Last Week’s Budget Crisis: Reality Check

(10 am. – promoted by ek hornbeck)

Cross posted from The Stars Hollow Gazette

The House and Senate will put the finishing touches on last week’s budget crisis over the budget for 2011. While the President and the Republicans were busy in front of the cameras praising themselves for “victory”, the Congressional Budget Office was counting the “beans”. Remember the much publicized $38.5 billion in cuts? Well, it will only reduce the deficit by $352 million. That is less than 1% in claimed savings:

   The Congressional Budget Office estimate shows that compared with current spending rates the spending bill due for a House vote Thursday would pare just $352 million from the deficit through Sept. 30. About $8 billion in cuts to domestic programs and foreign aid are offset by nearly equal increases in defense spending. […]

   The CBO study confirms that the measure trims $38 billion in new spending authority, but many of the cuts come in slow-spending accounts like water-and-sewer grants that don’t have an immediate deficit impact.

As Alex Seitz-Wald at Think Progress notes budget cuts helped Obama save some programs from the worst cuts “the fact remains that the cuts will be harmful to the economy and to the people who depend on valuable social safety net programs that will have their budgets cut.”

There is also the damage by $8.4 billion cut from the State Department and foreign aid budgets, a 14% budget reduction, that will affect some “critical diplomatic tools”

[C]hopping off $122 million from the U.S. Agency for International Development’s operating expenses and more than $1.4 billion from the State Department’s Economic Support Fund may cost us the ability to help critical countries transition to democracy, including Egypt and Tunisia. Turning our back on such assistance now is particularly problematic given how vulnerable nascent democracies in the Middle East and North Africa, as well as elsewhere, are to upheaval and violence.

It leaves military budget nearly intact so that any saving are wiped out by inflated defense spending”. The budget deal was suppose to cut $18.1 billion but Defense Secretary Robert Gates called for at least $540 billion for FY2011 and this budget deal funds DOD “just north of $530 billion” a figure that includes military construction.

That’s some victory, Barack.

3 comments

    • TMC on April 15, 2011 at 5:54 am
      Author
    • Edger on April 15, 2011 at 5:28 pm

    CBO: Budget deal cuts 2011 deficit by $352 million, not $38 billion promised, RawStory, April 14, 2011

    WASHINGTON – The budget deal struck last Friday to avert a government shutdown cuts the fiscal 2011 deficit by just $352 million, not the $38 billion touted by both parties, according to the Congressional Budget Office.

    A CBO analysis found Wednesday that the measure negotiated by President Barack Obama and House Speaker John Boehner (R-OH) to fund the government through September would yield less than one-100th of the deficit savings touted.

    The study confirms that the resolution cuts federal spending authority by $38 billion, but concludes that most of the money was unlikely to be spent anyway.

    The CBO figure was achieved after clearing the smoke and mirrors, by adjusting for savings that are likely to occur in a future year, spending increases elsewhere in the budget, and the hike in the military budget.

    When factoring in war funding, the analysis found that the legislation could even increase total federal outlays by $3.3 billion from 2010 levels.

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