Analysis of “FY 2025 Budget Reconciliation: Facts, Figures, and Analysis” by Senator Ron Johnson
Introduction
Senator Ron Johnson (R-Wis.) authored the “FY 2025 Budget Reconciliation: Facts, Figures, and Analysis” report, released on June 18, 2025, which examines the U.S. federal budget’s fiscal challenges. Notably, Johnson is also recognized for producing an immigration chart that gained historical significance during a July 13, 2024, campaign rally in Butler, Pennsylvania. Former President Donald Trump, unscripted, turned to reference this chart on illegal immigration-originally shared with him by Johnson during an April 2024 plane ride-when he was grazed by a bullet in an assassination attempt. Trump credited the chart, which highlighted border encounter data, with saving his life by prompting the head turn that altered the bullet’s trajectory.
1. Overview and Purpose
The report underscores the U.S. government’s spending-driven deficit problem, citing a 2011 Trump tweet: “Washington has a spending problem, not a revenue problem.” Using the Congressional Budget Office’s (CBO) January 2025 baseline, it projects a $21.1 trillion deficit over FY2025–2034 (revenues: $64.7 trillion; outlays: $85.8 trillion) and evaluates the “One Big Beautiful Bill” (OBBB) alongside alternative scenarios. The document attributes the fiscal imbalance to a 58% spending increase from $4.4 trillion in FY2019 to $7.0 trillion in FY2025, driven by persistent post-pandemic policies.
2. Analysis of the One Big Beautiful Bill (OBBB)
The OBBB, extending Tax Cuts and Jobs Act (TCJA) provisions, increases the CBO baseline deficit by $3 trillion to $24.1 trillion over FY2025–2034, including $551 billion in additional debt servicing costs. The report highlights scoring discrepancies:
– CBO’s “Current Law” Baseline: Assumes TCJA provisions expire, projecting $21.1 trillion in deficits. OBBB’s $3 trillion deficit increase reflects a $4 trillion revenue loss, partially offset.
– Senate’s “Current Policy” Baseline: Assumes TCJA continuation, yielding a $25.1 trillion baseline deficit. OBBB’s deficit impact is scored $1 trillion lower, but the total remains $24.1 trillion.
– White House Memo Critique: The June 7, 2025, memo claims OBBB reduces deficits by $6.7–$6.9 trillion against a $25.5 trillion “current policy” baseline. Johnson argues this overstates savings by $4 trillion due to inconsistent baselines, with CBO’s “current law” showing a $2.5 trillion reduction at best.
3. Growth Scenarios and Deficit Projections
The report tests four growth scenarios, assuming a constant 17.1% revenue-to-GDP ratio (FY2024 and 50-year average):
– Scenario 1 (2.21% GDP Growth): Based on 2000–2024 average, yields a $22.6 trillion deficit ($22.2 trillion after $0.4 trillion debt service savings).
– Scenario 2 (3% GDP Growth): Produces a $20.2 trillion deficit ($19.4 trillion after $0.8 trillion savings).
– Scenario 3 (White House Memo): Projects an $18.6 trillion deficit, including $2.8 trillion in tariff revenue, $1.6 trillion in discretionary cuts, and $0.8 trillion in debt service savings.
– Scenario 4 (4% GDP Growth): Yields a $17.1 trillion deficit ($15.6 trillion after $1.5 trillion savings).
All scenarios fail to restore pre-pandemic deficit levels (under $1 trillion annually), as even 4% growth leaves deficits above $1 trillion by FY2034.
4. Spending Reduction Proposals
Johnson advocates reverting to pre-pandemic spending, citing post-WWII cuts (41% of GDP in 1945 to 11.4% by 1948). Two scenarios combine 3% GDP growth with cuts:
– Scenario 5 (7.5% Cut): Based on FY2019 outlays ($6.5 trillion in FY2025, adjusted for inflation/population), reduces outlays to $77.8 trillion, yielding a $13.0 trillion deficit.
– Scenario 6 (14.6% Cut): Based on Trump’s FY2021 budget ($6.0 trillion), reduces outlays to $70.9 trillion, yielding a $6.1 trillion deficit, potentially balancing the budget by FY2034.
These exempt Social Security, Medicare, and debt interest, targeting discretionary and mandatory programs (e.g., Medicaid). Savings of $384–$898 billion are identified, with Medicaid adding $517–$1,309 billion.
5. Taxation
The report frames taxation as sufficient, with deficits driven by spending:
– Revenue Sufficiency: Federal revenue at 17.1% of GDP (FY2024 and 50-year average) is deemed adequate, rejecting tax increases.
– TCJA Extensions in OBBB: OBBB’s TCJA extensions (lower taxes, higher exemptions, business deductions) reduce revenue by $4 trillion, increasing deficits by $3 trillion (plus $551 billion debt service). CBO’s “current law” scores a $24.1 trillion deficit; “current policy” scores $1 trillion less but reaches the same total.
– White House Tariff Claims: The White House projects $2.8 trillion in tariff revenue, which Johnson critiques as unreliable due to consumer cost increases and uncertain yields.
– TCJA’s Impact: The report notes TCJA likely did not “pay for itself,” with CBO data showing $4 trillion in primary deficit growth (p. 19).
– No Tax Hikes: Johnson maintains a constant 17.1% revenue-to-GDP ratio, focusing on spending cuts.
– Scoring Confusion: “Current law” vs. “current policy” baselines create discrepancies, with “mixed scoring” potentially understating OBBB’s deficit impact (e.g., $20.1 trillion vs. $24.1 trillion).
6. Historical and Economic Context
The report links post-pandemic spending (above $6.5 trillion) to Biden-era policies, contributing to 40-year high inflation (20% dollar devaluation since 2019). Failed fiscal controls (e.g., Budget Act of 1974) and historical GDP growth (1950–1999: 3.12–4.53%; 2000–2024: 2.21%) highlight challenges in achieving 3–4% growth. Rising debt (122% of GDP by 2034) and interest costs (13% of outlays) amplify risks.
7. Recommendations
Johnson proposes a “line-by-line” budget review of over 2,600 federal programs, tied to Trump’s March 2025 pledge to balance the budget. It emphasizes 7.5–14.6% spending cuts, arguing a 14.6% reduction is feasible given the 47% FY2020 spending spike.
8. Strengths and Limitations
Strengths:
– Data-Driven: Uses CBO, BEA, and BLS data for credibility.
– Visual Clarity: Charts/tables illustrate deficit trajectories.
– Historical Precedent: WWII cuts support retrenchment feasibility.
Limitations:
– Optimistic Growth: 3–4% GDP growth exceeds post-2000 trends.
– Political Hurdles: Spending cuts face resistance given past failures.
– Narrow Revenue Focus: Rejects tax increases, limiting fiscal options.
9. Conclusion
Johnson’s report, amplified by his immigration chart’s role in the Butler incident, rigorously analyzes the U.S. fiscal crisis, identifying spending as the primary deficit driver. It critiques OBBB’s $3 trillion deficit increase, questions tariff revenue, and shows growth alone cannot achieve balance. Proposing up to 14.6% spending cuts, it offers a path to fiscal stability, though political and economic challenges persist.
