The Incredible Shrinking $38 Billion

On Monday I pointed out that despite all the hoopla, the $38 billion budget cut was only 1 percent of projected 2011 spending.

And now comes news that the actual spending cut in the budget deal is $352 million, or about … 1 percent of the purported cut. So now we’re told that the parties went down to the wire, negotiating till midnight, over 1 percent of 1 percent of federal spending. As National Journal explains:

As the parties argue over who who won the months-long budget battle that resulted in a deal to cut $38 billion in federal spending, the Congressional Budget Office offered this total buzzkill: the budget cuts were really only worth $352 million. That’s less than 1 percent of the touted total; many GOP lawmakers are furious and House Speaker John Boehner may have to count on Democratic votes to get the bill passed. Why did the CBO get such a wildly different number?

First of all, the deal actually increased Pentagon spending by about $8 billion, as the Associated Press’s Andrew Taylor explained in an article that was quickly passed around by outraged conservatives Wednesday afternoon. When war spending is considered, the budget actually increases spending by $3.3 billion compared to current levels. As for non-defense spending, much of what was cut comes from grants to state and local governments that haven’t gone into effect yet. (Example: The CBO provided another analysis to lawmakers smacking down claims that cutting health care-related bonuses to states would save $5.7 billion. The real amount of savings? About $0.) Other cuts withdrew appropriations outlays from earmarks that were never spent–and might never have been.

One cut that will seriously cut the deficit? Elimination of year-round Pell Grants. That’ll save $40 billion over the next 10 years, but just under $1 billion this year.

Politico’s David Rogers notes that if you ignore the defense spending, the deal still cuts $42 billion from current levels. Still, the CBO report is a problem for House Speaker John Boehner, Rogers writes. “Given the GOP’s famous ‘$100 billion cut’ rhetoric of the 2010 campaign, the influence of tea party conservatives and projections now of a $1.4 trillion-plus deficit…” The Republican might have to stoop to “borrow[ing] a phrase from Obama and try to sell the deal as an ‘investment in the future.’”

Nevertheless, the House has just passed the bill to fund the government for the rest of the year, with 59 Republicans and 108 Democrats voting no. For advice on how to cut the budget, visit DownsizingGovernment.org.