Deficit reduction refers to the process of decreasing the gap between a government's expenditures and its revenues. When a government spends more money than it collects through taxes and other income, it runs a deficit. Reducing this deficit can involve cutting spending, increasing taxes, or a combination of both. The goal of deficit reduction is to improve a country's financial health and ensure long-term economic stability. By lowering the deficit, governments can reduce their debt levels, which can lead to lower interest rates and increased investor confidence in the economy. This process is often a key focus for policymakers and can impact various sectors, including education, healthcare, and infrastructure.