WHAT THEY ARE SAYING: 3% Deficit Target is the Path to Fiscal Sustainability
WASHINGTON, D.C. – Last week, the House Budget Committee held a hearing entitled, “The Best Metric to Reverse the Curse: A 3% Deficit-to-GDP Path to Fiscal Sustainability,” examining how reducing deficits to 3 percent of GDP would stabilize the nation’s debt and strengthen long-term economic growth.
Read what top voices are saying:
Ray Dalio:
"I strongly endorse reducing the budget deficit to 3% of GDP because it is essential for preventing the United States from "going broke," which would most likely take the form of it printing a lot of money which would greatly devalue it. Because the mechanics of how over-indebtedness leads to a debt and monetary crisis are not well understood, I wrote a book, How Countries Go Broke: The Big Cycle, to explain it. In that book, I emphasize the pressing necessity to get the budget deficit down to 3% of GDP, and I describe my “3% 3-Part Solution” for doing so.
"All political leaders from both parties I have spoken with agree with this 3% target in private. Treasury Secretary Bessent has long been a supporter of this path, publicly saying, “I would urge [President Trump] to make public his desire to get the deficit down to 3% by the end of his term.” The only impediment is fear of the political consequences of being in favor of raising taxes and/or cutting benefits if that is required to reach the 3% GDP budget deficit.
"Passing a bill that specifies a 3% target would be an important step toward overcoming that objection because it would help legislators argue for fiscal responsibility. A stated 3% GDP ceiling goal would become a benchmark for accountability across administrations, providing both a rule and a report card. With it in mind, each year we would naturally ask, “Is the nation moving toward or away from sustainability?” That stated goal and progress toward fiscal responsibility would strengthen markets, bolster investor confidence, and reduce the risk of the U.S. experiencing a sovereign debt/currency crisis."
Concord Action:
"A 3 percent deficit target is not a silver bullet, but it is a strong and achievable first step toward restoring fiscal stability. It would signal seriousness, impose discipline, and begin to align federal policy with economic reality. Most importantly, it would help rebuild public trust by demonstrating that policymakers are willing to confront the nation’s structural fiscal challenges.”
America has charted a responsible fiscal course before, and with clear goals and bipartisan commitment, it can do so again. Concord Action urges the Committee to advance a 3 percent deficit-to-GDP target as part of a broader strategy to stabilize the national debt and secure the nation’s long-term economic strength."
Peterson Solutions Fund: Brett Loper, Executive Director
"Stabilizing the deficit at 3% of GDP would put our nation on a much stronger path, send a positive message to financial markets, and improve the economic outlook for millions of American families and businesses. It is encouraging to see significant bipartisan support for setting a meaningful fiscal target, and the best news is that there are many policy solutions available to close the structural gap between spending and revenue in our budget."
Fiscal Lab on Capitol Hill:
"Under historical financial conditions, a 3 percent deficit is approximately consistent with a primary balance. Revenues cover all spending except interest on existing debt, and economic growth absorbs the cost of servicing that debt. Congress should treat 3 percent as the long-run anchor and adjust the primary deficit year to year as financial conditions require. That target is most durable when paired with a debt target that gradually reduces the share of the deficit consumed by interest."
Heritage Foundation, Daniel Kowalski, Director Grover M. Hermann Center for the Federal Budget:
"The Heritage Foundation supports achieving a unified budget deficit of 3 percent of GDP as an important milestone along the way to a balanced budget but does not believe that 3 percent target should replace the goal of a balanced budget."
CATO Institute, Romina Boccia, Director of Budget and Entitlement Policy
"A 3 percent of GDP deficit limit offers a clear, credible benchmark to guide policymakers and help reassure markets that Congress is serious about stabilizing the nation’s finances. It brings much-needed focus to the worsening debt crisis.
"To reach the target goal, lawmakers should pair it with an effective mechanism to enact needed reforms, such as a fiscal commission. Pursued seriously, a 3 percent of GDP deficit target can help put the federal budget on a more sustainable path."
Arnold Ventures, Hana Greenberg, Vice President of Advocacy, Public Finance
"We commend the Committee for its focus on identifying a concrete, measurable metric to guide the nation toward fiscal sustainability. A 3% deficit-to-GDP target is an evidence-based benchmark that, over time, would stabilize the debt-to-GDP ratio at a more manageable level. Adopting such a metric would provide Congress with a clear guidepost as it navigates the treacherous fiscal path that lies ahead.
"The need for action is urgent, and the costs of continued inaction are not abstract. They are being borne, right now, by American families struggling to make ends meet. The Budget Lab at Yale has documented how deficit-financed fiscal policy has become a significant but overlooked driver of household affordability challenges. Since 2015, the cumulative cost of legislation has pushed up long-term interest rates by close to a full percentage point.
"The consequences for American families are real: the interest cost of a 30-year mortgage at the 2025 median home price is higher by roughly $2,500 per year—approximately $76,000 over the life of the loan—compared to a world without this additional federal debt. Annual borrowing costs on a typical auto loan or small business loan are about $120 and $770 higher, respectively. These higher costs also suppress business investment and slow the capital formation that drives wage growth, meaning fiscal mismanagement does not just raise the price of a loan; it contributes to slower economic growth that deprives Americans of better opportunities."
Committee for a Responsible Federal Budget (CRFB)
"A 3% of GDP deficit target may be the sweet spot between what is sufficient and what is possible. It is aggressive enough to reassure our lenders and financial markets that the U.S. has its finances under control yet realistic enough that lawmakers will be less likely to quit and resort to gimmicks as they have before with goals that were out of reach.
"The 3% target would cut the budget deficit in half as a share of GDP and stabilize the national debt. Budgets that meet the 3% goal without gimmicks and with credible estimates of economic growth will go a long way in taking the nation’s finances out of the danger zone and into more sustainable, pro-growth territory.
"Budgeting is about values and tradeoffs. With the outpouring of support for a 3% deficit target, it is encouraging to see growing support for the value of fiscal responsibility. Multiple budgets that meet the same fiscal target can help us confront the tradeoffs by facilitating direct comparisons of various options and hopefully leading to a productive conversation about different paths towards fiscal improvements.
"It is one thing to talk about fiscal responsibility; it is another to take steps to achieve it. We hope the 3% target will move us in the direction of realistic action."
