This week The Economist has a piece called “Deficit-Reduction Disorder.” It’s a great title, but the article unfortunately embraces the D.C. Dictionary’s definition of “large spending cuts”: a mere reduction to the future growth of spending. By that standard, in the aftermath of 2011′s continuing resolutions, the Budget Control Act of 2011, the American Taxpayer Relief Act of 2013, and the scheduled sequester cuts, the government is shrinking. Sadly, that is only the case when compared to how much bigger it would have been otherwise.
Don’t get me wrong: I am in favor of reducing the growth rate of spending, but such a measure shouldn’t be confused with actually cutting spending. To add insult to injury, often these “reductions” aren’t even what they appear to be. On Saturday the Washington Post ran an excellent article by David A. Fahrenthold, which looked at what happened to the supposed $37.8 billion in cuts that resulted from the April 2011 budget deal:
In the real world, in fact, many of their “cuts” cut nothing at all. The Transportation Department got credit for “cutting” a $280 million tunnel that had been canceled six months earlier. It also “cut” a $375,000 road project that had been created by a legislative typo, on a road that did not exist.
At the Census Bureau, officials got credit for a whopping $6 billion cut, simply for obeying the calendar. They promised not to hold the expensive 2010 census again in 2011.
Today, an examination of 12 of the largest cuts shows that, thanks in part to these gimmicks, federal agencies absorbed $23 billion in reductions without losing a single employee.
“Many of the cuts we put in were smoke and mirrors,” said Rep. Mick Mulvaney (R-S.C.), a hard-line conservative now in his second term. “That’s the lesson from April 2011: that when Washington says it cuts spending, it doesn’t mean the same thing that normal people mean.”
Now the failures of that 2011 bill have come back to haunt the leaders who crafted it. Disillusionment with that bill has persuaded many conservatives to reject a line-by-line, program-by-program approach to cutting the budget.
Instead, many have embraced the sequester, a looming $85 billion across-the-board cut set to take effect March 1. Obama and GOP leaders have said they don’t like the idea: the sequester is a “dumb cut,” in Washington parlance, which would cut the government’s best ideas along with its worst without regard to merit.
But at least, conservatives say, you can trust that this one is for real.
Well, the current deal (sequestration) actually isn’t for real and it certainly won’t be nearly as deep or as damaging as people claim. For one thing, the emergency-spending loophole hasn’t been closed, and lawmakers are already promising to restore the spending down the road. But I guess, as imperfect as it is, sequestration beats the alternative.
These revelations are especially depressing considering that none of these budget deals actually addressed our long-term problems. The Economist article rightly notes that very few of the alleged spending cuts tackle the long-term budget pressure the U.S. is facing. To understand how bad our budget outlook is, you can read my colleague Chuck Blahous’s piece called “Ten Things the Latest CBO Report Tells Us About Federal Finances.”