Following the passage of the American Taxpayer Relief Act, media figures have lamented that spending cuts were not included in the deal. However, experts believe that spending cuts made in 2011 should be included in assessing the latest deal, which shows budget cuts factor heavily into deficit reduction efforts.
Media Claim No Spending Cuts In Deficit Reduction Deal
U.S. News: Deal Offers “A Pass On Spending Cuts.” In summarizing the accomplishments and failures of the American Taxpayer Relief Act, U.S. News & World Report claimed that the deal does not offer any spending cuts. From the article:
Raising taxes only addresses a small part of the government's budget problem. A real fix also requires major spending cuts, to include costly entitlement programs such as Medicare and Social Security. The cliff deal contains no spending cuts, and in fact it delays for two months $110 billion worth of cuts that were due to begin January 1. [U.S. News & World Report, 1/3/2012]
Cavuto: Tax Hikes Outweigh Spending Cuts. On the January 2 edition of Fox News' Your World with Neil Cavuto, host Neil Cavuto claimed that the budget deal passed by Congress had a ratio of “41 to 1 in tax hikes versus spending cuts.” Cavuto also aired this graphic:
[Fox News, Your World with Neil Cavuto, 1/2/2013]
Hannity: “No Spending Cuts. None. Zero.” In an interview with Rep. Louie Gohmert (R-TX) and Rep. Jason Chaffetz (R-UT), Fox host Sean Hannity asked, “How is it possible that we got to this point, final hour, all the drama? How is it possible, and no spending cuts? None. Zero.” [Fox News, Hannity, 1/2/2013]
O'Reilly: Obama Hasn't Offered “Meaningful Spending Cuts.” Discussing the budget deal passed by Congress, host Bill O'Reilly reacted to the fact that revenues were raised by claiming that Obama won't make cuts in spending. From The O'Reilly Factor:
O'REILLY: It is now clear that Mr. Obama doesn't much care about federal spending. You simply don't run up deficits of about a trillion dollars a year, even with all this new revenue, even with that. You don't run up those deficits if you are concerned with fiscal responsibility. Clearly the president has not offered any meaningful spending cuts or entitlement reform.
He is not going to make any meaningful cuts in government spending. Not going to do it. [Fox News, The O'Reilly Factor, 1/2/2013]
But Congress Has Already Cut Spending...
Center On Budget And Policy Priorities: Congress Has Already Cut Spending By $1.5 Trillion. In a November report outlining cuts to discretionary funding, the Center on Budget and Policy Priorities (CBPP) found that in 2011, Congress reduced budget expenditures by $1.5 trillion over 10 years. CBPP also noted that this figure does not include potential sequestration cuts built into the Budget Control Act. From the report:
The $1.5 trillion in budget reductions in discretionary programs that policymakers have enacted reflect two actions that policymakers took last year. First, in the spring of 2011, Congress and the President cut discretionary funding for fiscal year 2011 below the 2010 inflation-adjusted level, and thereby reduced the base on which discretionary funding levels for future years are built. Second, in August 2011, they reduced future-year funding substantially by enacting the BCA, which established statutory caps on total discretionary funding and separate “sub-caps” on funding for defense and non-defense (i.e., domestic and international) discretionary programs for 2012 through 2021. [Center on Budget and Policy Priorities, 11/8/2012]
...And Previous Cuts Should Be Factored Into Current Deal
CBPP: Budget Cuts Under BCA Should Be Recognized In Current Negotiations. In a post on CBPP's Off the Charts blog, James Horney argued that when determining the mix of spending cuts to tax increases in any current deal, cuts made in the 2011 Budget Control Act should be recognized:
When those negotiations broke down, the President and Congress enacted the 2011 Budget Control Act (BCA), which established annual caps on discretionary spending for each of the next ten years. These caps, which will cut spending by what the White House estimates to be $1 trillion over the next decade, reflected a tentative agreement by the President and Speaker over discretionary spending in those negotiations.
Should we ignore those spending cuts when tallying up deficit-cutting efforts and the mix of spending cuts to tax increases? Absolutely not. [Center on Budget and Policy Priorities, 12/19/2012]
The Washington Post: Discretionary Spending Cuts Under BCA Address Deficit. Columnist Ezra Klein noted that bipartisan deficit reduction plans have included discretionary spending as a driver of deficits, which was addressed in the BCA of 2011. From The Washington Post:
On Monday, the Bipartisan Policy Center released the latest iteration of the Domenici-Rivlin plan. Domenici-Rivlin, which is named for former Democratic budget director Alice Rivlin and former Republican Senator (and Budget Committee Chairman) Pete Domenici, is probably the most respected of the bipartisan plans floating about town, and they're very clear: Of course you include the BCA's cuts, because those cuts secured about the level of discretionary spending cuts that most plans -- including Domenici-Rivlin -- recommended.
This is, to my mind, a much clearer way of thinking about it: The “grand bargain” involves a couple of categories of policy, and the “discretionary spending” category is finished. You can either include that in the ratio of throw out the idea of a tax-to-spending ratio altogether, but you can't pretend the BCA cuts didn't happen. [The Washington Post, 12/4/2012]
Total Deficit Reduction Favors Spending Cuts Over Revenue Increases
Center For American Progress: Recent Deal Increases Revenue By $617 Billion. In an analysis of the American Taxpayer Relief Act, the Center for American Progress noted that revenue from changes in the tax code will amount to about $617 billion from 2013 to 2022, far lower than the $1.5 trillion in spending cuts enacted by Congress in 2011.
The Washington Post: Spending Cuts Outweigh Revenue Increases. Columnist Ezra Klein noted that even if President Obama demanded a one-to-one ratio of revenue increases and spending cuts in future negotiations, total deficit reduction would "[tilt] heavily" toward spending cuts:
It's worth keeping this in perspective: All it means is that the White House can potentially demand a perfectly reasonable compromise of one dollar in revenue-generating tax reform for every dollar in spending cuts. When you add in the fiscal cliff deal, and the 2011 Budget Control Act, that'll still mean that the total deficit reduction enacted over the last few years tilts heavily towards spending, particularly once you account for reduced war costs. [The Washington Post, 1/2/2013]