Between the recent fiscal cliff deal, the Budget Control Act of 2011, and the federal budget negotiation of Spring 2011, the United States has succeeded in reducing its deficits for the next decade by over $2 trillion. The first brought in over $600 billion in new revenue, while the two budget deals cut over $1.5 trillion in spending, including reduced interest payments on a smaller debt.
As both the Center for American Progress and the Center for Budget and Policy Priorities have noted, the end result of all that leaves the country’s total deficit-reduction efforts grossly tilted towards the GOP’s priorities: spending cuts dominate new tax revenue by approximately three to one.
The CBPP’s report also fleshed out the implications of this imbalance going forward. In order to stabilize the debt for the next decade, another $1.2 trillion in deficit reduction is needed, accompanied by about $200 billion in additional interest savings. The CBPP’s numbers also show that for the final result to be a true 50-50 balance between spending cuts and tax increases, nearly 90 percent of the additional $1.2 trillion must come from revenue increases:
[E]ven if the additional savings [from $1.2 trillion in additional deficit reduction] were divided evenly between revenue increases and program cuts, the total deficit reduction under the three deficit-reduction packages would be heavily weighted toward budget cuts: 64 percent budget cuts to 36 percent revenue increases, or a ratio of nearly 2 to 1. To achieve a 50-50 split for the combined deficit-reduction packages, policymakers would have to obtain nearly 90 percent of the additional $1.2 trillion in savings from revenue increases.
In contrast, if all of the additional savings were to come from program cuts, as Republican congressional leaders have suggested, the overall ratio would be still more skewed, with more than four-fifths coming on the spending side — a ratio of nearly 5 to 1.
So the Democrats’ proposal that further deficit reduction include $1 trillion in additional revenue — which arguably denotes the far-left flank of the debate at this point — comes the closest to meeting the 50-50 test. Meanwhile, Republicans’ insistence that “the tax issue is finished” would push the country towards an even more wildly skewed result. America remains as far as ever from the ostensibly bipartisan goal of balanced deficit reduction.