I Reducing the Deficit Your text discusses the possible harmful effects of budget deficits. Since a budget deficit results from government spending that is greater than tax revenues, reducing the def icit implies reducing government spending, increasing taxes, or both. But to quote Publius Syrus, “There are some reme dies worse than the disease” (Maxim 301). Since reducing government spending and increasing taxes reduce aggregate demand, the economy might be thrown into a recession if spending cuts and tax increases are adopted.