Thursday, May 07, 2009

The $17 Billion in “Savings”    [Brian Riedl]

One detail not being reported about the President’s $17 billion in “cuts” . . . is that the budget would not be cut. Virtually every dollar “saved” would automatically go towards new spending instead of deficit reduction

Here’s why: The president already proposed a specific discretionary spending level (which included these proposals), and Congress has already approved a budget that would spend $1,086 billion on regular discretionary spending in FY 2010. The discretionary savings proposals affect only the composition of such spending. Thus, even if the entire $12.5 billion in discretionary spending cuts are enacted, the savings would automatically be plowed into other programs to maintain discretionary spending at that pre-set $1,086 billion level. So this exercise is about reorganizing — not reducing — government.

Even on the entitlement side, $3.6 billion of the $4.6 billion in 2010 savings comes from phasing out the subsidized student-loan program, with all savings redirected into expanded Pell grants. There is virtually no deficit reduction from these reforms.

So even if Congress did enact all these reforms (fat chance), total federal spending would not change.

That is, unless some strategic lawmakers offer an amendment requiring that the “cuts” go towards deficit reduction.

— Brian M. Riedl is Grover M. Hermann fellow in Federal Budgetary Affairs at the Heritage Foundation.

05/07 04:26 PMShare