April 14, 2011 4:05PM # The Incredible Shrinking $38 Billion By [David Boaz](https://www.cato.org/people/david-boaz) --- SHARE On Monday [I pointed out](http://www.britannica.com/blogs/2011/04/biggest-cut-history-long-shot/) 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](http://www.nationaljournal.com/dailyfray/how-did-38-billion-in-spending-cuts-turn-into-only-352-million--20110414): > As the parties argue over who [who](http://www.thedailybeast.com/blogs-and-stories/2011-04-08/government-shutdown-how-obama-rose-above/) [won](http://www.npr.org/templates/story/story.php?storyId=135272026) 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](http://nationaljournal.com/budget/cbo-says-budget-deal-will-cut-spending-by-only-nobr-352-million-nobr-this-year-20110413)? > > > First of all, the deal actually increased Pentagon spending by about $8 billion, as the Associated Press’s [Andrew Taylor](http://hosted2.ap.org/FLJAJ/b7538a1b675b4d059de3e728edc01923/Article_2011-04-13-US-Spending-Showdown/id-295c9eea4b7b4e90b16621b714583489) 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](http://clerk.house.gov/evs/2011/roll268.xml). For advice on how to *cut* the budget, visit [Down​siz​ing​Gov​ern​ment​.org](http://www.downsizinggovernment.org/). ##### Related Tags [Government and Politics](https://www.cato.org/government-politics), [Tax and Budget Policy](https://www.cato.org/tax-budget-policy) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).