Why was it so hard to get a budget passed that kept the federal government open for the remainder of this year? Why did it take the imminent threat of a complete government shutdown to broker a deal that cut $38.5 billion from the 2011 budget? The American people have a right to know the answers to these questions.
To be sure, a government shutdown of the magnitude nearly realized would have been disastrous. For weeks, the entire country was consumed with the possibility that basic government services would have grinded to a complete halt. Finally, after three years of record deficit spending, President Obama engaged and struck a deal with House Republicans to cut spending.
Rather than eliminating spending, however, some of those cuts were actually a rescission of spending authority for projects and programs that the government wasn't going to need anyway. The Census Bureau, for instance, lost $6.2 billion for the remainder of 2011 -- all money approved to conduct the 2010 decennial census. Now that the census is over, the money isn't needed.
Soon after the deal was announced, the Congressional Budget Office ("CBO") released a report that projected the total "real" cuts would equal a meager $352 million. That's roughly 1/1000th of one percent of the federal budget. Essentially, this means that Congress and the White House battled it out over policy matters for weeks on end to fund agencies at basically the same level as last year. Indeed, decades of spending gluttony on the part of both Republicans and Democrats has created a culture in Washington where the real cuts in federal spending are harder than ever.
Nevertheless, the combined $38.5 billion deal of real spending cuts and budget rescissions means the federal government will have less authority to spend taxpayer money this year. In Washington, that's a real victory.
All of this leads to a sobering realization. Uncle Sam is not quite ready for the kind of austerity it will take to bend the spending curve down to a sustainable path. House Republicans approved a 2012 budget last week that promises to cut federal spending by $6 trillion over ten years. True to form, President Obama responded by announcing his goal of cutting spending by $4 trillion over the next 12 years. Of course, the president doesn't really hope to cut spending as much as he wants to reduce the deficit. And the way he wants to reduce it?
By raising taxes.
The president says that spending cuts alone won't eliminate the deficit, but thus far he has refused to offer any substantive proposal to reform entitlements like Medicare and Medicaid, the greatest sources of uncontrollable spending. A report last year from the Medicare trustees revealed that the program will face a $38 trillion shortfall over the next 75 years. Moreover, the CBO estimates that Medicare alone will consume 12 percent of our annual economic output. The President has offered no proposal to tackle these spending crises, and Democrats are already preparing to scare seniors into believing that Republicans want to end rather than fix Medicare.
If the budget battle of 2011 threatened the worst government shutdown in memory in order to squeeze out $352 million in real spending cuts, then it is difficult to imagine what will happen when Congress begins the serious work of tackling entitlements and other discretionary spending. In fact, at the rate we're going -- borrowing more than 40 cents on every dollar that Washington spends (mostly from China) -- we'll have to cut spending by 40 percent annually to balance the budget. We'll have to cut even more if we hope to make a dent in the national debt, which is now fast-approaching the $14.3 trillion ceiling.
At the bottom line, the reason it's so hard to achieve real spending cuts is that the way Congress approves spending is fundamentally flawed. And while this year's prolonged budget battle managed to keep down spending increases across the federal government and make only slight reductions in a handful of programs, the real victory is that House Republicans have changed the conversation.
When you have the president who signed multiple pieces of trillion dollar legislation start announcing a goal to cut spending, you know that a victory for fiscal responsibility is within reach.
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