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.

The list of terminations comes out of the gate with three plausible-sounding cuts. A grant program to fight teen pregnancy is being zeroed out, but the Obama administration last year created a new program to do the same thing that's better-funded. The Centers for Disease Control and Prevention has a program to research agricultural, forestry, and fishing hazards, which does seem a little far afield from its core mission. A Housing and Urban Development program to redevelop contaminated factories and warehouses is apparently duplicative of other programs.

But why end the Bureau of Labor Statistics's International Labor Comparison program, "which provides international comparisons of employment, compensation, productivity, and price data"? Such information is useful to labor economists (and—full disclosure—it's the sort of information I'll be drawing on for the book on income inequality that I'm writing). "This is depressing," Tom Geoghegan e-mailed me. Geoghegan is author of Were You Born on the Wrong Continent?, a thoughtful exploration of the differences between U.S.- and German-style capitalism of the sort that will henceforth be more difficult to undertake.

The Obama administration would also eliminate a grant program that helps community colleges provide job training; I wasn't aware that community colleges had perfected job training to the point where they no longer need federal help. (Apparently they already get federal help from the federal Trade Adjustment Assistance program, but given current structural challenges in the economy, they can probably use all the help they can get.) Subsidies to children's hospitals? Let the little brats fend for themselves. A program to reduce diesel emissions? Hell, they've already reduced 'em plenty! A program to protect intercity buses from possible terrorist attack? All the best people take the train, fly, or drive. The Bart Stupak Olympic Scholarship? He retired from Congress, and, besides, that rat-fink almost sank Obamacare! The [Robert] Byrd Honors Scholarship? Nice guy, but he's dead now and can't raise a ruckus.

None of these programs is so essential that eliminating it will prove disastrous. But neither is any so expensive that eliminating it will save much money. (The BLS, for instance, spends all of $2 million annually to collect its international labor statistics.) Meanwhile, the hardship many of the Obama administration's planned cuts impose on program beneficiaries will far exceed their paltry budgetary benefit. For example, the administration proposes saving $984 million in 2012 by no longer having the government pay interest on loans to students seeking advanced degrees while those students are still in school. Many of these students, it reasons, will end up in high-paying jobs.

No doubt. But many of them won't. One Barack Obama worked as a community organizer after he left Harvard Law School. He's doing all right now financially, but he had some lean financial years. Should he have worked for Milbank, Tweed instead? The Low-Income Home Energy Assistance Program spent $5.1 billion this year to help poor families pay for heating in the winter and air conditioning in the summer. Next year, they'll have to make do with $2.57 billion. "Current energy price forecasts predict relatively moderate price increases for winter 2011-2012 compared to this winter," the administration says to justify this cut. Current energy price forecasts predicting what will happen one full year from now and fifty cents will buy you a cup of coffee.

The way to reduce the deficit is to cut entitlement spending by phasing it out at higher incomes; cut a Pentagon budget that's more than doubled during the past decade without providing the United States the means or the will to locate Osama Bin Laden; restore taxes on incomes above $250,000 to where they were when Bill Clinton left office (an option Obama agreed to defer until 2013); and raise tax rates on incomes well above $250,000, in recognition of the fact that incomes at the tippy top of income distribution have enjoyed a stratospheric climb for the past 30 years. To pretend that there's much money to save by squeezing the same 15 percent that's already been squeezed time and again neither achieves much in budget savings nor demonstrates much concern for what gets lost and who gets hurt. It's a stupid political game, invented by Republicans but now played by both parties. The president shouldn't play it.

Also in Slate, John Dickerson suspects a better, secret budget deal may be in the works. Fred Kaplan lays out even more potential cuts to the Pentagon budget. David Weigel reports on Republican Paul Ryan's critique of the White House budget. Annie Lowrey describes how your household budget would look if you spent money like the federal government.

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Timothy Noah is a former Slate staffer. His  book about income inequality is The Great Divergence.

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