What you need to know
Because Republicans wield nearly every point of power in the current U.S. Congress, the initial moves on deficit reduction in 2025 will likely come from them. As of late February, the Senate has passed a proposal, and the House is moving towards considering its version. However, given certain divisions within the Republican Party and its narrow majorities in the House and Senate, substantial deficit reduction will likely involve a combination of Republican and Democratic support.
- Because Republicans control both Houses of Congress, the initial moves on deficit reduction will come from them.
- Given policy differences in the Republican Party and its narrow congressional majorities, substantial deficit reduction will likely require some votes from Democratic legislators.
- This brief reviews Democratic ideas about deficit reduction.
Democratic Party Proposals
There is no official Democratic Party position on deficit reduction, either by the national organization or the Democratic Caucuses in the House and Senate. Most comments by Democratic officeholders critique the Republican deficit-reduction proposals discussed in previous briefs without offering alternatives
Representative Chris Pappas
Representative Chris Pappas of New Hampshire introduced the Fighting Budget Waste Act as his first bill of the 119th Congress. This bill mandates that the Office of Management and Budget (OMB) use the Government Accountability Office's (GAO) annual report to identify and eliminate wasteful and redundant federal programs. The report has been released annually for the last two decades, yielding billions in spending reductions.
The largest potential saving identified in the 2024 GAO report is Medicare Site Neutrality, whereby the Medicare program would not pay higher hospital rates for procedures performed at a hospital-owned medical office. As we discussed in our introduction to deficit reduction, this proposal is one of the few that attracts bipartisan congressional support and is likely to be part of any deficit reduction proposal. Estimates are that this change would generate $136 billion in savings over the next ten years.
Unfortunately, the other items in the GAO report would generate much lower savings, on the order of several billion dollars per year. For example, GAO recommends that the Department of Education verify reported incomes in the Federal Student Loan Income-Driven Repayment Program. GAO estimates that verification would identify enough underreported income to increase loan payments by two billion dollars over ten years. While implementing such changes is important to demonstrate government efficiency, it will not substantially reduce deficits.
Senator Elizabeth Warren
In a letter to Elon Musk as the leader of DOGE (Department of Government Efficiency), an initiative of the second Trump administration tasked with reducing federal spending, Senator Elizabeth Warren offered ideas quite different from the Republican approaches discussed thus far. She listed 30 specific cuts that would be supported by congressional Democrats and would satisfy the 2 trillion dollar goal of cuts announced at the start of the Trump administration.
Warren’s letter details approaches rather than specific program cuts. For example, she notes that past Department of Defense Inspector General reports documented overbilling by government contractors and suggests that an investigation of current contracts could yield considerable savings. Similarly, she proposes greater oversight of private insurers who provide Medicare Advantage policies to seniors, noting that previous studies have suggested that the government is being overcharged by up to $83 billion per year.
Other Democratic Party Proposals
A third approach has been offered by Democratic House members who are part of the Problem-Solvers Caucus, a group of Republican and Democratic representatives who work to develop bipartisan proposals for issues such as deficit reduction. Our final brief on deficit reduction focuses on their efforts.
The Take-Away
There is no official Democratic Party position on how to accomplish deficit reduction.
Proposals made by individual Democratic legislators highlight the very real differences in policy priorities between the two parties.
Democratic ideas focus on uncovering waste and fraud, particularly in defense programs and health care. The amount of potential savings and policy consequences are unknown.
The efforts of the Problem-Solvers Caucus - the only organized group in Congress currently working to develop a bipartisan deficit reduction plan - may offer a path to a bipartisan deficit reduction proposal.
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Further reading
House Budget Committee Democrats. (2025.). Reconciliation explainer FY2025. U.S. House of Representatives. Retrieved February 5, 2025, from https://tinyurl.com/5x92jus9
Warren, E. (2025, January 23). Letter to Mr. Elon Musk, Chair, Department of Government Efficiency. Retrieved February 20, 2025, from https://tinyurl.com/3tsmr68s
Sources
Congressional Budget Office. (2023). Options for Reducing the Deficit: 2025 to 2034. Retrieved January 31, 2025 from https://tinyurl.com/3ne3478s
Congressional Research Service. (2004). Reference Table: Expiring Provisions in the “Tax Cuts and Jobs Act” (TCJA, P.L. 115-97) . R47846. Retrieved February 5, 2025, from https://tinyurl.com/zrpy5zrp
Jeffries, H. (2025, February 3). Dear colleague re: Ongoing House Democratic Caucus activity. U.S. House of Representatives. Retrieved February 5, 2025, from https://tinyurl.com/yc7vcv72
Medicare Payment Advisory Commission. (2024). Report to the Congress: Medicare payment policy (p. 373). Retrieved from February 21, 2025 from https://tinyurl.com/3wntrpky
Novelly, T. (2024). Air Force overcharged 7,943% for C-17 hand soap dispensers, watchdog finds. Military.com. Retrieved February 21, 2025 from https://tinyurl.com/mwdykbf2
Office of the Under Secretary of Defense for Acquisition & Sustainment. (n.d.). Base Realignment and Closure (BRAC). U.S. Department of Defense. Retrieved February 5, 2025, from https://tinyurl.com/35ue9zuz
Contributors
Ralph Fernando (Intern) is an Economics and Mathematics student at Indiana University Bloomington. He will graduate in May 2025 and plans to attend graduate school to pursue a Ph.D. in Economics.
Lindsey Cormack (Content Lead) is an Associate Professor of Political Science at Stevens Institute of Technology and the Director of the Diplomacy Lab. She received her PhD from New York University. Her research explores congressional communication, civic education, and electoral systems. Lindsey is the creator of DCInbox, a comprehensive digital archive of Congress-to-constituent e-newsletters, and the author of How to Raise a Citizen (And Why It’s Up to You to Do It) and Congress and U.S. Veterans: From the GI Bill to the VA Crisis. Her work has been featured in The New York Times, The Washington Post, Bloomberg Businessweek, Big Think, and more. With a drive for connecting academic insights to real-world challenges, she collaborates with schools, communities, and parent groups to enhance civic participation and understanding.
William Bianco (Research Director) is Professor of Political Science at Indiana University and Founding Director of the Indiana Political Analytics Workshop. He received his PhD from the University of Rochester. His teaching focuses on first-year students and the Introduction to American Government class, emphasizing quantitative literacy. He is the co-author of American Politics Today, an introductory textbook published by W. W. Norton, now in its 8th edition, and authored a second textbook, American Politics: Strategy and Choice. His research program is on American politics, including Trust: Representatives and Constituents and numerous articles. He was also the PI or Co-PI for seven National Science Foundation grants and a current grant from the Russell Sage Foundation on the sources of inequalities in federal COVID assistance programs. His op-eds have been published in the Washington Post, the Indianapolis Star, Newsday, and other venues.
