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CBO: U.S. Budget Bill Lowers Spending Far Less Than Projected

The compromise fiscal year 2011 continuing resolution bill (HR 1473) would cut federal spending for the remainder of this budget year by just $352 million, or less than 1% of the estimated savings that top congressional leaders had expected, according to an analysis released by the Congressional Budget Office on Wednesday, the AP/Washington Post reports (AP/Washington Post, 4/13).

Background on Budget Agreement

Congressional appropriators had projected that the proposal -- which top House and Senate leaders agreed to late last week -- would cut between $38 billion and $39 billion from current discretionary and mandatory spending levels through September.

Details of the FY 2011 CR indicate that about $20 billion of the overall spending reductions would come from domestic discretionary programs, while $17.8 billion would be cut from mandatory programs. Those cuts include the nearly $12 billion in reductions that Congress approved in the recent stopgap CR bills. In addition, more than half of the total spending cuts would affect health, labor and education programs.

Lawmakers for weeks had been at odds over the inclusion of dozens of policy-based non-spending provisions -- known as riders -- in the House-passed FY 2011 CR budget bill (HR 1), particularly two that would cut off funding for the federal health reform law and Planned Parenthood. Under the agreement, those riders have been dropped, and they would be considered separately on the Senate floor at a later time.

Among the spending reductions in the deal are proposals that would affect two specific programs in the health care overhaul -- the proposed health insurance cooperatives designed as an alternative to the public health insurance plan option and a voucher program to allow low-income workers to opt out of their employer-sponsored plans and obtain coverage through the new state-based health insurance exchanges (California Healthline, 4/13).

CBO's Analysis

The AP/Post reports that although CBO confirmed that the FY 2011 CR would cut $38 billion in federal spending from current levels, the agency noted that many of the proposed reductions would not have an immediate effect on the deficit (AP/Washington Post, 4/13).

When emergency funding is factored into the analysis, CBO said the deficit actually would increase by $3.3 billion compared with FY 2010 levels.

According to National Journal, the report's findings are based on several factors:

  • Increases in spending included in the deal, especially for the Department of Defense;
  • Decisions to draw over half of the savings from rescissions, cuts to reserve funds and mandatory spending programs; and
  • Cutting funds that likely would not have been used (Fernholz, National Journal, 4/13).

According to the AP/Post, the "lack of immediate budget-cutting punch" can be attributed to the fact that more than half the fiscal budget year is over and that the reductions in new spending take longer to be reflected in deficit analyses (AP/Washington Post, 4/13).

In a separate analysis provided only to lawmakers, CBO found that $5.7 billion in proposed spending cuts through the elimination of bonus payments to states for enrolling more children in health insurance programs and reducing the funds for the co-ops program in the health reform law would not produce any savings, the AP/Post reports (AP/Washington Post, 4/13).

Boehner Pushes Back Against CBO Report

During an appearance on the Fox News Channel on Wednesday, House Speaker John Boehner (R-Ohio) attempted to clarify what he described as "inaccurate information" about the FY 2011 CR, although he did not specifically refer to the CBO report, The Hill reports. He said, "These are real cuts," adding, "I'm not jumping up and down thrilled to death with this deal [on the CR], but it was the best we could get."

The House and Senate are expected to vote on the measure on Thursday (Berman, The Hill, 4/13).

On Wednesday, Boehner spokesperson Michael Steel reiterated that the CR includes actual spending cuts, even if they are all not reflected for the current budget year. "This bill will cut $315 billion in Washington spending over 10 years, $78 billion compared with the president's request this year alone," he said.

According to Roll Call, conservative bloggers and prominent Republican party officials, including several potential GOP presidential contenders, have rejected the deal, and it currently is unclear whether Republicans "will jump ship" over the CBO analysis (Dennis, Roll Call, 4/13).

Passage of CR Expected in Both Chambers

Despite the uncertainty over passage of the FY 2011 CR, a whip count indicates that the bill has drawn adequate support in the House and Senate to pass, The Hill reports (The Hill, 4/13).

Within the House Democratic caucus, some leaders said they do not intend to push members to vote for the measure, and expect the lawmakers to "vote their conscience." Although House Minority Whip Steny Hoyer (D-Md.) has indicated that he will vote for the measure, House Minority Leader Nancy Pelosi (D-Calif.) has remained non-committal on the issue (Lillis, The Hill, 4/13).

Congress must approve the bill to avert the possibility of a government shutdown on Friday, when the current stopgap CR expires (Young, CQ Today, 4/13).

Advocacy Group Warns Against Cuts to Children's Coverage

On Wednesday, First Focus -- a Washington, D.C.-based family and children's advocacy group -- cautioned that the proposal in the compromise FY 2011 CR to cut $3.5 billion in unused funds for the Children's Health Insurance Program could block essential health coverage for as many as six million uninsured children who qualify for the program or Medicaid, CQ HealthBeat reports (CQ HealthBeat, 4/13).

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