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Revised Boehner Bill Cuts $917 Billion, Raises Debt Ceiling by $900 Billion

8:02 PM, Jul 27, 2011 • By JOHN MCCORMACK
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This evening, the Congressional Budget Office released its score of John Boehner's revised "Budget Control Act." 

boehner, john

The new report shows that the bill would cut discretionary spending by $917 billion over 10 years while raising the debt ceiling by $900 billion. The bill would reduce the deficit by $22 billion in 2012. The discretionary spending cuts for 2012 aren't that far off* from the cuts in the House-passed 2012 budget, which all but four Republicans voted for last spring. (The 2012 cuts were incorporated into the "cut, cap, balance" plan.)  

Yuval Levin calls the bill a "modest improvement" and explains why the up-front cuts are significant: 

These are still very small numbers in the scheme of federal spending, but the greater front-loading actually matters a lot. One reason is that the 2012 and 2013 budgets are the only ones that will actually be under the control of this congress. But even more important is the greater reduction of the baseline itself since, as we’ve witnessed in the past 24 hours, the CBO baseline is the measure of all future cuts—it sets the bar. This debt limit fight has set a precedent that from now on increases in the debt ceiling will need to be accompanied by equivalent cuts in spending, and those cuts will be measured by the CBO baseline, so cutting it by this much in the first two years will really shape the next round of the budget wars, which will come very soon. Front-loaded cuts have a kind of ratchet effect. And the larger cuts to the baseline in the following years (the revised bill’s cuts are larger every year than the original bill’s cuts) matter for the same reason—even if they don’t fully materialize (since one congress can’t bind another), they define the measure of future spending in every round of budget debates, which means that they make all future cuts larger in real terms.

Yesterday's bill scored only $1 billion in deficit reduction next year. Boehner revised the bill because he'd promised that cuts would be greater than the debt ceiling hike. Because the drafters of the original bill were working off the January CBO budget projections, rather than a revised March update, the bill scored as $850 billion in cuts tied to a $1.2 trillion debt hike. 

“We’re here to change Washington – no more smoke-and-mirrors, no more ‘phantom cuts,’" Boehner said in a statement last night following the release of the CBO's report. "We promised that we will cut spending more than we increase the debt limit – with no tax hikes – and we will keep that promise. As we speak, Congressional staff are looking at options to adjust the legislation to meet our pledge. This is what can happen when you have an actual plan and submit it for independent review – which the Democrats who run Washington have refused to do.”

*Paul Ryan's House Budget Committee has a useful chart** comparing the various budget proposals flying around: bcabca

As you can see, the Budget Control Act cuts just a couple billion more in non-war discretionary spending than the Reid plan does. But the key difference between the Boehner and Reid plans is that Congress must vote on another package of $1.8 trillion in cuts in order to raise the debt ceiling through the 2012 election.

The Budget Control Act cuts nearly $100 billion deeper than Obama's budget request, and its non-war discretionary cuts fall $24 billion shy of the House-passed 2012 budget resolution. 

**Fair warning: you're about to get deeper into the budgetary weeds. In this chart, "BA" stands for budget authority and "OT" stands for outlays in the chart. A congressional aide explains the difference in an email (in case you're interested): 

Congress annually provides agencies with the authority to spend money. This is known as discretionary budget authority. This authority does not all spend out in one year. For example, if the BA is provided to build a bridge, that budget authority could spend out (outlay) over several years. By contrast if the BA is provided for employee salaries, it would spend out (outlay) much more quickly. Outlays are recorded when agencies actually spend the money for which they have been provided BA.

Congress directly controls BA and through it the level of spending agencies can undertake. BA is the usual measure when discussing appropriations bills.

By contrast, for programs that have permanent authority to spend money, for example for Medicare or Social Security, the usual measure to discuss is the actual rate at which these programs spend money, i.e. outlays.

When comparing total spending (annual and mandatory) outlays are generally used. And it is the difference between outlays and revenues that determines budget deficits.

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