A decade from now, interest on the deficit alone will be higher than the entire deficit was last year. Should this be reflected in government spending and budget estimates?
The federal deficit was $779 billion last year. [See Table 1.1 in that link, cell E29.] It’s projected to rise to $960 billion this year. And on its current path, it will exceed $1 billion annually for the next decade.
Several factors are contributing to this sharp rise. One of the biggest is 2017’s Republican-led Tax Cuts and Jobs Act law which slashed rates on income, payroll, and corporate taxes. Increasing spending enacted on a bipartisan basis for Social Security, Medicare, and defense is also contributing to the rising deficit as well.
Interest owed for the national debt is also increasing. Interest on the debt was $325 billion last year. It’s projected to rise to $372 billion this year. The Congressional Budget Office (CBO) currently projects that by a decade from now, in 2029, the interest will be $807 billion. [See Table 1.1 in that link, cell P23.]
To put it another way, a decade from now, interest on the deficit alone will be higher than the entire deficit was last year.
What the legislation does
The Budgetary Accuracy in Scoring Interest Costs (BASIC) Act would require any governmental spending or budget projections made by the Congressional Budget Office or Joint Committee on Taxation must include costs related to interest on the national debt.
The House version was introduced on July 25 as bill number H.R. 3979, by Rep. Daniel Meuser (R-PA9). The Senate version was introduced a week later on August 1 as bill number S. 2435, by Sen. Steve Daines (R-MT).
Sen. Daines voted for the Tax Cuts and Jobs Act, as did every voting Senate Republican. That bill caused the plunging revenues that are among the primary drivers of the recent national deficit explosion in the first place. (Rep. Meuser is a freshman congressman, who was not in office to vote on the 2017 bill.)
What supporters say
Supporters argue that the legislation portrays a fuller, more comprehensive, and more realistic assessment of the complete cost of federal spending — and that this may force Congress to live within its means a little more.
“What this bill does, it will finally allow the American people to understand the true cost of the irresponsible spending that’s going on here by Congress,” Sen. Daines said in a speech on the Senate floor. “It’s going to face Congress, and force Congress to deal with the reality of our debt. So we can make decisions that need to be made going forward — knowing the true impact they will have on our children and our grandchildren.”
“The way we’re calculating budgetary costs now, it actually deflates the true cost. So it’s painting a rosier picture for the public than what actually exists,” Sen. Daines continued. “If I go back home, chatting with a Montanan, and tell them Congress allows gimmicks that shields how much it spends, they’d be furious — and they _should _be furious.”
What opponents say
While GovTrack found no explicit statements of opposition, someone against the bill might counter that the Congressional Budget Office couldn’t realistically include interest on the deficit in their calculations, since nobody knows with certainty what the interest rate will be a year from now — much less 10 years from now.
For example, in July, the Federal Reserve lowered interest rates for the first time in 11 years. That caused the Congressional Budget Office to lower its total national debt projection by $1.4 billion for the next decade.
Odds of passage
The House version has attracted two cosponsors, both Republicans. It awaits a potential vote in either the House Rules or House Budget Committee.
The Senate version has also attracted two cosponsors, both Republicans. It awaits a potential vote in the Senate Budget Committee.
A previous version introduced last Congress in 2017 attracted a slightly larger four Senate cosponsors, all Republicans. It never received a vote.