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Budget deal: CBO analysis shows initial spending cuts less than expected


 
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Gallery: The struggle over the budget: Even as the 2011 budget fight winds 
down, with a compromise measure passed by Congress, a larger battle over future 
deficit reduction begins. 

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By David A. Fahrenthold, Thursday, April 14, 9:01 PM


A federal budget compromise that was hailed as historic for proposing to cut 
about $38 billion would reduce federal spending by only $352 million this 
fiscal year, less than 1 percent of the bill’s advertised amount, according to 
the Congressional Budget Office <http://www.cbo.gov/> .

Graphic

 
<http://www.washingtonpost.com/politics/final-vote-on-2011-budget/2011/04/14/AF1nv5dD_graphic.html>
 See how the House voted on the 2011 budget compromise.


Graphic: See how the House voted on the 2011 budget compromise. 

Video

 
<http://www.washingtonpost.com/politics/president-obamas-full-speech-on-budget/2011/04/13/AFK60lXD_video.html>
 President Obama laid out his plans to cut the deficit by $4 trillion over 12 
years on Wednesday, saying that it was necessary to use a scalpel instead of a 
machete to cut costs and that both parties need to come together to do so by 
the end of June. (April 13)


Video: President Obama laid out his plans to cut the deficit by $4 trillion 
over 12 years on Wednesday, saying that it was necessary to use a scalpel 
instead of a machete to cut costs and that both parties need to come together 
to do so by the end of June. (April 13) 

Although that analysis dampened enthusiasm for the deal among many Republicans 
on Thursday, the House and the Senate approved the measure with bipartisan 
support. President Obama  <http://www.whorunsgov.com/Profiles/Barack_Obama> is 
expected to sign the bill Friday, officially ending the prospect of a 
government shutdown.

The findings from the budget office warned that the deal may never come close 
to delivering on its promises. The analysts found that $13 billion to $18 
billion of the cuts involve money that existed only on paper and was unlikely 
to be tapped in the next decade.

The shrinking appearance of the reductions changed Thursday’s atmospherics on 
Capitol Hill. Just days after he was hailed for “winning” negotiations with the 
White House and Senate Democrats, House Speaker John A. Boehner 
<http://www.whorunsgov.com/Profiles/John_A._Boehner>  (R-Ohio) was making a 
last-minute plea for votes from members of his party.

In the end, about one-quarter of House Republicans voted against the bill. That 
total included 28 of the 87 Republican freshmen, who had won election by 
promising that the solutions were simple — it was how Washington works that was 
unnecessarily complicated.

For some, the news of this accounting alchemy showed how complicated the place 
remains, even with them in it.

“It was a factor in what pushed me toward ‘no,’ ” said Rep. Joe Walsh 
<http://www.whorunsgov.com/Profiles/Joe_Walsh>  (Ill.), one of 28 Republican 
freshmen who voted against the deal. “This is just the way that both parties 
have done business for a long time. And I just don’t want to be a part of that 
stuff.”

Boehner rejected the idea that the cuts were not as large as they appeared. 
Rather, he said, the impact could be much larger: In part because it would 
shrink the baseline budget left to future Congresses, it might save up to $315 
billion over 10 years.

“There are some who claim that the spending cuts in this bill aren’t real, that 
they’re gimmicks,” Boehner said in a speech before the House’s vote. “Well, I 
just think it’s total nonsense. A cut is a cut.”

The problem — in the murky mathematics of the federal budget — is that not all 
“spending” is really spending.

Understanding why requires knowing that the government does not work like a 
savings bank. Agencies do not have their own checking accounts, fattened up
every year with new money from Congress.

Instead, Congress usually gives agencies the authority to draw from Uncle Sam’s 
one gigantic checking account. That is the Treasury’s General Fund, which is 
constantly taking in taxes, fees and borrowed money.

The agencies can’t take money out of this fund until they’re ready to spend it.

And that’s where it becomes complicated.

Sometimes, agencies aren’t ready to spend the money until a year, or longer, 
after Congress gives them their IOU. That’s not a problem when an agency makes 
a one-time purchase for something like pencils. Officials call a supplier, get 
their pencils and write a check, and the money is gone.

But it works differently when the government buys an aircraft carrier.

“The final check doesn’t go out until the carrier has gone through sea trials,” 
said Scott Lilly, a budget expert at the liberal Center for American Progress 
<http://www.americanprogress.org/> . “And that’s about six years later.”

The compromise bill has canceled some of these long-term IOUs. These are real 
cuts, experts say: They stop spending that was going to happen. But they aren’t 
counted in the current fiscal year, because the money was going to be spent 
later.

That’s part of the reason why just $352 million in the cuts will be felt during 
fiscal 2011. In fact, when “emergency” money for military action is factored 
in, the overall spending for this fiscal year may actually increase, by more 
than $3 billion.

Then there are the cases where IOUs were sitting idle and un-used.

This might be because a project was finished under budget, with some money left 
over. It might also be because a project was cancelled, or because an agency 
simply chose not to do something that Congress gave it money to do.

The result is leftover budget authority. Some expire at the end of the fiscal 
year. But others roll over, which can leave agencies with rainy-day funds 
filled with billions in theoretical money.

The compromise bill canceled some of these IOUs, too. But, experts say, these 
shouldn’t count like the others: It’s not exactly a cut if the money was never 
going to be spent.

“There was permission to spend money, but there were never actual dollars 
allocated,” said Brian Riedl of the conservative Heritage Foundation 
<http://www.heritage.org/> . “It’s kind of like a parent saying, ‘If you go buy 
something, I’ll pay the credit card for you.’ And then the kid never goes out 
and buys it.”

A Washington Post analysis of the 459-page budget revealed at least 98 cases in 
which Congress took back unused IOUs and called it a cut.

In some instances, federal agencies said they really were about to use the 
money. At U.S. Customs and Border Protection, for instance, a spokesman said 
the loss of a $10 million IOU would delay the replacement of aging equipment. 
The Census Bureau <http://www.census.gov/>  lost $50 million it was planning to 
spend on support personnel and things such as IT infrastructure.

But in other cases, the IOUs seemed unlikely to be cashed in.

The compromise budget, for instance, takes $560 million from the Academic 
Competitiveness and SMART programs, which gave grants to college undergraduates.

But the programs are set to end after this school year. And
the Education Department has enough cash to cover the remaining grants. “We 
would not have used this money,” a spokesman said.

At the Treasury Department, Congress gave itself credit for rescinding $423 
million from a program that uses forfeited assets to aid criminal 
investigations.

But there, too, the cut was less impressive than it sounds. Last year was a 
banner year for forfeited assets: The fund took in $1.2 billion after a series 
of financial-crime cases and found it had far more money than it could use.

At the Department of Homeland Security, the Federal Air Marshal Service lost 
$2.4 million and the Coast Guard $13.5 million. But both already had enough 
money to cover expenses, a spokesman said. “There is no impact.”

Congress took back one IOU from . . . itself.

When the Capitol Visitor Center  <http://www.visitthecapitol.gov/> was under 
construction, lawmakers allotted $621 million to pay for it. The project wound 
up costing less than $600 million. In the compromise budget, lawmakers took 
back $15 million of the unused budget authority.

Spokesmen for both parties in Congress defended these moves this week, saying 
it was a good thing to take back authority that federal agencies might have 
eventually used.

“They prevent Washington bureaucrats from spending money,” said Michael Steel, 
a spokesman for Boehner.

“Is it a taxpayer dollar? Then it counts,” said Jon Summers, a spokesman for 
Senate Majority Leader Harry M. Reid 
<http://www.whorunsgov.com/Profiles/Harry_M._Reid>  (D-Nev.). He said that if 
the IOUs weren’t revoked, agencies could have found ways to spend the money — 
turning it from theoretical to real.

“I mean, is it better to just leave the money sitting there?” he said.

 



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