R Street Institute
Real Solutions

Virtual Federal Budget Reform Forum: Recommendations for Congress

by Nan Swift
Jan 22, 2026
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issues: Budget and Spending Reform, Federal Government Affairs, Governance

Forum Participants

Introduction

There are myriad smart options for improving the federal budget process, and it can be hard to know where to begin. As our debt crisis compounds, spending continues unabated, and trust funds are on the precipice of insolvency, what should be the top priority? R Street Institute asked leading budget experts to contribute their recommendations for Congress to this virtual forum. Each participant was asked:

“What is the most important federal budget process reform that would achieve a more sustainable fiscal outcome?”

For more on some of these and other budget process and spending reforms, visit our quick-reference guide, “Elements of Change: Building Blocks for a Better Budget.”

***Disclaimer: These are the personal opinions of the participating experts and do not necessarily reflect an official R Street Institute position or their employers, which are listed for identification purposes only.

Establish an Independent, Fast-Track Fiscal Commission

By Romina Boccia

The United States is on a collision course with a fiscal crisis driven by automatic entitlement spending growth and chronic political paralysis. Federal debt is rising faster than the economy’s productive capacity, interest costs are consuming a larger share of the budget than national defense, and the programs driving the imbalance remain politically untouchable.

Congress should establish a fiscal commission that enlists independent experts to support legislators in making economically necessary, but politically unpopular reforms, and fast-track their implementation.

Such a fiscal commission should be modeled after the Base Realignment and Closure (BRAC) process and might operate as a fail-safe alongside a more traditional congressional fiscal commission—preserving Congress’s leadership role while ensuring that reform does not yet again collapse under political incentives that reward obstruction and inaction.

Congress does not lack information about the nation’s fiscal crisis. The drivers are well known: automatic spending in Social Security and Medicare accounts for the entire long-term (75-year) unfunded obligation. Federal health care spending is by far the largest non-interest driver of growing deficits and debt, followed by retirement obligations.

What Congress lacks is a credible mechanism to overcome the political costs of reforming programs it placed on autopilot decades ago. Congress abdicated its fiscal responsibilities when it allowed entitlement spending to grow automatically without meaningful limits or regular review.

A fail-safe commission structure acknowledges political reality. Under this approach, Congress would first attempt to solve the problem through a congressional fiscal commission, guided by clear objectives such as stabilizing the debt at or below 100 percent of GDP and restoring long-term solvency to major entitlement programs. This preserves congressional ownership and accountability and offers lawmakers every opportunity to act responsibly.

But history suggests that Congress may fail. Previous commissions dominated by sitting politicians—most notably Simpson-Bowles—produced sensible ideas that Congress ultimately ignored. That failure was not accidental; it was baked into a process that required affirmative political courage at every step. A fail-safe BRAC-like commission ensures that failure is not the default outcome. It is a tool for reclaiming responsibility, not relinquishing it.

Modeled on the successful BRAC process, the independent commission would serve as a backstop. Its recommendations would become law upon presidential approval unless Congress affirmatively rejected them in their entirety. This “silent approval” mechanism flips the default from paralysis to action, while still preserving Congress’s ultimate authority to say no.

Most importantly, this approach allows reform to occur before a crisis forces far worse decisions. Crisis-driven policymaking invites panic, punitive taxation, and economically destructive shortcuts. A BRAC-like fail-safe enables gradual, predictable reforms that protect vulnerable populations, respect economic growth, and restore generational equity.

If Congress is serious about stabilizing the debt, it must design institutions that make success possible even when political courage falls short. A fail-safe BRAC-like fiscal commission does exactly that.

Additional Resources:

Romina Boccia is the Director of Budget and Entitlement Policy at the Cato Institute.

Set a Three Percent Deficit Target: A First Step Back to Balance

By Dr. Carolyn Bourdeaux

A growing number of fiscal experts and policymakers, including Treasury Secretary Scott Bessent, financier Ray Dalio, and the Committee for a Responsible Federal Budget are coalescing around the idea that reducing the federal deficit to 3 percent of gross domestic product is a critical first step toward stabilizing the national debt and moving back to balance. This effort to effectively cut the deficit in half is a cornerstone of Concord Action’s Policy Agenda to Restore Fiscal Responsibility.

The three percent target is grounded in economic fundamentals. When deficits stay below the rate of economic growth, the debt-to-GDP ratio levels off, preventing the debt burden from rising indefinitely. With deficits projected to average around 6 percent of GDP over the next decade and debt held by the public on track to exceed 120 percent of GDP by the mid-2030s, the three percent benchmark offers a realistic short-term goal that can help put the country on a more sustainable path.

Where We Are: A Budget Deep in the Red
The federal deficit for fiscal year 2025 reached $1.8 trillion, or 5.9 percent of GDP. That is far above the 50-year average of 3.8 percent. Historically, deficits of this size occurred during extraordinary events. Today’s deficits are unusually high for peacetime and are driven by structural imbalances including an aging population, rising interest costs, and tax policies that fall short of covering current spending levels. Without corrective action, debt will continue to grow faster than the economy, limiting future economic growth, exploding interest costs, and reducing the government’s ability to respond to crises.

Making a Plan to Reach the Target
Reaching a three percent deficit will require a comprehensive plan that blends spending reforms, revenue changes, and strategies to manage rising interest costs. The most practical way to develop such a plan is through a bipartisan Fiscal Commission, and Congress already has a strong proposal on the table. The Fiscal Commission Act (H.R. 3289), sponsored by Rep. Scott Peters (D-Calif.) and Rep. Bill Huizenga (R-Mich.), would create a bipartisan, bicameral commission charged with producing recommendations to stabilize the debt and improve the long-term fiscal outlook. The commission would examine every part of the budget and tax code, set a clear fiscal goal, and submit a package that receives expedited consideration in Congress. This structure gives lawmakers a credible path to reach the three percent target and to move beyond it toward true long-term sustainability.

Conclusion: A Compass for Fiscal Sustainability
A three percent deficit target is not a final destination but a strong first step. It signals seriousness, imposes discipline, and aligns fiscal policy with economic reality. When the nation sets clear goals and follows through, it can restore trust and strengthen long-term stability. We have balanced the budget before and we can do it again.

Dr. Carolyn Bourdeaux is the Executive Director at Concord Coalition.

A Comprehensive Budget Can Restore Responsibility in Congress

By Kurt Couchman

Congress has abundant information about America’s challenges, but outdated budget practices block converting resources into results. Congress can dramatically empower itself with a comprehensive budget: one annual bill with all spending and revenue.

Members’ tremendous potential would be unleashed. Every committee could manage its programs. All members could contribute to committee markups and on the floor.

A real budget enables trade-off discussions. Are funds more useful here or there? Can we stretch dollars, coordinate related activities, or scale back?

Any successful enterprise looks closely at revenue and expenses. State legislatures that approach a complete budget are more efficient. Some countries’ constitutions mandate “all revenues and expenditures” in the budget bill. The Congressional Budget Office, Government Accountability Office, and the White House regularly review the entire budget, but Congress does not. 

Budgeting is the indispensable coordination hub for weighing priorities and to minimize disjointed legislating that balloons the debt.

Moving to a comprehensive congressional budget would grow the pie for Congress and the American people. Every committee could do what the Appropriations Committees already do: manage its fiscal portfolio within limits. 

Congress could enact fresh appropriations—on time—by expanding member commitment to the annual process. Authorizers would have more ways to apply their ideas and legislative skills. Budget Committee members would supervise. Leaders could let committees handle most dealmaking, especially if committees are microcosms of Congress.

Members would have more bipartisan, bottom-up spaces to seek better ways of doing things. Benefits programs and the tax code would finally be part of a holistic regular order. Practical options and coalition-building from outside experts and organizers would be in greater demand.

Within a comprehensive congressional budget, appropriators would still do their twelve subcommittee bills. The House Ways and Means and Senate Finance Committees could modernize the tax code and coordinate benefits programs. The other fifteen spending committees per chamber would do the same. The Budget Committees would make sure everyone lives within the framework.

The Comprehensive Congressional Budget Act would make this possible. It includes smart checks-and-balances backstops if Congress is late with a budget resolution or if any committee does not complete its piece on time. The budget bill would even provide a regular way to update the budget process.

An annual budget act would draw on committee expertise and member input for all spending and revenue. It would give Congress far more control of the budget. Members could chip away at challenges year after year. 

Holistic budgeting would make tough-but-necessary changes more survivable by expanding healthy kinds of political cover. Improving the value of good working relationships within Congress would reduce polarization and promote the search for common ground.

Regularly managing the entire budget would foster a more cooperative and coherent legislature. To boldly face our country’s challenges, Congress must give itself better tools, especially a comprehensive budget.

Additional Resources:

Kurt Couchman is a Senior Fellow in Fiscal Policy at Americans for Prosperity.

End the Baseline Bias

By Matthew Dickerson

The most basic aspect of the federal budget process is biased towards big government. 

The Congressional Budget Office (CBO) baseline is often described as reflecting current law, but this is a myth. Instead, the official CBO baseline is distorted in favor of higher spending and taxes. 

The CBO baseline is important because it is used as the official benchmark against which legislative proposals are scored. The biases in the baseline allow the true costs of legislation to stay hidden from the public and members of Congress.

There are four deviations from actual current law in the baseline that CBO is required to incorporate. Three of these make spending look much higher, and one makes revenues look slightly higher than they would be if Congress made no further changes in law:

  1. Discretionary appropriations are assumed to be continued and grow with inflation each year.
  2. Certain direct spending programs larger than $50 million are assumed to be extended beyond their statutory expiration.
  3. Entitlement programs are assumed to make all scheduled benefit payments, even if a program’s trust fund and financing is inadequate to do so.
  4. Excise taxes dedicated to a trust fund are assumed to be continued beyond their statutory expiration.

This bias hides tens of trillions of dollars in spending in the baseline.

Congress should remove the distortions required throughout Section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985 so that the official CBO budget baseline reflects current law. The No Bias in the Baseline Act, introduced by Rep. Ben Cline (R-Va.), would provide more consistent, transparent, and realistic cost estimates for legislative proposals.

The baseline is sometimes misunderstood as being a forecast of what budgetary outcomes will be in the future. However, as the CBO itself has stated, “CBO’s baseline is not intended to be a forecast of budgetary outcomes; rather, it is meant to provide a neutral benchmark that policymakers can use to assess the potential effects of policy decisions.” Unfortunately, as CBO Director Phil Swagel testified before the House Budget Committee, its baseline is “not a neutral benchmark.”

While legislation should be measured against a current law baseline, the CBO should also produce a variety of informational alternative fiscal scenarios to show what the fiscal outlook could be under different fiscal and economic paths.

A current law baseline would provide the clearest picture of the choices facing lawmakers if they either maintain the legal status quo or decide to make changes in law. Fixing the baseline to reflect actual current law would make it more obvious that keeping spending high is a policy choice.

Additional Resources:

Matthew D. Dickerson is Director of Budget Policy at the Economic Policy Innovation Center (EPIC).

Set a Statutory Cap on Total Federal Spending to Force Tradeoffs

By William Glass

Today’s budget process avoids choice by design. Discretionary spending is negotiated at the margins, while most of the budget grows automatically under baseline assumptions that treat policy decisions as neutral facts. The result is a system where nearly everything is rhetorically “essential,” aggregate outcomes are no one’s responsibility, and fiscal sustainability is always someone else’s problem. This is why forcing Congress to make real tradeoffs every year by setting a binding topline for total spending and requiring lawmakers to prioritize explicitly within it would be the most important federal budget reform if enacted.

A binding topline would change behavior without dictating policy. Unlike the annual budget resolution, which is advisory and largely confined to discretionary spending, this cap would be enacted in statute and apply to total federal outlays. Congress could set the level wherever it wanted, but once set, the ceiling would be real. If spending exceeded the cap, an automatic correction would trigger unless lawmakers affirmatively voted to override it. The default outcome would be compliance, not waivers.

The power of this reform lies less in the cap itself than in what it forces Congress to do next: prioritize. When total spending must fit under a fixed ceiling, growth in one area must be offset elsewhere. Formula-driven increases, inflation indexing, and eligibility expansions stop being background noise and start competing with other priorities. That does not require rewriting entitlement law or mandating cuts. It simply requires Congress to acknowledge that automatic growth is a choice, not a force of nature.

Just as important, a binding topline makes tradeoffs visible. Under the current process, committees can claim they met their targets while the overall budget continues to drift upward. A hard cap forces those tradeoffs into the open. Whether through ranked priorities, consolidated tradeoff packages, or transparent offset tables, lawmakers must show what they funded instead of something else. Budgeting becomes an exercise in governing, not messaging.

This approach is also more realistic than many popular process reforms. New commissions, better forecasts, and improved scorekeeping all have value, but they fail for the same reason past reforms failed: Congress can ignore them without consequence. A binding topline does not rely on better intentions or greater foresight. It relies on a simple constraint that channels political disagreement into concrete choices.

Critically, this reform preserves flexibility. Congress can still respond to emergencies, but emergency spending would require a clear designation and an affirmative vote, and it would not permanently evade constraint. If lawmakers believe spending must exceed the cap, they can say so openly and accept responsibility for that decision.

Budgeting will never be painless. But the goal of reform should not be to eliminate conflict; it should be to force it to happen honestly. A binding topline with mandatory prioritization does exactly that. It restores scarcity to a process that currently pretends it does not exist, and in doing so, it reestablishes the most basic function of budgeting: deciding what matters most when not everything can be funded.

William Glass is the Policy Director at In the Black (formerly the Millennial Debt Foundation).

Reform the Reconciliation Process

By G. William Hoagland

The adage “if you are in a hole, stop digging” aptly applies to the federal budget outlook. Left unchanged, the current federal budget is projected to see increasing debt and deficits well into the future. Prior to the adoption of the recent reconciliation bill—H.R.1, the One Big Beautiful Bill Act (OBB)—the federal budget debt held by the public was expected to grow over the next decade from $30.1 trillion (100% of GDP) today, to over $52.1 trillion (119% of GDP) by 2035. Post OBB, these metrics are expected to worsen. 

Federal policies enacted through the budget reconciliation process over the last many years have only dug the hole deeper. 

During the heated debate over health care reform in 2009, Senator Robert C. Byrd, one of the original authors of the reconciliation process, wrote his colleagues: “Reconciliation was intended to adjust revenue and spending levels in order to reduce deficits.”

In the 51-year history of the Congressional Budget Act (CBA), there have been 28 budget reconciliation bills, four were vetoed, and 24 enacted into law. The 13 reconciliation bills enacted up through the Balanced Budget Act of 1997 adhered to the principle that reconciliation bills should reduce deficit projections. The Economic Growth and Tax Relief Reconciliation Act of 2001 was projected to reduce taxes by $1.3 trillion. But the bill’s 10-year tax cuts were predicated on surplus projections; they were not designed to or expected to lead to deficits.

However, beginning with the seven enacted reconciliation bills enacted after 2005 through most recently the OBB, all have been estimated to add to the federal deficit and by significant amounts. Further, beginning with the Health Care & Education Reconciliation Act of 2010, all have been enacted along strict party line votes, both when Republicans controlled the U.S. Senate and when Democrats were in control of that chamber. Using the reconciliation process to dig the hole deeper has been a feat with bipartisan concurrence.

A simple amendment to the CBA—to at least prevent digging ourselves into an even deeper hole—is required.  Reconciliation—the shovel—should be amended to codify the original intent of the process as Senator Byrd stated. 

The amendment would specify that no reported reconciliation bill shall be in order in either the U.S. Senate or House that the Congressional Budget Office estimates will add to current law projected debt and deficits covered by the bill. However, the legislation could continue to be considered but it would proceed without the current procedural and privilege protections afforded a reconciliation bill today. In other words, it would be fully amendable regardless of germaneness, Byrd rule limitations would not apply, and there would be no time constraints (currently 20 hours in the Senate).  And yes, proceeding to consider the legislation would be subject to Senate filibuster rules. 

Would this simple amendment result in a more sustainable fiscal outcome? It is unclear that it would itself, but at least a reformed reconciliation process would not allow the hole to get any deeper.

G. William Hoagland is Senior Vice President at the Bipartisan Policy Center.

Offset Emergency Spending

By Dominik Lett

Most budget experts will rightly tell you that Congress needs better fiscal rules. But as we’ve seen with the Budget Control Act and the recent Fiscal Responsibility Act, well-intentioned fiscal rules are useless if they have a massive loophole. In Washington, that loophole is the “emergency designation.”

Over the last three and a half decades, Congress has increasingly used emergency spending designations as a workaround to sidestep budget rules, avoid trade-offs, and pass massive spending bills with minimal congressional and public scrutiny.

From the wars in Iraq and Afghanistan to disaster relief and the COVID-19 pandemic, emergency designations have enabled more than $12.5 trillion in spending since 1991. That’s comparable to the entire amount spent on Medicaid and veterans’ programs combined during the same period, or roughly half the federal public debt. This surge in spending has added an estimated $2.5 trillion in additional new interest costs, effectively throwing trillions of taxpayer dollars into a fire pit.

The problem isn’t just that Congress engages in spending binges during real crises (which they do). The problem is also that emergency designations have become a means of circumventing budget caps for routine, predictable expenses, such as law enforcement salaries or housing subsidies. This is largely because there is no expectation that emergency spending will be offset with spending cuts or revenue increases elsewhere. It is simply added to the national credit card, forever.

Luckily, we can learn a few lessons from our European neighbors on how to design good fiscal rules without abandoning the emergency exemption altogether.

Switzerland and Germany have both adopted debt brakes—binding constitutional fiscal rules that limit borrowing—which include mechanisms to exempt certain emergency spending, provided it is repaid over subsequent years. The COVID-19 pandemic response put these provisions to the test.

Since 2019, both Germany and Switzerland have reduced their governmental debt-to-GDP ratios, a sign of fiscal healthiness. Meanwhile, nations with weaker fiscal rules, including the United States, have substantially increased their debt-to-GDP ratios.

Congress should follow Switzerland and Germany and adopt a debt brake that places binding constraints on borrowing, including a budget enforcement mechanism to track and offset new emergency spending. Should Congress violate spending limits or fail to offset new emergency spending, automatic, across-the-board spending reductions should serve as a backstop to offset new deficit spending over a five or ten-year period. Without a process to offset emergency spending, Congress will continue to use emergencies as a pretext to pass budget-breaking spending initiatives with no plan to rein in future spending.

Strong, well-designed fiscal rules anchor public expectations about politicians’ responsibility to budget in a forward-looking manner. Accordingly, emergency spending exemptions can provide needed flexibility during a crisis without sacrificing economic and fiscal stability, so long as they are designed correctly and fully offset.

Additional Resources:

Dominik Lett is a policy analyst at the Cato Institute.

Prohibit Reconciliation Bills from Expanding Budget Deficits

By Jessica Riedl

Proposed budget reforms to rein in soaring federal debt typically face a trade-off between effectiveness and political feasibility. The most effective reforms—such as an airtight cap on government borrowing as a share of the economy—currently face no plausible path to enactment. On the flip side, PAYGO rules to limit deficit-expanding legislation have garnered little opposition because the ease with which they can be bypassed has rendered them useless.

Instead of forcing painful tax increases and spending cuts, one approach to thread the needle between effectiveness and feasibility would make it much more difficult for lawmakers to worsen deficits. This means banning reconciliation bills from expanding budget deficits over any five-year period.

Reconciliation bills have become a lead driver of deficit-expanding legislation. The 2001 Bush tax cuts ($1.35 trillion), 2003 tax cuts ($350 billion), 2017 Tax Cuts and Jobs Act ($1.9 trillion), 2021 American Rescue Plan ($1.8 trillion), and 2025 One Big Beautiful Bill Act ($3.4 trillion) were all passed under reconciliation. And while the 2013 permanent extension of the Bush tax cuts—costing $4 trillion over the first decade—was not a reconciliation bill, there would have been no tax relief to extend without the earlier reconciliation law. That’s a staggering $12.8 trillion in new debt passed by (or related to) reconciliation since 2001—plus trillions more in resulting interest costs.

Such costs are antithetical to the purpose of reconciliation of bills. The1974 Budget Act created the modern budget resolution to help Congress set responsible medium-term fiscal targets. Reconciliation was included as a fast track, privileged, once-per-year process to help Congress meet those targets. While this process was meant to facilitate deficit reduction, the law failed to prohibit lawmakers from instead setting looser fiscal targets and using reconciliation bills to expand deficits (although the Byrd Rule later prohibited reconciliation bills from hiking deficits in the years beyond the budget resolution window).

Lawmakers focused reconciliation bills on deficit reduction until 2001, when the process was twisted into an annual “get out of jail free” card to cut taxes and expand spending without the possibility of a Senate filibuster. Since 2001, every president except Obama has pushed through a trillion-dollar reconciliation bill shortly after taking office (Obama passed his $800 billion bill outside of reconciliation).

If the Senate is going to maintain the filibuster, there is no rational reason to exempt one annual Christmas tree bill that can be packed with every budget-busting priority that could never pass under regular order. After all, the expedited consideration privilege exists to help Congress facilitate some vital national objective, in this case deficit reduction.

The Senate’s “Conrad rule” existed between 2007 and 2015 to prohibit reconciliation bills from expanding deficits at all. Congress should codify this concept, and close the loopholes allowing lawmakers to circumvent such rules by rewriting bill scores or measuring their cost against a baseline other than current law. These reforms may not douse the debt inferno but would at least limit Congress’ ability to pour additional gasoline on it.

Jessica Riedl is a fellow at the Brookings Institution.