Federal budget: Why is Obama playing the Republicans' game? Discretionary spending cuts are kid stuff.

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Feb. 14 2011 7:03 PM

The Terminator

Why is Obama playing the Republicans' game? Discretionary spending cuts are kid stuff.

The Obama budget. Click image to expand.
The Obama budget

Under the budget proposed by President Obama on Monday, the federal government would spend $3.8 trillion in 2012. That's a big number. Under the budget proposed by House Republicans, the federal government would spend $3.4 trillion in 2012. That's also a big number, if not quite as big as $3.8 trillion. And then there is $1.1 trillion, which is what the U.S. federal budget deficit will be in 2012, according to the Congressional Budget Office. Appearances notwithstanding, this is also a very big number.

Obama's budget plan would cut $33 billion in spending in 2012. The latest iteration of the House GOP plan would cut three times that—$100 billion—and the cuts would come this year rather than next. House Republicans initially intended to propose $35 billion in cuts, a package virtually the same size as the president's, but the GOP's Tea Party faction bullied them into raising that to $100 billion. Dean Clancy is legislative counsel to FreedomWorks, the DC-based nonprofit that helps direct the supposedly grassroots tea partiers. (Think of him as March Hare to Dick Armey's Mad Hatter.) Of the Tea Party's $100 billion victory, Clancy crowed to ABC News: "We insist on it, and we're getting it." But in the context of government spending that exceeds $3 trillion, neither $33 billion nor even $100 billion in cuts amounts to very much. Either way, the budget deficit both this year and next will be more than the once-unthinkable sum of $1 trillion.

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Why are even the House Republicans' proposed cuts so comparatively inconsequential? Because both the Obama administration and the House Republicans are engaging in the time-honored Washington game of cutting the budget by whittling away at its smallest component, "discretionary spending." If you take a look at this interactive pie chart from the left-leaning Center for American Progress, you will see that discretionary spending accounts for slightly more than one-third of the federal budget, while "mandatory" spending accounts for nearly 60 percent. (CAP's numbers are identical to those available from the nonpartisan Congressional Research Service.)

Mandatory spending, also known as entitlement spending, is money spent according to a formula, previously agreed upon by Congress, for social programs (primarily Social Security and Medicare). It is the reason government spending is out of control, but even conservatives are usually too terrified to cut it because these programs are very popular. To cut the federal budget without cutting entitlements is like giving up chocolate-chip cookies and then deciding it's OK to eat the ones that don't have any nuts.

Take a look at that interactive pie chart again, and click on the discretionary (red) portion. You will see that the majority of this discretionary slice (58 percent, or 20 percent out of the 35 percent that constitutes all discretionary spending) gets gobbled up by the Pentagon. But guess what? Neither the Democrats nor the Republicans are very keen to cut that, either! The Obama budget would actually increase defense spending by $22 billion in 2012 (though it promises management and acquisition reforms that would cut $78 billion over five years). The Republicans have proposed $16 billion in defense cuts—that's $16 billion out of a total $100 billion in cuts—but there's a lot of skepticism about whether they'd actually go through with it.

Remove entitlement spending and defense spending and you're left with "non-defense discretionary spending," a slice of pie that represents 15 percent of federal spending. That's right. The deficit's more than a trillion dollars, the Tea Party is baying for blood, and meanwhile both Republicans and Democrats start from the premise that 85 percent of the federal budget must remain largely intact. The Washington Post's Ezra Klein nicely describes the federal government as "an insurance conglomerate [i.e., entitlements] protected by a large, standing army." Somewhere in there, though, there's a sliver of other stuff called nondefense discretionary spending. This budgetarily inconsequential 15 percent is the ground on which Obama will skirmish with House Republicans.

To say this 15 percent is inconsequential in terms of size doesn't mean that it's inconsequential in terms of value. Precisely because this is where most partisan budget battles have been fought during the past 30 years, you might wonder whether there's much fat left in the nondefense discretionary budget. A perusal of the Obama administration's proposed terminations suggests not.

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