In a rare but welcome move for Congress, the Republican Study Committee (RSC) has for the first time released its annual budget well ahead of the April 15 statutory deadline for Congress to adopt a budget resolution. Congress consistently fails to adopt a budget by the deadline, despite it having been the law for half a century since the enactment of the Congressional Budget Act of 1974 and has not done so since FY 2004.
Not only is the RSC FY 2025 budget timely, it also compares favorably against President Biden’s budget and the Congressional Budget Office (CBO) baseline by keeping deficits low, balancing in seven years, and addressing our nation’s overspending problem. The policies highlighted in the RSC budget target waste, fraud, and abuse of taxpayer funds and serve as a tangible and realistic blueprint for fiscal responsibility as we move further into a time of unprecedented spending and debt.
The CBO baseline estimate for our nation’s finances paints an unsettling picture. If spending and revenues under current law remain unchanged, the government is on track to collect $62 trillion in taxes but spend $82 trillion over the decade, resulting in a $20 trillion increase in the federal debt.
The budget that President Biden released on March 11 does not look much better. Relative to CBO’s baseline, it increases spending by $4 trillion while increasing taxes by $8 trillion. While technically a deficit reduction over the baseline, Biden’s budget still allows for significant deficits even after hamstringing the economy with substantial tax increases.
The RSC addresses this by reducing spending by $16 trillion from the baseline, bringing total deficits to $2 trillion over ten years and balancing the budget by 2031. The RSC’s proposed outlays in 2025 would be less than CBO’s projected 2024 outlays. In subsequent years, the rate of growth slows from 4.1 percent in the baseline to 2.4 percent. This would also have a positive impact on debt servicing costs relative to the CBO baseline, which must be taken into consideration when analyzing deficit spending. Complementing reductions in spending are the RSC’s pro-growth tax reform proposals, many of which raise government receipts through their economic impact. Estimated receipts from the RSC budget are slightly higher than baseline estimates because of this effect, but remain well below President Biden’s proposals to rake in trillions of additional taxpayer dollars through new taxes.
FY 2025–2034 Budget Options (in $ trillions) | |||
|---|---|---|---|
| Receipts | Outlays | Deficit |
RSC Budget | $63.621 | $66.024 | -$2.404 |
Biden Budget | $70.328 | $86.625 | -$16.297 |
CBO Baseline | $62.649 | $82.665 | -$20.016 |
Reining in Spending
The RSC budget carefully targets government overspending and finds ways to reduce outlays within the ten-year window in a sensible manner.
The budget supports constitutional checks on spending through a Balanced Budget Amendment (BBA) and specifically commends former Representative Bob Goodlatte’s (R-VA) BBA which limits annual spending to no more than 20 percent of GDP and prevents excessive tax collection to ensure that the budget balances through sound fiscal management.
In addition, the budget supports long-term revenue and spending caps, capping all revenues as a percentage of nominal GDP, while requiring the Department of the Treasury to implement an enforcement mechanism if the cap is breached. Providing a way to reinforce long-term revenue and spending caps is an important step to ensure that Congress doesn’t ignore its fiscal duty, as it tends to do with current laws such as the Statutory Pay-As-You-Go (PAYGO) Act.
Other important budgetary reforms include the elimination of earmarks again after their reintroduction following an eleven-year moratorium. Earmarks funnel taxpayer dollars into niche special interest projects, often located in the home district of congressional appropriators. In fact, on March 9 President Biden signed into law the Consolidated Appropriations Act of 2024 (P. L. 118-42) containing nearly 6,000 earmarks, amounting to $12.7 billion of taxpayer funds spent on politicians’ pet projects. The RSC budget would save this unnecessary expense by simply prohibiting earmarks.
The budget also includes reforms for the designation of emergency spending, used to exceed spending caps. These reforms include a requirement to accompany emergency spending legislation with a statement explaining the purpose of the emergency designation, require a three-fifths majority vote to approve such spending, and create a budget point of order against emergency spending resulting in outlays beyond two fiscal years.
Keeping Taxes Low
Alongside the RSC budget’s efforts to reduce wasteful spending are its proposals that would keep taxes low, especially compared to the proposals in President Biden’s budget, and simplify the tax code. These proposals cut taxes by nearly $5.1 trillion over the ten-year budget window and would generate $566 billion in additional government revenue through economic growth effects.
Most notably the RSC budget preserves and extends important provisions of the Tax Cuts and Jobs Act (TCJA) that are due to expire in 2025. The budget implements Rep. Vern Buchanan’s (R-FL) TCJA Permanency Act which would preserve TCJA’s lower individual tax rates, higher standard deduction, and 20 percent deduction for pass-through business income. In addition, the budget implements Rep. Jodey Arrington’s (R-TX) Accelerate Long-term Investment Growth Now (ALIGN) Act, which would make permanent TCJA’s full expensing provision to allow businesses to deduct the full cost of machinery and equipment in the year it is purchased.
The RSC’s budget includes pro-growth and taxpayer-friendly tax reforms beyond what was in the TCJA as well. Full and immediate expensing for research and development (R&D) costs is also included, incentivizing the productivity improvements that enable wage and employment increases. The budget would also eliminate the death tax and index capital gains to inflation. Together, these two proposals eliminate other problems created by quirks in the tax code. Finally, the budget includes Rep. Carol Miller’s (R-WV) Saving Gig Economy Taxpayers Act, which reverses the American Rescue Plan Act’s misguided changes to 1099-K reporting requirements.
Conclusion
NTUF welcomes any proposal to protect future generations of taxpayers from carrying the burden of our nation’s overspending problem. Releasing the budget before the statutory deadline sets an important precedent and demonstrates RSC’s commitment to fiscal responsibility.