Word is that progress is being made on a budget deal that would garner the needed support to raise the debt ceiling. If so, good. But one thing to stay nervous about is whether the share of revenues in the deal is too small relative to the share of spending cuts.
This matters not for aesthetic reasons; it matters because if the path to a sustainable budget is lined largely with spending cuts, the damage we’ll do to the ability of government to protect the vulnerable, provide health and income security to retirees, and invest in the future will be too deep. The deal will have come at too steep a price.
And for the record, earlier deficit reduction deals maintained a decent balance in this regard. My CBPP colleague Kathy Ruffing crunched the numbers based on various sources (CBO, CRS, Treasury).
The Deficit Reduction Act of 1984 reduced the deficit by 0.5% of GDP over five years (back then, they did five-yr scores), with about an 80/20 split, revenues to spending cuts. That’s right—President Reagan would be drop-kicked out of today’s Republican party in a New York minute!
The 1987 Budget Summit reduced the deficit by 0.7% of GDP over 5 years, with about a 40/60 split, revenues to spending cuts.
The Omnibus Budget Reconciliation Act of 1990 reduced the deficit by 1.4% of GDP, and OBRA 93, by 1.2%.
(Note: I’m leaving out the Balanced Budget Act of 1997; it cut taxes and only reduced the five year deficit by 0.2% of GDP.)
So listen up, D’s: In no case was the revenue share less than a third of the deal, and that includes the days of Ronald Reagan. I see no reason to break the precedent.
Sources: see text.
(Note: Ezra has a similar take on Kathy’s numbers.)