We noted yesterday that legislative changes account for most of the nearly $5 trillion decline since 2010 in projected deficits for the 2015-2024 decade. Those legislative changes, in turn, consisted mostly of program cuts, which outweigh revenue increases 77 percent to 23 percent (see graph).
This lopsided 3 to 1 ratio strongly suggests that further deficit reduction should place greater emphasis on revenue increases. And the deductions, exclusions, preferential rates, and other tax breaks known collectively as tax expenditures are ripe for reform.
The four major pieces of deficit-reduction legislation enacted since the fall of 2010 were the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012, the Bipartisan Budget Act of 2013 (also known as the Murray-Ryan deal), and this year’s farm bill.
Altogether, they cut projected deficits over 2015-2024 by $4.1 trillion: about $3.2 trillion from program cuts (including the associated interest savings) and $950 billion from higher revenues (again, including the interest savings).
See our new paper for details.