The 2025 Tax Debate: Congress Should Be Transparent on Cost

Hard-working Americans understand that a good household budget starts with an accurate accounting of income and expenses. If a person’s income drops from $80,000 one year to $70,000 the next, they adjust their expenses accordingly to avoid or minimize debt.

Although the federal budget is considerably more complex than that of a household, both should have accurate and transparent accounting at the core. As lawmakers consider tax and spending legislation in 2025 and beyond, Congress should follow longstanding precedent and use current law as the baseline for measuring the cost of legislation.

Policymakers no doubt have a monumental task ahead of them. Major provisions from the 2017 Tax Cuts and Jobs Act (TCJA) are scheduled to expire at the end of this year. BPC shares lawmakers’ interest in extending many of these tax cuts for workers and families.

The best way to address expiring TCJA provisions and secure their pro-growth benefits is to offset extensions, which the Congressional Budget Office estimates would cost $4 trillion from 2025 through 2034. Whether Congress uses a current law or current policy baseline, extending the tax cuts without paying for them will require trillions of dollars in additional borrowing over the next decade and beyond.

Higher deficits and debt will continue to slow private investment in the U.S., dragging down growth and making it more difficult for America to compete in the global economy. Continued historic levels of borrowing will further elevate interest rates in a time of rising costs and economic uncertainty, making it more difficult for American workers and families to afford basic expenses or pay down their debt.

Furthermore, a current policy baseline may allow Congress to bypass and degrade one of its own budget rules, the Byrd Rule, which says any fast-track tax or spending legislation cannot increase the nation’s debt in years beyond the coming decade. If current policy is used, trillions of dollars in tax cuts for 2035 and beyond could be obligated without any way to pay for them, putting our nation’s finances further at risk.

To date, lawmakers have uniformly used a current law baseline to measure the budgetary impacts of reconciliation legislation. Breaking this precedent and adopting a current policy baseline would open the floodgates for future congresses—regardless of party control—to increase borrowing by trillions of dollars without accurately accounting for those costs.

A future Congress could increase spending by $100 billion in one year and subsequently extend that funding at $100 billion per year for nine more years but claim it costs $0 on a current policy baseline. The same approach could apply to a $100 billion per year tax cut. The additional debt required is the same under either baseline, but breaking the precedent now makes it easier for both parties to add significantly to the debt for decades to come.

Lawmakers in both parties should keep the current law baseline as their North Star.

BPC and others have achievable offset options that total trillions of dollars and would reform government spending, reduce improper payments, improve efficiency, and close tax loopholes. Congress has the opportunity this year to demonstrate its commitment to America’s economic prosperity, which will only be realized if we restore its fiscal health.