus 214 no's.

It still has to make its way through the Senate. We don't know if it will.

We can give you a rough idea of what annual deficits would be like under current existing law. It's as we showed you yesterday—if no changes are made to current law, future deficits are projected to look like this:

Projected federal deficits, FY 2025-2029
2025: $1.9 trillion

[...]

2035: $2.7 trillion

Those are projected annual revenue shortfalls—projected annual deficits. In written form, using actual words, the picture looks like this:

The Budget Outlook / Deficits

In CBO’s projections, the federal budget deficit in fiscal year 2025 is $1.9 trillion. Adjusted to exclude the effects of shifts in the timing of certain payments, the deficit grows to $2.7 trillion by 2035. It amounts to 6.2 percent of gross domestic product (GDP) in 2025 and drops to 5.2 percent by 2027 as revenues increase faster than outlays. In later years, outlays increase faster than revenues, on average. In 2035, the adjusted deficit equals 6.1 percent of GDP—significantly more than the 3.8 percent that deficits have averaged over the past 50 years.

As we noted yesterday, those are the large annual deficits which Paul Krugman has recently called "unsustainable." Over the next ten (or eleven) years, annual deficits are projected to start at something like $2 trillion and to rise from there.

We're so old that we can remember when major newspapers devoted more space to budget data than they do today. We think back to 1999 and 2000, for example—back to the endless attempts to decide how much revenue Candidate Bush's tax cut proposal would cost the federal treasury over its first ten years.

Quoting Harper Lee, "A day was twenty-four hours long but seemed longer" back then. There were no distractions by President Trump to chase around and attempt to decipher. There was much more time for getting confused about the minutia of budget proposals!

Journalists would report more budget numbers back then. Today, you're likely to read something like what you see below about the effect of the proposed budget bill on the size of our future deficits:

Pivoting From Tax Cuts to Tariffs, Trump Ignores Economic Warning Signs

[...]

In report after report, economists this week predicted that Mr. Trump’s signature tax package could add well over $3 trillion to the national debt. Some found that the measure is unlikely to deliver substantial economic growth, and could enrich the wealthiest Americans while harming the poorest, millions of whom could soon lose access to federal aid for food and health insurance.

Also this:

When it comes to budget math, ‘D.C.-style’ actually means ‘honest’

[...]

The CBO does in fact project that Trump’s bill will add $3.8 trillion to the federal debt over the next decade. (It also estimates that the bill’s resulting “increase in the resources” provided to U.S. households will “not be evenly distributed”: Resources “would decrease for households in the lowest decile (tenth) of the income distribution, whereas resources would increase for households in the highest decile.”)

The first passage comes from the New York Times. The second passage comes from the Washington Post.  

Each passage talks about what the budget bill would "add to the national debt." The Times didn't bother with stating a time frame. The Post cited the standard ten years.

Friend, consider this about those very familiar presentations:

If you have a rough idea of how big our annual deficits got to be during Covid, you might even think that deficits won't be so terrible over the next ten years! You could almost think that deficits will only average something like $300=380 billion per year over the next ten years, thereby adding something like $3.8 trillion to the accumulated national debt over the course of that decade.

That isn't what those passages mean. What they mean is this:

They mean that you have to start with the giant deficits which have already been projected—annual deficits ranging from something like $2 trillion per year up to $2.7 trillion by 2035.

You have to start with those giant deficits, then add on even more deficit spending! That $3.8 trillion—on average, $380 billion per year—is the amount the GOP bill would add to those giant annual deficits over the course of the next ten years. That's the amount the GOP bill would add to the deficits which have already been projected—deficits which already have us on an "unsustainable path."

Keeping it simple:

At present, the deficit for 2035 is projected to be $2.7 trillion. If the GOP budget bill passes, that projection would jump to something like $3.1 trillion. On average, the bill would have an effect like that over each of the next ten years.

In short, the GOP bill wouldn't balance the budget. It wouldn't even reduce the size of our projected federal deficits.

It would make those annual deficits larger than currently projected. Instead of adding a mountain of debt, we'll be adding a larger mountain.

You can think of that however you wish. We offer two closing points:

Krugman says the situation is already unsustainable as matters currently stand. The budget bill which is routinely said to be "beautiful" makes the projected situation worse.

Journalists used to try to explain these matters. Today, as journalists chase those endless distractions around, days like those are gone.

Tomorrow: A tiny bit of found humor