Harry Reid's illusory $41 billion in budget cuts

Posted at 6:00 AM ET, 02/24/2011

By Glenn Kessler

"We've already proposed $41 billion in cuts. So for the Republicans to say we're not cutting anything, they're being disingenuous and unfair and really not very truthful."
--Senate Majority Leader Harry M. Reid (D-Nev.), Feb. 23, 2011

Congress is in a budget-cutting frenzy.

With a March 4 expiration of a stopgap government-funding bill looming, both sides are jockeying for position, eager to avoid blame for a government shutdown if no deal is reached.

The GOP-led House of Representatives last week passed a bill that would cut $61 billion in spending in this year's budget, and now Senate Democrats feel the pressure to show that they too are serious about reining in spending. (Few question anymore whether it makes sense to cut federal spending as the nation struggles to emerge from a recession, but that's another story.)

The way Senate Majority Leader Harry Reid frames it, there does not appear to be much difference between the two sides: $41 billion in cuts vs. $61 billion in cuts. But nothing is ever simple when politicians are spouting budget figures.

The Facts

There are really three different budgets in play now, and people in Congress mislead by mixing them up.

There is the fiscal year 2012 budget, which starts in October. President Obama this month submitted his blueprint for that. Let's put that aside for now.

Then there is the fiscal year 2011 budget, which started last October. Congress never passed the annual appropriations bills needed to fund that budget -- submitted by Obama last year -- so government spending has continued on at 2010 levels, with some adjustments. Republicans are demanding that some of those appropriations be rescinded now, even with just seven months left in the fiscal year, as part of an effort to get spending back to pre-stimulus, 2008 levels.

Finally, there is the fiscal year 2010 budget, which was passed into law and ended on Sept.30, 2010. But it remains important because current government spending has been set more or less according to the 2010 pace.

Also keep in mind that the proposed cuts are taking place in the discretionary-spending part of the budget -- just one-third of the overall budget pie. Congress each year sets spending for the discretionary programs, such as Cabinet agency funding. Mandatory-spending programs, such as Medicare and Social Security, continue at the same pace unless Congress changes the laws governing those programs.

So what is Reid talking about when he says Democrats have already proposed $41 billion in cuts? He's talking about the difference between what Obama proposed last year -- and was never enacted -- and 2010 spending. Or, to put it another way, he's talking about cutting spending that never happened.

Republicans can play the same game. House Republicans brag that the House bill passed last week cut spending by $100 billion. That also is from the levels proposed in the Obama budget. So an apples-to-apples comparison would be about $100 billion in cuts in the House vs. about $40 billion in the Senate, or $60 billion in the House vs. zero in the Senate. Either way, there's a gap of about $60 billion.

A Reid spokesman offers the GOP language as an excuse. "The $41 billion is off of President Obama's 2011 budget," Jon Summers said. "The GOP also factors this into their $100 billion, so clearly both sides consider this a cut."

(For complicated, technical reasons, the numbers do not precisely line up. The stopgap funding bill is a smidgen, about $2 billion, below 2010 levels. Overall, the president proposed spending $1.128 trillion on discretionary programs in 2011 and the House bill would spend just $1.027 trillion.)

Now, of course, just flat-lining spending year after year can be a cut of some magnitude. If a family spends $100 a week on food one year, and then inflation brings costs to $103 a week the next year, there is less money for other things if income remains the same. Similarly, inflation and population growth affect the cost of government programs. Over time, the best way to compare government spending over many years is calculating its share of gross domestic product, not just looking at raw numbers.

But Obama's 2011 budget was not trying to freeze spending at constant levels. According to the historical data listed in the 2012 budget, Obama proposed a real increase in spending from 2010 to 2011. In inflation-adjusted dollars, Obama proposed a boost of $43 billion in discretionary spending. As a percentage of the gross domestic product, discretionary spending would have climbed from 9.3 percent to 9.4 percent.

The Pinocchio Test

If Reid had stipulated he was talking about cuts from Obama's never-enacted budget, he might have been on more solid ground. But then he paired his statement with an attack on Republicans, claiming that for them "to say we're not cutting anything, they're being disingenuous and unfair and really not very truthful."

It is Reid who is being disingenuous and not very truthful. He is playing with figures to conjure up $41 billion in cuts that are largely illusory. The GOP may play the same games to bump up their figures, but two wrongs don't make a right -- and certainly the GOP can claim most of their cuts are real.

Two Pinocchios

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UPDATE, 9:30 AM:
Summers, the Reid spokesman, says Reid has not compared the $41 billion figure to the $61 billion figure. We don't think this article says that. The paragraph above, starting "The way Senate Majority Leader Harry Reid frames it...," was referring to the confusion readers might have when they hear Reid speak of $41 billion in cuts while newspaper headlines refer to $61 billion in cuts by House Republicans. Virtually no major news organization ran stories saying House Republicans cut $100 billion.