How Not to Cut Spending

Posted: May 17, 2011 11:38 PM
The six-month continuing resolution passed last month by bipartisan agreement in Congress originally bore a headline number of $38.5 billion in spending cuts - less than what the GOP was hoping for, but far more than Democrats initially came to the table with.

Then things started unraveling. Close examination of budget numbers revealed something funny: the CR might have only cut the budget by a few hundred million dollars (around 1% of that original number).

And now, Doug Elmendorf came out with a report that the temporary budget bill would increase spending by $3.2 billion through September. Huh?

CBO had previously estimated that the full-year appropriation act will yield a net reduction of $0.4 billion in nonemergency outlays in 2011.

The comparison issued today is different: It includes emergency appropriations, excludes the effects of changes in mandatory programs, and incorporates adjustments to various estimating parameters that were applied to the appropriation act to make them consistent with the March 2011 baseline.

Aha! The original estimates had all been incomplete. For good reasons, it was impossible to give a complete budget picture in April because, well, the government does have to be flexible to a certain extent in how it spends money - for example, some of the increased spending comes in the form of defense spending, which obviously needs to be responsive in a time of war.

Dan Foster notes that while this looks worse and worse, but it's not as bad as it sounds.

It’s still the case that the C.R. cuts the government’s authority to spend money by $38 billion compared to the baseline and by $78 billion compared to the president’s proposed alternative. Over ten years, it cuts spending authority by $183 billion...

It’s $183 billion less than Uncle Sam would have spent had we enacted the president’s nifty sounding “spending freeze” and who knows how many hundreds of billions less than would have been spent had Congressional Democrats had their way.

Nevertheless, it's tough not to immediately think that Boehner couldn't have had a better deal if he had pushed - and used the negotiating tact that the bill would indeed look better for Dems as time went on.

H/t: Economics 21.