Friday, 15 April 2011

CBO Finds 37.5B in "Cuts" Were Gimmicks, 2011 Budget Increases Spending

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money with flagThe compromise fiscal 2011 budget resolution Congress passed April 14, which awaits President Obama's signature, boasted some $38 billion in "cuts" that were just gimmicks and would increase spending overall, according to analysis by the non-partisan Congressional Budget Office.

The bill passed the House by a vote of 260-167 and the Senate by a vote of 81-19. The "nay" votes included conservative and Tea Party-aligned Republicans (e.g., Senators Rand Paul, Jim DeMint and Mike Lee; and Representatives Ron Paul, Justin Amash, and Michele Bachmann) who refused to support the big spending — as well as some leftist Democrats who believed the bill did not spend enough money.

The Washington Post for April 12 reported: "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."

The CBO concluded in an analysis of the legislation that about half of the reductions are for future years, and nearly half of the rest are phantom cuts. "Many of the reductions in budget authority for mandatory programs would have little or no effect on outlays in 2011 or future years. As a result, the estimated change in cumulative outlays under H.R. 1473 ($20 billion to $25 billion) is less than the reduction in 2011 budget authority ($37.7 billion)." In short, the Washington Post reported April 14: "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."

About half of the "cuts" are cuts in funds that wouldn't have been spent anyway, "accounting alchemy" to the very leftist Washington Post. These are unused funds agencies don't need and won't spend. The Post noted that "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."

One example provided by the Washington Post was a cut of $560 million from the U.S. Education Department's Academic Competitiveness and SMART programs. “We would not have used this money,” a spokesman told the Washington Post.

The CBO analysis also found that the spending cuts were more than offset by increased spending for wars. As the Washington Post explained April 13: "About $8 billion in immediate cuts to domestic programs and foreign aid are offset by nearly equal increases in defense spending. When war funding is factored in the legislation would actually increase total federal outlays by $3.3 billion relative to current levels."

Related article:

Obama Proposes Budget "Cuts" (i.e., Spending Increases and Tax Increases)