A new report shows that projected ten-year deficits have shrunk by nearly $5 trillion since 2010, which is pretty remarkable. It seems like just yesterday that the Simpson-Bowles Commission released it's findings amid a fierce debate over the budget deficit. But actually it was almost four years ago.
Progressives took a clear stance in the budget debate, arguing that reducing the deficit was exactly the wrong priority during a recession, but if deficit reduction were tackled, it should be done mainly by raising taxes, not cutting spending.
We now know how this historic battle turned out: Progressives got their asses kicked. The new report
, by the Center for Budget and Policy Priorities, shows that deficit reduction is mainly the result of four major pieces of legislation passed since 2010, most notably the Budget Control Act of 2011 -- legislation that primarily cut spending to shrink deficits.
In short, deficit reduction did become a top priority in Washington, recession or not, and whacking government programs was the main way this goal was accomplished. The report shows that 77 percent of projected deficit reduction in the next decade will come from program cuts, and just 23 percent will come from revenue increases.
What a wipeout. How did that happen?
It's no mystery, really. For starters, the donor class that underwrites our electoral system viewed deficit reduction as a higher priority than stimulating the economy to create more jobs. As Demos pointed out in our study, Stacked Deck
, that's exactly the reverse of how most ordinary Americans think. Polls show that most people don't care much about deficits but do care about jumpstarting the economy and creating jobs. Alas, these Americans don't make many campaign donations or frame the elite conversation. So their priorities took a back seat to deficit reduction, which surveys show is a top concern of the most affluent Americans.
Also, of course, the progressives who were fighting to put stimulus first were undermined by a Democratic president who legitimized deficit reduction as a top national priority. Obama didn't create a blue-ribboned commission on jobs, he created one on fiscal challenges. And he regularly talked about the need to reduce the deficit. And so even as the president made major proposals for more stimulus in 2011 and 2012, like his American Jobs Act, the die was already cast.
Other parts of the story are well known. The rise of the Tea Party and 2010 election didn't just bring deficit hawks to power in the House, those events brought extremists to power who were ready to use whatever tactics necessary to cut spending, including a threatened default by the U.S. Treasury. Those same hardliners ensured that taxes were put off the table in budget negotiations, and the only reason that some deficit reduction will occur due to new revenues is because Obama was able to force higher taxes on the wealthy as Washington approached the "fiscal cliff." But even here, the president didn't drive a very hard bargain, and the fiscal cliff deal left 85 percent of the Bush tax cuts in place, a huge victory for conservatives. Enshrining those tax cuts into permanent law will drive harsh budget cuts for years to come.
It's a sorry story, but a familiar one, of how the donor class sets the agenda, Republicans hold the line, and Democrats cave.