When members of Congress vote on legislation, they should have a full picture of its fiscal impact. However, under current scoring rules, the cost estimates provided by the Congressional Budget Office (CBO) are incomplete because they do not account for debt service costs.
To address this gap, Rep. Michael Cloud (R-TX)—joined by a bipartisan quintet of cosponsors—Rep. Dan Meuser (R-PA), Jared Golden (D-ME), Rep. Ed Case (D-HI), Tom McClintock (R-CA), and Marie Glusenkamp Perez (D-WA)—introduced the Cost Estimates Improvement Act (H.R. 991). The reform would bring greater transparency to Washington by ensuring that the complete costs of legislation—including the cost of interest payments—are fully accounted for in CBO’s cost estimates.
Currently, CBO’s estimates only include the direct year-to-year changes in outlays and revenues of legislation. This approach leaves out the full impact of policies enacted by Congress for decades that have financed a sizable portion of federal spending by borrowing on the taxpayer’s tab.
For FY 2024, the federal government spent $881 billion on interest on the federal debt. This is more than what we spend on national defense or the combined total of what we spend on social safety net programs such as Medicaid, SNAP, and the earned income and child tax credits. In 2024, debt interest payments equaled 3.1% of GDP, translating to the federal government spending $3,580 for every man, woman, and child in this country.
CBO estimates that, by 2035, debt interest payments will equate to 4.1% of GDP and balloon to over $1.783 trillion, more than doubling what the federal government spends on debt-servicing over the course of the next decade. Mounting debt servicing costs will ultimately lead to more constraints in the federal budget-making process in the future.
Incorporating debt service costs into CBO’s estimates would provide lawmakers and the public with a better understanding of the fiscal implications of legislation. As a simple matter of fairness, younger generations of taxpayers deserve to know the full cost of today’s policy decisions, as they will ultimately bear the consequences of rising interest payments. Excessive deficit spending places significant burdens on future generations, who may be forced to pay higher taxes to service the debt.
Thankfully, CBO will easily be able to include debt service impacts in its cost estimates. CBO has already created an interactive workbook that lets users see how changes in outlays and revenues affect debt service costs. Using CBO’s spreadsheet, NTUF’s Demian Brady revealed that the $95 billion supplemental aid bill passed by Congress in April 2024 came with additional debt costs of $31 billion—a figure not reflected in CBO’s official score because of the rules set by Congress.
The Cost Estimates Improvement Act would aim to close the scoring gap by having CBO’s estimates reflect fiscal realities through a comprehensive assessment of future debt service costs. By doing so, this common-sense piece of legislation will promote greater transparency and accountability as Congress appropriates for the future.