Was GOP Fooled By Its Own Budget Numbers?
A substantial number of the House Republican caucus are now complaining loudly about the “bad deal” their leadership struck to pass the Continuing Resolution for FY11 last week. That agreement kept the government open and many expect it will pass the House today only because enough Democrats cross the aisle and vote with Speaker Boehner.
The complaint centers on two realities.
First, many of the new House Republicans pledged to voters last November that they would fight to the bitter end to get $100 billion in spending cuts in the FY11 budget.
Second, as the “real” numbers begin to emerge, many of these members now realize that the $38 billion in “cuts” could mean perhaps as little as $15 billion in true deficit reduction in FY11.
We touched on both these issues before.
To repeat—no way existed short of closing down most domestic government agencies to get $100 billion in real deficit reduction from the FY11 budget.
And, just because you “cut” appropriations bills by $100 billion doesn’t mean you have cut the deficit by $100 billion.
Things get a bit wonky here, but if one doesn’t know the budget process and the federal budget, both wonky things, one makes bad assumptions. The conservative complaints now reveal how little too many incoming GOP members knew about either.
If you cut money from the president’s proposed budget for FY11, you have to make sure that you are cutting from already-authorized (enacted) programs, not from the president’s wish list of new spending. Obviously, if you are rejecting additional money to already existing programs, or are refusing to fund new initiatives, you really aren’t cutting the Congressional Budget Office’s deficit baseline. After all, you are cutting things that don’t yet exist.
If you refuse to spend monies that were appropriated, but now lie unused (as in the case of census expenditures) and will never be used for the purpose intended, you are cutting spending in some sense, but you surely cannot claim to be cutting deficits. That money was never going to be spent any way. You cannot restrain spending by restraining non-spending.
Finally, when you get down to the real meat of cutting presently-enacted programs in which money is being spent and will continue to be spent, you have the nasty little fact of something called “spend-out rates.”
This is where most folks go to sleep. But, it’s also the most important part of understanding the appropriations and budget processes. As senior budget staff in the Senate, we used to say that the most important thing we could teach new senators was the difference between budget authority and outlays. Sometimes we succeeded.
If you want to cut $100 billion from spending in non-security, discretionary accounts—really cut monies that will be spent otherwise—you would probably have to cut about $250-$300 billion in budget authority. Since the total budget authority for all those accounts amounts to less than $500 billion in FY11, and since the Fiscal Year is about half-over, that means to truly save $100 billion in outlays, about a third of the government agencies would be shuttered.
Most money that is destined to be spent in any fiscal year goes to salaries, expenses, medical benefit support, and entitlements. Large construction projects, or defense projects like new ships or planes, spend out their budget authority over four, five, as much as seven years. So eliminating all funding for a new ship channel might cut $500 million in budget authority, but would cut deficits only a small fraction of that in the first fiscal year.
The way to cut spending with any assurance is to change underlying authorizations. You have to change the way we implement Medicare, Medicaid, Social Security, farm subsidies and other mandatories and entitlements.
And even if you fundamentally, radically reform entitlements, real deficit and debt savings won’t occur to any great degree within the next couple of fiscal years.
Let me guess: so, now you are bored out of your mind. You wonder why you had to listen to all this gobbledy-gook. You just want to cut spending and now some budget geek is telling you that when you cut spending you don’t cut spending?
That’s how many of the new House Republicans must feel about now. They should have listened carefully when they discussed with their colleagues how to cut $100 billion or even $38 billion. But too many of them didn’t and now they feel misled and embarrassed.
They weren’t misled. Too many of them might have happened to sleep through that boring budget lecture that the House Republican leadership provided a couple of months ago at the “budget camp.”
Now comes the debt ceiling increase vote. It will even more complicated. And the scar tissue from the CR fight will be fresh.
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