Fiscal Consolidation

Fiscal consolidations are programs to reduce government budget deficits and stabilize debt as a percentage of GDP. They rely entirely on spending reductions, and as evidence shows, are more likely to achieve their goals of government budget deficit reduction and debt stabilization as a percentage of GDP than programs that rely primarily on tax increases. Below are resources provided by JEC Republican Staff to provide evidence and explain how fiscal consolidation can lead to economic growth.

Tackling deficits and debt in America now can boost the economy and create jobs.

Republican Staff Commentary: Spend Less, Owe Less, Grow the Economy
In the long term, fiscal consolidation programs that reduce government spending as a percentage of GDP accelerate economic growth.

Statement of Rep. Kevin Brady on Fiscal Consolidation
Republicans in Congress are determined to remove barriers to new jobs by tackling America’s dangerous budget deficits and removing the resulting uncertainty that deters businesses from hiring new workers.

VIDEO: Rep. Brady hold Press Conference on New Joint Economic Study on Economic Growth

House Majority Leader Eric Cantor, Majority Whip Kevin McCarthy and Chief Deputy Whip Peter Roskam joined Kevin Brady, the top Republican on the Joint Economic Committee for the release of new economic data that proves government spending cuts help grow economies.

Presentation: Spend Less, Owe Less, Grow the Economy
Powerpoint includes charts used during the press conference to identify the positive correlation between private investment and private sector job growth, as well as the negative correlation between government investment and consumption and private sector job growth; average spending cuts and revenue increases from successful and unsuccessful fiscal consolidations; the correlation between federal outlays and the unemployment rate; and example countries that have implemented fiscal consolidation measures.

Republican Staff Commentary: IMF Research Shows the Type of Fiscal Consolidation Matters for Economic Growth
A key confirmation of the IMF study is that fiscal consolidations based on spending reductions are significantly less contractionary than consolidations based on tax increases.