OOPS! Historic ‘Spending Cut’ Bill Increased Spending By $3 Billion

May 16, 2011 2:19 p.m.

Republicans stormed Capitol Hill in January vowing to slash discretionary spending by $100 billion right off the bat. In their pledge to America, they promised that, “[w]ith common-sense exceptions for seniors, veterans, and our troops, we will roll back government spending to pre-stimulus, pre-bailout levels, saving us at least $100 billion in the first year alone.”

As time went on, it became clear that they wouldn’t get the whole loaf, and the key question became: How many billions of dollars in spending would Democrats agree to cut, without risking massive Republican defections, and, perhaps, a protracted government shutdown?

A few weeks after they cut the deal, we have an answer. It turns out the six-month spending bill Congress passed in April increased discretionary outlays through the remainder of the fiscal year by a bit over $3 billion. In other words, total direct spending will be higher by the end of September than if Congress had just set spending on autopilot for the remainder of the fiscal year back in April.“Total discretionary outlays in 2011 will be $3.2 billion higher as a result of the legislation, CBO estimates–an increase of $7.5 billion for defense programs, partially offset by a net reduction of $4.4 billion in other spending,” reads a just-released report from the Congressional Budget Office — Congress’ non-partisan scorekeeper. Analysts there conclude that increase is due in large part to the fact that the six month spending bill shifted defense spending to more immediate activities, which means the bills will come due sooner than later.

When the deal went down in early April, both Democrats and Republicans characterized it as a historic spending cut bill — a triumph of bipartisanship and the first time in memory that the government significantly reduced spending. But the approximately $38 billion in advertised cuts spanned the entire federal budget, including locked-in “mandatory” spending programs, and it reflected reductions in “budget authority” — how much the government is allowed to spend — as opposed to projected “outlays” — how much the government truly will spend. When viewed more narrowly — how many fewer dollars will the government spend this year as a result of this bill — the results flip.

Brendan Buck, spokesman for House Speaker John Boehner (R-OH), explains on the Speaker’s blog “The effect on outlays (based on how quickly the administration spends money) meanwhile is slowed due to increased and accelerated spending for our men and women in uniform. As the CBO puts it, ‘part of the reason …is that some defense funding was shifted from slower-spending to faster-spending activities.'”

Before Congress passed the six month spending bill, a similar analysis found that the deal would only cut domestic discretionary spending by about $350 million this fiscal year. House GOP leaders actually invited conservative economist Doug Holtz-Eakin up to the Hill at the zero-hour to forestall a major revolt within their caucus. When you add the new defense spending numbers, the picture changes further.

“CBO had previously estimated that the full-year appropriation act will yield a net reduction of $0.4 billion in nonemergency outlays in 2011,” the report says. “The comparison shown here is different: It includes emergency appropriations, excludes the effects of changes in mandatory programs, and incorporates adjustments to various estimating parameters that were applied to the appropriation act to make them consistent with the March 2011 baseline.”

A footnote at the end of the report notes, “The extrapolation of 2011 appropriations does not include the effect of changes in mandatory programs that were included in the full-year appropriation act…. The net effect of such changes to mandatory programs over the 2012-2021 period is close to zero.”

Republicans have pointed out fairly that reducing budget authority will reduce spending in the coming fiscal year. And overall, CBO finds that the bill Congress passed in April will result in about $122 billion in aggregate spending cuts over 10 years — and $183 billion in reduced budget authority. “[O]ne thing is clear: congressional Republicans were able to save American taxpayers hundreds of billions of dollars in the long term,” Buck writes

But that’s just to say that in their first bite at the apple, Republicans got done in a 10 year time-frame a bit more than they hoped to accomplished by September. Ouch.

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