Behind the Budget Deal: Preserving the Status Quo

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REUTERS/Jim Young

Budget issues are complex and confusing, which makes them infinitely spinnable.  Officially, the deal House Speaker John Boehner cut with President Obama over the FY11 continuing resolution—which is distinct from the FY12 budget debate, which is distinct from the debt limit issue, which, oh, never mind—included $38 billion in spending cuts. Boehner bragged that it slashed $78 billion from President Obama’s budget proposal. But Tea Party conservatives are furious that the true cuts in “outlays” for this year amount to only $352 million. Now Boehner’s claiming the actual cuts in “budget authority” will expand to $315 billion over a decade.

None of those numbers are really wrong. If you twist the assumptions and the baselines and the accounting, you can get a budget to say almost anything you want it to say. But dive into the details, and a budget can tell a story.

The story behind the numbers of this particular budget deal is simple: It doesn’t roll back President Obama’s agenda, not at all, but it doesn’t let him expand it, either. It didn’t dismantle his high-speed rail program, notwithstanding the obituaries in the media, much less his health care or Wall Street reforms.  It didn’t shred the safety net, despite caterwauling from liberals, and it didn’t really invest more in winning the future, no matter what Obama says. And really, that’s exactly what should have happened given the current balance of political power.

The problem going forward is that Tea Party activists think the 2010 elections gave the Republican Party a mandate to repeal the Obama presidency.  And liberals think Obama is caving to the GOP agenda. So doing more deals like this one might be tough. But as I’ll show, this one basically extended the status quo.

The Republican budget that passed the House really would have undone the Obama agenda. And the deal that Boehner cut with Obama initially seemed like at least half a loaf; they both described it as “the largest spending cuts in history.” But after the Congressional Budget Office dug into the deal, a new conventional wisdom emerged that those cuts had been oversold.  The conventional wisdom is…correct. It happens.

A classic example of the misleading numbers is the Census Bureau, which will get $6.2 billion less than it got in 2010, because it was doing a census in 2010. It’s playing Foosball this year. Similarly, a lot of the new cuts are “rescissions” of money that wasn’t going to be spent anyway, like $2.5 billion in unusable highway funds, or “eliminations” of one-time expenditures like a $350 million program to help dairy farmers deal with low 2009 prices. There are some safety-net trims, like $500 million from the WIC low-income nutrition program and $390 million from LIHEAP low-income heating subsidies, but those are based on the reasonable assumption that the economy will be a bit better this year, so fewer people will need the help.

The Republicans had vowed to rescind all of Obama’s unspent stimulus money, but I didn’t see any actual rescissions  The deal actually extended stimulus initiatives like Obama’s Race to the Top education program, which got another $700 million, and the new ARPA-E energy research agency, which survived thanks to a $180 million appropriation. Technically, the innovative TIGER transportation grants that were created by the stimulus were erased by the budget deal, but they were actually extended with an additional $527 million under a new name.

The GOP has been bragging about slashing high-speed rail, but that’s a bit of a stretch, too.  The program got $8 billion in start-up funds from the stimulus in 2009, and another $2.5 billion from Congress last year. Obama’s budget then included another $1 billion. He didn’t get that, and the deal actually rescinds $400 million, so technically, this year’s high-speed rail budget will be $2.9 billion lower than last year’s. But hardly any of the original $10.5 billion has been spent, so the new program is still flush.  In fact, Florida Governor Rick Scott just sent his state’s share of $2.4 billion back to Washington; the rescission means that Obama will only be able to redistribute $2 billion, but that’s plenty for now.

Still, Obama recently proposed an additional six-year, $53 billion expansion of high-speed rail; there’s no trace of that in the 2011 budget. Similarly, Republicans blocked Obama’s budget push for new investments in the Energy Department’s office of science, loan guarantees for renewable energy projects, the Americorps national service program and foreign economic aid. And they were able to trim some programs that Obama had previously boosted, like construction of energy-efficient federal buildings, grants to police departments and other emergency responders, water and sewage projects, and community health clinics.

But this deal didn’t really gut any Obama initiatives; Boehner is bragging about eliminating four “czars,” but all of them had already left the government. Obama even secured funding for his health care and financial reforms. Last week, an open microphone captured him telling his supporters what he told Boehner behind closed doors: If Republicans want to overturn his agenda, they’ll have to overturn his veto. “I said, ‘You want to repeal health care? Go at it. We’ll have that debate,’” Obama recalled. “You’re not going to be to do that by nickel-and-diming me in the budget.”

Republicans won the 2010 election by promising to repeal the Obama era.  But they won’t be able to do that unless they win the 2012 election.

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