04.15.2011 0

Budgeting Apples and Oranges

By Robert Romano – A battle has broken out between the tea party movement and House Republicans over just what the now-enacted continuing resolution (CR) for fiscal year 2011 will achieve in real savings. Activists have been responding to AP reports that the resolution cutting $38.5 billion would only result in $352 million in actual cuts to outlays in 2011.

How can this be?

The difference is between the not-commonly-understood “budgeting authority” for 2011 versus outlays that will actually occur in 2011.

Here’s the facts: the 2011 CR addresses the non-emergency budgeting authority for 2011. It authorizes $1.049 trillion of spending versus the total $1.364 trillion discretionary portion of the budget that will actually be spent this year. Why the difference?

Because discretionary outlays for 2011 serve as a function of the 2011 non-emergency budgeting authority plus the war supplemental plus budgeting authorities enacted by previous Congresses. All that was on the table with the continuing resolution was the non-emergency portion, and a small portion of mandatory spending.

Also including in the $1.364 trillion discretionary spending is the war supplemental that will cost $159.4 billion, but CBO projects only $75.583 of it will be spent. The rest of it, approximately $240 billion, is spending that was already in the pike from previous Congresses.

Therefore, departments and agencies will have to burn through the remaining funds before the impact of $38.5 billion reduction of the budget authority is felt.

In many ways, this discussion over the savings of the continuing resolution is a testament to just how much Congress spent under Nancy Pelosi and Harry Reid, who controlled Congress from 2007 through 2010. Congress authorized so much spending, it has not even all been spent yet.

For that reason, Labor, Health and Human Services and Education will spend $202.5 billion in 2011 even though Congress has only authorized $156.5 billion this year. The additional $46 billion was already authorized, and not subject to the CR that passed Congress. Another example is that the Transportation and HUD will spend $131.76 billion in 2011, but the CR only authorizes $55.49 billion. The other $76.26 billion was previously authorized.

So, Speaker Boehner is correct that he has reduced the budgeting authority by $38.5 billion from its previous level — the savings of which will be felt over time beyond 2011. And the tea parties are correct that this will have little effect on 2011 outlays, and that the miniscule savings felt this year fall far short of the Pledge to America to “roll back government spending to pre-stimulus, pre-bailout levels, saving us at least $100 billion in the first year alone and putting us on a path to balance the budget and pay down the debt.”

The American people were expecting more, and for the most part, that is why the outcome is surely disappointing to most observers.

However, on the bright side, according to the Congressional Budget Office, the bill will reduce outlays by about $20-$25 billion over the next ten years, with “[t]he vast majority of the $20 billion to $25 billion reduction in projected outlays would fall in the five-year period spanning fiscal years 2012 through 2016, with a small amount occurring over the 2017-2021 period.”

Obviously, with such a small reduction in the total $3.7 trillion budget, there is much more to be done. If the tea parties, and more broadly the American people, really want to reduce total outlays, it will require more reductions in the discretionary budget authority, as Boehner has accomplished here. Additional savings can be found by rescinding previous budget authorities.

And the bulk of the real savings will be found by reforming the $2.194 trillion of mandatory spending programs by rolling back eligibility requirements, amending and in some cases repealing legislation that requires the Treasury to spend the money. ObamaCare is a perfect example of legislation that must be repealed to rein in Medicaid spending as well as health insurance subsidies under the insurance exchanges.

In order to get at the heart of the nation’s spending problem, all of the spending needs to be on the table. And with this now-enacted continuing resolution, it was not, as the American people have learned. In the 2012 budget process, it needs to be.

Robert Romano is the Senior Editor of Americans for Limited Government.

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