When $85 billion in cuts isn’t $85 billion…or a cut


Since the Budget Control Act (BCA) became law in August 2011, both parties have prominently pushed to avoid the spending reductions in the law. Republicans have wanted to avoid the defense side of things, and Democrats have wanted to avoid the social program side of things. After all, $85 billion in “cuts” to spending is a lot, isn’t it?

Not really. In fact, no cutting will take place in the overall size of the federal budget over the 10 years the BCA is supposed to diminish spending. Even if the BCA goes into full effect, the Congressional Budget Office (CBO) expects the federal debt to increase. This would not be the case if real cuts – meaning, reductions from the current year’s spending – were to take place every year for a decade.

To be fair, both parties correctly note the cuts will hit discretionary spending significantly (as well as a small amount of mandatory spending), at least in Washington terms. Non-defense discretionary spending will drop 5.2%, and defense by 7.8%, on an annually-calculated basis, according to the Bipartisan Policy Center. Total spending would only drop by 2.5%, though – not exactly a slashing of the budget.

In the end though, $85 billion isn’t $85 billion. The CBO estimates only $44 billion of the BCA’s “cuts” will be implemented in 2013. This is the equivalent of having a budget of $3,600 or so…and cutting $44 out of it. Can’t you feel the devastation???

Oh, and that’s after Washington grew the budget by about 40% since 2006. This is equivalent to going from a budget of slightly under $2,700 to a budget of $3,800 in six years…and then cutting back by $44. Not exactly the end of the world.

As the sequester begins to take effect, we’re going to keep hearing stories of the debilitating effect of these minor spending reductions. Prepare yourselves for the biggest collective yawn since the Mayan calendar apocalypse.