The deficit reduction that's been passed so far has almost entirely come from three kinds of legislation: the Continuing Resolutions for discretionary spending passed in the first half of FY 2011, which resulted in $760 billion in savings over 10 years; the debt-ceiling deal passed in August 2011 that reduced discretionary spending immediately by $1.08 trillion; and the "fiscal cliff" deal passed over the new year, which reduced the deficit by $850 billion, according to the Committee for a Responsible Federal Budget. (All of the figures above include interest savings and are within the 2014-2023 budget window.)
Cumulatively, that means that we've achieved $2.7 trillion in savings so far, excluding the sequester from March to December 2013. If the rest of the sequester (or its equivalent) is allowed to take effect, that would mean about $3.9 trillion in savings over 10 years, according to the CRFB. With the sequester, that would bring the debt-to-GDP ratio down to about 74 percent, according to Richard Kogan of the Center on Budget and Policy Priorities.
Deficit hawks believe that's a positive step toward bringing the long-term debt-to-GDP in line, though they disagree about how much it helps our long-term fiscal health.
However, the austerity the federal government has enacted has also been a significant drag on short-term economic growth. In 2011, government austerity slowed GDP growth by 0.7 percentage points — about half of which came from federal spending cuts and half from state/local fiscal consolidation, estimates Dean Maki, chief U.S. economist at Barclays. In 2012, the total drag was 0.3 percentage points, about two-thirds of which came from federal cuts. In 2013, the fiscal drag from government austerity is expected to be between 1.5 and 2.0 percentage points — depending on whether the full sequester stays in place all year — the vast majority of which is because of federal spending cuts and tax hikes.
Overall, Maki estimates that austerity measures taken by the federal government have lopped 0.6 percentage points off GDP growth between the end of 2010 and 2013.
This fiscal drag has infuriated deficit owls who believe that the federal government has needlessly gotten in the way of our economic recovery at a time that it should be boosting spending.
But deficit hawks believe there will be a significant upside to fiscal consolidation further down the road. "Most models do suggest that reducing deficits does weigh on growth in the near term and help it in the medium term," Maki concludes, though he believes that legislators must reform entitlements and taxes in order to make the United States fiscally sustainable in the long term.