The endless rounds of deficit reduction in Washington in recent years have significantly improved the nation’s budget outlook, reducing projected borrowing by $3.3 trillion through 2024, according to new estimates by Senate Budget Committee chairman Patty Murray (D-Wash.).
In a memo distributed Thursday to Senate Democrats, Murray tots up the spending cuts and tax increases enacted during the 2011 debt-limit fight, the 2012 fiscal-cliff confrontation, last December’s budget deal and sundry other negotiations, and then projects the impact on deficits over the next decade.
The result: $3.3 trillion in total savings, with the burden falling heavily on agency budgets. As this chart from Murray shows, the discretionary budget, which funds the Pentagon and other agencies, will absorb nearly half of the cuts, or $1.6 trillion.
A quarter of the impact comes from the higher taxes on the wealthy that were adopted during the fiscal cliff fight. And another 20 percent comes from not borrowing as much and not having to pay more than $700 billion in interest that otherwise would have accrued.
Mandatory programs, which include Social Security and Medicare, were barely nicked, meanwhile, accounting for just 7 percent of overall savings.
Murray’s math includes sharp automatic spending cuts known as the sequester – but only through 2015. She declined to include sequester cuts for 2016 through 2021 because Democrats argue that the sequester should be replaced with other savings. If the full sequester had been included, Murray would show nearly $4.2 trillion in total savings.
Why does this matter now? Murray argues that while actions taken by Congress have improved the nation’s fiscal outlook, the sluggish recovery has darkened projections. Therefore, she says, it’s time for lawmakers to stop bickering about spending cuts and start focusing on measures that stand a chance of improving economic growth.
“With near term deficits significantly reduced, a brighter fiscal outlook over the decade, and without the constant crises that have taken up far too much of our time in recent years, we must do more to address the serious and growing deficits in other areas that will only become more costly if ignored,” the memo says. “Too many Americans are still struggling to find work and make ends meet. We are increasingly at risk of losing our competitive edge in innovation, in business-friendly infrastructure, and in preparing our students for success in a global economy.
“Just as we cannot afford to ignore our long-term budget deficits, we cannot afford to underestimate the very real impact that these other deficit challenges have on families and communities — right now and for decades to come.”