04.14.2011 0

Republican Study Committee analysis of the budget deal

UPDATE: The House has passed the 2011 FY Budget with 260 Yea votes (179 R and 81 D) and 167 No votes (59 R and 108D).

Here is the analysis of last Friday’s budget deal from the Republican Study Committee:

Take-Away Points

Spending Levels: The total non-emergency spending level for H.R. 1473 is $1.05 trillion. The bill leads to $421.9 billion (compared to $378 billion in FY 2008) for non-security spending and $627.9 billion for security spending (compared to $554 billion in FY 2008).

Savings Amount: Overall, this is a $78.3 billion reduction compared to the President’s FY 2011 budget: $56.1 billion of this reduction is to non-security spending, $22.2 billion is to security spending. Compared to FY 2010, and counting the $12 billion in savings attached to three previous continuing resolutions, the final spending reduction amounts to $40.0 billion. According to the Majority Whip’s office, the legislation will reduce spending projected in CBO’s baseline by $315 billion over ten years.

Compared to FY 2008 Levels: Compared to the original House Republican goal of returning non-security spending to FY 2008 levels, the legislation is $43.9 billion short of this target.

Historical Perspective: The $1.05 trillion spending level is the second highest spending level for the appropriations process in U.S. history (in nominal terms). This will be the third time in U.S. history the appropriations process will wrap-up with a spending total in excess of $1 trillion (others being 2009 and 2010).

Outlays: According to CBO, the most recent CR would lead to a non-emergency outlay level of $1.286 trillion in FY 2011. This legislation would lead to a non-emergency outlay level of $1.289 trillion in FY 2011. This is an increase of $3 billion. The outlay impact beyond 2011 would presumably be negative, but by an amount that is unknown to RSC staff.

Potential Gimmicks: As noted in the bullet above, the bill leads to an increase in outlays for this year compared to the existing CR. This is no doubt partly due to the fact that budget authority and budget outlays never move in tandem on a yearly basis. For example, even though H.R. 1 included $61 billion worth of cuts, it would only have caused an $8.8 billion reduction to outlays in FY 2011—the remaining impact on outlays would have come in subsequent years.

However, in order for a reduction in budget authority to have an impact on the deficit, it must cause a reduction to outlays eventually. No CBO score is available for all of the cuts made by the bill. But the following cuts are, according to various reports, not likely to actually reduce spending.

Consumer Operated and Oriented Plan (Co-Op) Program: The bill rescinds $2.2 billion of funding for this program created by Obamacare. However, according to reports, this money  was not expected to be spent anyway.

Performance Bonus Payments: The 2009 S-CHIP reauthorization law created performance bonuses for states that meet certain conditions. This legislation rescinds $3.5 billion of this funding, but according to reports, CBO did not expect the money was going to be spent anyway.

Highway Rescission: The legislation rescinds $3.1 billion of highway contract authority that, according to reports, would not have been spent anyway.

Crime Victims Fund: The legislation rescinds $4.8 billion for this purpose. The fund is made up of fines paid by criminals and forfeited bail bonds, and was created to compensate victims of crime.

Also, the Washington Examiner is reporting that the budget deal might be in trouble, and that Boehner is holding a meeting of the House GOP caucus to go over the budget deal numbers…

Also Read: Boehner addresses “facts and myths” from the budget deal

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