Free Markets, Free People

Quin Hillyar

The $32.5 billion in cuts are real cuts

They’re not all smoke and mirrors as some are alleging.  But you have to understand the budget process to know that.  Quin Hillyar explains:

Anyway, yes, the cuts are not of the high quality of cuts we might like. Yes, there are a few which can only be characterized as smoke and mirrors. But no, the bulk of these cuts are not meaningless; most of them actually will keep money from being spent that otherwise would, yes, be spent. In other words, most of the complaints are groundless.

Here’s why. This is an Appropriations bill. Approps bills are primarily expressed through "budget authority," not through "outlays." A project in an Approps bill that receives budget authority in FY 2011 might not actually get spent — there may not be an "outlay" of the full amount — in 2011. If it is a construction project, that will almost certainly be the case. This late in the fiscal year — which began last October 1, and thus is more than halfway over — some of these projects may not even get the contracts signed before the end of the fiscal year. So cutting that project would not cut a single dollar from actual spending this year. But that does NOT — NOT NOT NOT NOT NOT — mean that cutting the project is a waste of time. If the budget authority is removed, it means that the money that absolutely would have been spent in future years now CANNOT be spent, by law. It saves real money.

Hillyar worked on the staff of the House Appropriations Committee during the time Republicans balanced the budget and brought Bubba to the table to sign kicking and screaming all the way (you remember Clinton’s "can’t be done" statement, right?).

More clarity about the process:

The savings are real. It’s the same thing with a lot of the items that critics are calling "smoke and mirrors" just because they don’t cut this year’s outlays. The criticism is utterly ill-informed and baseless.

Granted, there also are accounts that contain leftover money that supposedly wasn’t going to be spent anyway — so in this case, say the critics, cutting the budget authority doesn’t save money; it’s just forcing the official accounting to catch up with the reality of the unspent funds….. Well, yes and no. Or rather, maybe. The dirty little secret about unobligated funds is that many of them are in accounts that aren’t impressively tight. Executive branch bureaucracies, without approval of Congress, often can tap into those funds (in effect) for other purposes, merely by shifting them among accounts. Most funds are fungible. That’s why Sen. Tom Coburn is making such a big deal, overall (apart from this battle), about cutting hundreds of billions in unobligated funds: because as long as they remain on the books, they still can get spent, and in most cases will get spent. Therefore, eliminating the budget authority for these programs does indeed save real money. It’s not just an accounting trick. It takes away all legal authority to spend that money. It means the taxpayers will not be on the hook for the money.

So while maybe not ideal in terms of the amount of “high quality” cuts we would have preferred, believing the narrative that they’re all smoke and mirrors is just wrong.  When a program has budget authority, it is funded and those funds will be spent – by someone.  That authority has now been withdrawn and thus the ability to spend even a penny of the formerly allocated funds goes with it.

An even better silver lining (again something you have to understand about the process to appreciate the impact):

Also important is that they force the overall spending baseline lower. So much of what happens in Washington budgets involves comparing spending year to year. If you take away budget authority EVEN FOR PROGRAMS THAT NEVER WOULD GET SPENT, you also make the official baseline for future years lower. It thus becomes far harder for the left to demagogue GOP spending proposals, because the proposals will be compared to a lower starting point than they would if the programs in question still remained on the official books. Anybody who doesn’t think this is an important budgetary victory is either ignorant or a fool.

Or both.

All of these things are important.  Removing the budget authority essentially defunds a program, or, as mentioned, stops it in its tracks and removes the money from being available to the program being defunded.   It also removes it from the grasping, greedy fingers of bureaucrats ready and eager to take whatever money they can get their hands on and spend it.

Best of all worlds?  Probably not.  But certainly not at all the worst of all worlds.  Anytime we can save money and force the spending baseline lower seems to me to be a victory.