Washington, D.C. — Three-quarters of the $2.4 trillion in deficit reduction in recent years has come from spending cuts, not tax increases, according to a new analysis from the Center for American Progress released today. The new analysis undercuts conservative claims that the $630 billion in higher taxes under the “fiscal cliff” deal is a reasonable limit or upper-bound for government revenue. Indeed, any balanced approach to further deficit reduction must take into account that the vast majority of actions taken so far have been on the spending side—and that new revenues must be central to negotiations going forward.
“The twists and turns of the past fiscal years should not obscure the simple fact that we have accomplished a significant amount of deficit reduction along the way,” said Michael Linden, CAP’s director of Tax and Budget Policy and author of the analysis. “While there is still a great deal of work to be done, it’s important to realize that we’ve come a long way already.”
The analysis, entitled “The Deficit Reduction We Have Achieved So Far,” details the major pieces of legislation enacted by Congress since the start of the fiscal year 2011 that will reduce future budget deficits relative to what they would have been had we continued forward under the policies in place before enactment of those bills. Since the start of fiscal year 2011, Congress and the president have cut $1.5 trillion in programmatic spending, raised about $630 billion in new revenue, and generated about $300 billion in interest savings, for a combined total of more than $2.4 trillion in deficit reduction.
The result of these deficit reduction efforts is a substantial cut in how much publically held debt the country is expected to hold 10 years from now. Instead of debt reaching nearly 93 percent of GDP, debt is now projected to total about 83 percent of GDP— a full 10 points lower. And while that won’t be enough to finally put the budget onto sustainable footing, it is a massive improvement. In fact, it is about two-thirds of the way toward stabilizing the debt-to GDP ratio.
Read the analysis: The Deficit Reduction We Have Achieved So Far by Michael Linden
See also: Revenue from the Fiscal Cliff Deal in Context by Michael Linden and Michael Ettlinger
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