This Is Deficit Reduction?

by Pejman Yousefzadeh on April 13, 2011

We are going to have to do a whole lot better than last week’s budget deal, if we want to get back to the realm of fiscal sanity. Why? Because last week’s budget deal was not nearly what it was cracked up to be:

For example, the final cuts in the deal are advertised as $38.5 billion less than was appropriated in 2010, but after removing rescissions, cuts to reserve funds, and reductions in mandatory spending programs, discretionary spending will be reduced only by $14.7 billion.

White House officials said throughout the process that the composition of the cuts was more important than the top-line number, and that including mandatory cuts allowed that top line to grow while limiting the immediate impact of the cuts.

The move also keeps the 2011 discretionary baseline slightly higher, a terrain advantage for the Democrats heading into the 2012 spending process.

Republican press releases are pointing out that the deal eliminates four White House policy “czars,” but those positions had already been phased out by the White House — the health care policy director after Obama’s health care plan became law, and the “auto czar” following the government restructuring of General Motors and Chrysler.

[. . .]

Still, the GOP collected its pound(s) of flesh from the $1.3 trillion federal budget and Obama’s priorities: $1.6 billion in reductions at the Environmental Protection Agency, though that is nearly half what the House asked for in February; nearly a billion from drinking water funds at the Department of the Interior; $2.9 billion in high-speed rail money, and hundreds of millions in public housing funds, among other savings.

Yet even where President Obama had to concede on key priorities, he could find a small advantage. The bill cuts $800 million from the Pell Grant program, for example, through the mechanism the president endorsed in his budget, ending year-round government support while maintaining the recently-increased maximum grant of $5,550, which had higher education advocates cheering.

The president also garnered an additional $700 million in spending for his competitive education funding program, “Race to The Top,” and though it includes new audits of the consumer protection agency created by the Dodd-Frank financial regulatory overhaul, it also raises funds to implement reforms at the Securities and Exchange Commission and the Commodities Futures Trading Commission.

Bear in mind that these games are being played while the deficit is in the trillions. If this is the best that can be done to address the deficit problem, then banana republic status is just around the corner.

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