All but unnoticed last month, a bipartisan group of legislators introduced a resolution calling for Congress to keep budget deficits at no more than 3% of gross domestic product. Though not enough by itself to solve America’s fiscal problems, the proposal is a rare step in the right direction. It deserves strong support.
On plausible assumptions, such a constraint would hold public debt constant at its current level of around 100% of GDP. A new report by the nonpartisan Congressional Budget Office projects deficits of about twice that size over the next 10 years, sufficient to keep the debt burden on an accelerating upward trajectory — reaching 120% of GDP by 2036 and 175% by 2056. The need to get off this road to disaster should be uncontroversial.
In principle, the White House agrees that stabilizing and then reducing the debt is desirable, and Treasury Secretary Scott Bessent has previously proposed a 3% budget deficit as a way to do so. The problem is that current policy on taxes and public spending — contrary to the administration’s forecasts — will almost certainly fall short.
The White House Council of Economic Advisers is expecting economic growth of 4% a year through 2028 plus dramatically lower deficits over the next 10 years. This would indeed start to get debt under control. Problem is, the growth prediction is double the consensus estimate of roughly 2%, and the deficit forecast is based on a combination of wishful thinking and accounting maneuvers that treat recent tax cuts and spending increases as temporary (which, in practice, they won’t be).
Granted, tariffs are on track to raise a lot of additional revenue — on the order of $250 billion a year (if the Supreme Court allows the duties imposed under emergency powers or the administration resorts to other legal devices instead). But the tariffs will also slow growth, while tax and spending changes in the recent One Big Beautiful Bill Act more than cancel out their benefits. If alarm over this dire outlook should cause long-term interest rates to rise, the growing debt will cost more to service, and those already bleak projections will prove much too cheerful.
Plain common sense demands a mix of higher taxes and lower spending to get projected deficits down — preferably by enough to reduce the debt, not merely stabilize it. There’s no lack of feasible options: gradually raise the retirement age for pension benefits, change the taxation of assets transferred at death, tighten limits on itemized tax deductions and so on. The broader the scope of such reforms, the less painful they’ll be. That’s why, if Congress cares about fiscal discipline, it should also break its habit of targeting tax and spending changes at narrow constituencies for political purposes. This mind-set — meddling now, budget control later — is how the country wound up here.
Once upon a time, a budget deficit of 3% of GDP — with the economy at or close to full employment and growing well — would’ve been regarded as excessive, and 6% as simply insane. But Washington has grown comfortable with such irresponsibility. It’s good that this resolution has attracted initial support from both Republicans and Democrats, but they’re too few and the idea is still a long way from becoming reality. Better to act on it now, before it’s too late.
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