As Congress Votes on Budget Proposals, It Is Also Voting on Whether It Understands the Economy

Later today and tomorrow, the House of Representatives will consider and vote on six different budget proposals—those put forth by the House leadership of both the Democratic and Republican parties, as well as by the Obama administration, the Congressional Progressive Caucus (CPC), the Congressional Black Caucus, and the Republican Study Committee.

We already know that only the Republican budget, authored by House Budget Committee Chair Paul Ryan (R-Wisc.), will pass in the House—and even then, it won’t become law—but it is still important to understand what these proposed budgets call for. While it’s true that a budget proposal is a statement of values, it is also the reflection of its supporters’ understanding of the economy.

The chart below shows the cuts and increases to various parts of the budget, as called for by the proposals made by Chairman Ryan, House Budget Committee Ranking Member Chris Van Hollen (D-Md.), and the CPC. Chairman Ryan includes deep cuts to just about every budget function, and doubles down on the unspecified sequester cuts. Rep. Van Hollen’s budget gets rid of the onerous sequestration spending cuts but otherwise primarily stays the course. Meanwhile, the CPC’s budget calls for immediate stimulus spending in order to meet its stated goal of returning the economy to full employment over the next three years.


At a time when the U.S. economy is suffering from a lack of aggregate demand, we need public spending to provide a near-term economic boost. While an economy is operating far from its potential, as ours is currently, each dollar of additional spending returns more than a dollar to the economy, helping to create jobs. As such, the near-term stimulus of the CPC budget would boost employment considerably, especially over the first three years it’s in effect. Conversely, by removing billions of dollars of public spending from the economy, the Ryan budget would widen the “output gap” between actual and potential economic growth, resulting in large job losses—especially when the full extent of discretionary cuts begin in fiscal year 2016.