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Budget Confusion

8:32 AM, Apr 14, 2011 • By JOHN MCCORMACK
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Some conservatives were taken aback by the AP's report yesterday that the continuing resolution (CR) that cuts $38 billion will only reduce this fiscal year's deficit--i.e. reduce total outlays through September 30--by $352 million. 

Is the CR a sham? Nope, not really. 

Politico's veteran congressional reporter David Rogers explains at the end of this story that the reduction in outlays through the next five months was always going to be significantly less than the total level of cuts in budget authority. 

H.R. 1, the original House GOP budget that was supported by Tea Parters and was passed in February, had a cuts-to-outlay reduction ratio of 4 to 1 for non-defense spending. The ratio for the CR agreed to by Boehner, Reid, and Obama is 5 to 1. The CR reduces outlays by $8.2 billion on non-defense spending through the end of the September.

As Rogers writes:

[W]hen CBO estimated the initial House bill in February, it projected that the $61.3 billion in nonemergency appropriations cuts would result in $9.2 billion in outlay reductions by Sept. 30 when measured against comparable outlay estimates two months earlier, on Dec. 20.

By comparison, the precise appropriations cut now, $37.7 billion, translates into a vastly smaller sum, $352 million, using the same standard.

A more accurate picture can be drawn by separating out the annual Pentagon portion of the bills.

When this is done, the House bill in February can be seen as having truly proposed to cut more than $68 billion from largely domestic and foreign aid appropriations. The resulting 2011 outlay reduction forecast by CBO was about $18 billion — a roughly 4-1 ratio.

By comparison, the deal now cuts $42 billion from non-Pentagon accounts, but the outlay reduction is about $8.2 billion — a 5-1 ratio.

This is all a little confusing, but the bottom line is that the conservative angst over the CR seems to be much ado about little.

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