Budget politics since 1965, with perhaps a brief reprieve during the mid-1970s, have been dominated by efforts to rein in budget deficits. The federal government has recorded deficits in just about every year of this almost half century, managing to keep expenditures below revenues only in 1969 and then forty years later in 1998–2001. Across this period, postwar budget deficits averaged 2.6 percent of gross domestic product (GDP), climbing to as large as 6 percent of GDP during the 1980s. In spite of the apparent permanence of budget deficits, American politicians have refused to embrace them as an ordinary element of America's post-war political economy. Instead, deficit reduction has become the focus of intense bargaining between key players in the executive branch and Congress. Efforts to reduce deficits usually entail negotiating agreements that provide some combination of higher taxes and reduced spending on social welfare programs.

Although large cuts to military spending have rarely occupied a prominent role in the deficit reduction negotiations, military buildups have nevertheless pushed deficit reduction to the fore of American budget politics for two reasons. First, postwar military buildups have created the large and persistent budget imbalances that generate the pressure for deficit reduction in the first place. Second, the nature of the security shock that sparks the increase in military spending that generates the budget imbalance means that the single largest discretionary spending program is removed from the set of programs that can be adjusted to reduce the budget deficit. Thus, military buildups undertaken in response to security shocks have forced policymakers to reduce a large deficit by negotiating mutually acceptable packages of higher taxes and reduced social welfare spending.

The ability of the administration and Congress to agree on deficit reduction packages has been delayed by many years in every instance since 1960.