Crunching the budget deal numbers

posted at 2:41 pm on December 12, 2013 by Steve Eggleston

Yesterday, the Congressional Budget Office released its cost esimtate on the current bipartisan budget deal. The topline of a net $16 billion in direct “spending reductions” and $7 billion in brand-new revenues (read – taxes) in exchange for $62 billion in new discretionary spending versus the sequester this fiscal year and next seems impressive.

Americans for Limited Government found a whole lot of DC Math in that:

But that’s not the only whopper in this grand bargain. It allegedly “reduces the deficit by $23 billion and it does not raise taxes. It cuts spending in a smarter way,” declared House Budget Committee Chairman Rep. Paul Ryan (R-Wisc.), who brokered the deal.

Doesn’t increase taxes, you say?

Besides the $6.6 billion of increased revenues CBO scores, tucked into the package is $12.6 billion over ten years from a fee of “$5.60 per one-way trip in air transportation or intrastate air transportation that originates at an airport in the United States” that was somehow magically scored not as revenue, but as a spending cut. Huh?

You got that right. In what universe is that a spending cut? It doesn’t matter. The next time you book a round-trip flight and it is $11.20 costlier, remember you’re not actually paying a tax, you personally are reducing federal spending — even though the provision itself does nothing to actually reduce transportation security spending.

Similarly, almost $7.9 billion of increased premiums paid into the Pension Benefit Guaranty Corporation is scored as a spending cut. So are about $6.8 billion of higher customs user fees collected in 2022 and 2023.

Just those three items total $25.9 billion — a full one-third of the supposed $78.4 billion of spending cuts are no cuts at all, but fee increases.

To be fair, the entirety of the officially-scored revenue increases comes not from tax increases or even the end of “legitimate” tax subsidies, but from increased pension contributions from federal employees, worth $6 billion, and anti-fraud measures, worth $0.6 billion. However, if one flies, has a pension, or buys an imported good in 2022 or 2023, one gets to donate more money to the federal government.

Strip out the $26 billion in tax-and-fee increases from the $78 billion in direct spending “cuts”, and there is a net increase in spending of $10 billion versus leaving the sequester alone. That, however, is not the extent of the spending increases. Even though the CBO only scored the increase in discretionary spending directly associated with gutting the sequester for FY2014 and FY2013, they note that three of the provisions for which direct spending is reduced will likely result in increases in discretionary spending:

The COLA provision (the 1 percentage-point reduction for military retirees under the age of 62) also would reduce discretionary accrual payments to the Military Retirement Fund over the 2015-2023 period. While such payments count against discretionary amounts allocated to the Department of Defense as part of the annual appropriations process, they are intragovernmental transactions, and do not result in outlays from the government. If, within the discretionary caps, the reduction in accrual payments makes possible an offsetting increase in other appropriations, the net effect would be an increase in outlays—because an intragovernmental payment would be replaced by spending that goes outside the government….

Eliminate mandatory payments, authorized through 2019, to nonprofit organizations that service student loans. Although this provision would reduce direct spending by an estimated $3.1 billion over the 2014-2023 period, those loans would still need to be serviced. As a result, CBO estimates that implementing this provision would require additional discretionary appropriations of roughly the same magnitude as the mandatory funding that would be eliminated….

Section 706 would add a two-person “self plus one” coverage option for federal employees and retirees under the Federal Employees Health Benefits (FEHB) program. CBO estimates that option would be priced below the “self plus family” option currently available. However, the “self plus family” option would become more costly than under current law because the average number of people covered by policies of that type would rise. CBO expects that federal retirees would be more likely than active federal employees to switch to “self plus one” policies. As a
result, the average cost of FEHB policies for federal retirees would be lower than under current law, and the average cost of FEHB policies for active federal employees would be higher than under current law.

The provision would reduce direct spending because the government contribution for health benefits for federal retirees is classified as direct spending. On the other hand, implementing the provision would increase spending subject to appropriation, assuming appropriation of the necessary funds, because the government contribution for health benefits for active federal employees is classified as discretionary spending.

The direct spending cuts associated with the three provisions are, respectively, $6 billion, $3 billion and $3 billion. The CBO unofficially scored the student loan provision as a $3 billion discretionary spending increase. Similarly, it is reasonable to believe that the entirety of the saviings from cutting the retirement pay of “young” military retirees will go out the door elsewhere in the Defense Department budget, and that the entirety of the direct spending savings from the change in the health benefits plan will go out the door on the discretionary side. After all, we are talking about the federal government.

That doesn’t even take into account the $28 billion counted as direct spending reductions from extending the sequester to FY2022 and FY2023. Given the sequester was trashed now, there is no guarantee that it won’t be trashed again next decade, with that $28 billion in projected reductions zeroed out.


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Constitutional government would cost about 10% of what we have now, and wouldn’t require income taxes to fund it.

Akzed on December 12, 2013 at 2:44 PM

Washington DC – the altered math state.

ghostwalker1 on December 12, 2013 at 2:46 PM

The only math concerns how few hours it will take for Congress to pass this abomination divided by the number of minutes it takes to sprint to their limousines multiplied by the square root of their Christmas vacation days which is one of the reasons it’s being pushed so fast.

It all = Americans get screwed. Again.

Bishop on December 12, 2013 at 2:47 PM

However, if one flies, has a pension, or buys an imported good in 2022 or 2023, one gets to donate more money to the federal government.

A balanced budget in just 40 years and Boehner has the audacity to call himself a conservative as he pushes this crap. It is’t the dissenters that lack credibilty or are being ridiculous.

Happy Nomad on December 12, 2013 at 2:47 PM

$7 billion in brand-new revenues (read – taxes) in exchange for $62 billion in new discretionary spending versus the sequester this fiscal year and next seems impressive.
======================

Common Sense Runneth Amucks!!

canopfor on December 12, 2013 at 2:50 PM

The Republican civil war is getting bloodier

And now all the focus is not on Obamacare but the budget deal.

In some sense, the longer this drags out, the worse it is for us. It does seem like a horrible budget deal, but my only counterpoints are that maybe it’s small potatoes compared to the bigger picture, and maybe it is the best we can do with the Dems effectively being in charge. But Boehner is not helping the cause of unity by going after conservative groups and the Tea Party instead of saying something to the tune of “you got a point, but this is all we can do under these [bad] circumstances.”

anotherJoe on December 12, 2013 at 2:50 PM

Paul Ryan is a fool and he should read this comment before he comments on it.

One clue: Schumer, Pelosi and Obama like the deal.

One tip: The House is a separate body of Congress. The House does not have to do whatever the Senate tells it to do.

Paul Ryan has a lot of reading to catch up on. At least he won’t have to worry about taking time out to run for President.

IndieDogg on December 12, 2013 at 2:51 PM

Steve,..that was fast:


https://twitter.com/search?q=%23BudgetDeal&src=hash

Richard Viguerie ‏@RichardViguerie 2m

Crunching #budgetdeal #s or “How to Turn $16Billion in SpendingCuts into $22Billion+ in Spending Increases” http://bit.ly/1kDDeWi

canopfor on December 12, 2013 at 2:52 PM

Wasn’t Ryan the one who, in the last week or so, warned against using budget gimmicks and tricks in any plan that would come forth?

Midas on December 12, 2013 at 2:52 PM

Results for #KillTheBill

https://twitter.com/search?q=%23KillTheBill&src=hash

canopfor on December 12, 2013 at 2:53 PM

“Say what!?” – John Boner

Free Indeed on December 12, 2013 at 2:55 PM

Tweets All / No replies

Reuters Politics ‏@ReutersPolitics 6m

Budget proposal clears procedural hurdle in House http://reut.rs/PoliticsLive
Retweeted by Reuters Top News

https://twitter.com/Reuters

canopfor on December 12, 2013 at 2:56 PM

It shaves about $23 billion from the deficit, but provides for $85 billion in new spending over a decade, funded through cost savings and fees slapped on air travel and Medicare providers.

Great news! It also applies more fees to Medicare providers on top of dumping millions of more Americans into their laps to treat! What could possibly go wrong?

Johnnyreb on December 12, 2013 at 2:59 PM

I need to learn how to proofread – the instance of “FY2013″ above should be “FY2015″.

Steve Eggleston on December 12, 2013 at 3:00 PM

Our libtard run edumacation system produces such WONDERFUL math skills, doesn’t it?
No wonder we’re falling further behind the rest of the world every year.
Third-world stone-age idiocracy (aka libtard commie utopia) here we come….

dentarthurdent on December 12, 2013 at 3:02 PM

One clue: Schumer, Pelosi and Obama like the deal.
IndieDogg on December 12, 2013 at 2:51 PM

Uh no she doesn’t. Surf on over to Drudge She has the place of honor.

Johnnyreb on December 12, 2013 at 3:02 PM

Since Boehner and the Republicans told us they were going to stop government growth a long time ago, I guess I was hoping for a $1.5 Trillion reduction. Kind of like getting back to those “Bush is going to bankrupt the country” good old days.

oldroy on December 12, 2013 at 3:09 PM

Uh no she doesn’t. Surf on over to Drudge She has the place of honor.

Johnnyreb on December 12, 2013 at 3:02 PM

False flag. And an ugly one at that. This is just to give Boehner some cover.

oldroy on December 12, 2013 at 3:10 PM

US Congress, calculating with an abacus since 1789…..

hillsoftx on December 12, 2013 at 3:12 PM

False flag. And an ugly one at that. This is just to give Boehner some cover.

oldroy on December 12, 2013 at 3:10 PM

Not buying that. Nearly every article I have read has stated that not extending unemployment benefits would be a deal breaker for Dems in any budget fight.

Johnnyreb on December 12, 2013 at 3:16 PM

Remember those shirts that had Ryan’s face with the word “Math” under it? Those were good times.

Bishop on December 12, 2013 at 3:20 PM

Establishment Republicans and Democrats…not a penny’s worth of difference…

PatriotRider on December 12, 2013 at 3:28 PM

Remember those shirts that had Ryan’s face with the word “Math” under it? Those were good times.

Bishop on December 12, 2013 at 3:20 PM

Math is a cruel mistress, even crueller than Politics when the money well runs dry.

Steve Eggleston on December 12, 2013 at 3:30 PM

“D.C. Math.”

Identifies this thing well enough.

Just those three items total $25.9 billion — a full one-third of the supposed $78.4 billion of spending cuts are no cuts at all, but fee increases.

These are the machinations of people out to politicize and not out to administrate.

We voters continue to see the problem realistically enough but why can’t we accomplish effective solutions? Everyone present in D.C. as to Congress is there because of elections they “won”. So there’s the problem…

Lourdes on December 12, 2013 at 3:30 PM

“It’s beginning to look a lot like Christmas.”

I’ll bet the malls in DC are doing a booming business, what with all that money floating around.

oldroy on December 12, 2013 at 3:30 PM

“embrace the suck” sez the old bat. Where did she get that, from a sign at one of those vulgar parades in her district?

Yeah, embrace it. Then choke on it. The whole lot of them.

Brat on December 12, 2013 at 3:32 PM

And Pelosi telling Dems to “embrace the suck” is outrageous. Politically, she’s trying to foil the Right (trying to appear resistant but supportive — uhhh — to this deal while relishing the deal in reality, thus her disgusting remark).

Boehner either has to explain himself competently — which so far he hasn’t — or he has to drop this rotten potato, same with Ryan.

Blaming one’s own party and voters for whatever is a losing method and Boehner needs to cut it out. Same with Paul. Same with the “groups” and lobbyists. Go for solutions and stop the infighting.

Lourdes on December 12, 2013 at 3:34 PM

“embrace the suck” sez the old bat. Where did she get that, from a sign at one of those vulgar parades in her district?

Yeah, embrace it. Then choke on it. The whole lot of them.

Brat on December 12, 2013 at 3:32 PM

Just when you think Pelosi can’t be even more gross than she already is, she gets grosser. She’s really a disgusting, utterly gross, person. Just gross.

Lourdes on December 12, 2013 at 3:35 PM

“It’s beginning to look a lot like Christmas.”

I’ll bet the malls in DC are doing a booming business, what with all that money floating around.

oldroy on December 12, 2013 at 3:30 PM

At least the portions where the federal workers and the lobbyists live. Get out of those safe areas and the DC metro area is as depressed as the rest of the country.

Steve Eggleston on December 12, 2013 at 3:35 PM

The reason Boehner is on the attack is because he knows it’s a bad deal and is pulling a Democrat strategy of attack first and put anyone being critical on the defensive.

I hope Boehner is replaced, he just doesn’t have a clue.

bflat879 on December 12, 2013 at 3:39 PM

1) Start with the FY 2007 budget

2) Remind Dems of their 2006/2007 promises of “no more deficit spending”.

3) If we limited FY 2014 outlays to FY 2007 levels, we would run a budget SURPLUS.

ITguy on December 12, 2013 at 3:41 PM

Wonder what her war expert 5 year old grandson thinks of that language.

“Grandma Mimi, I think no suck”

Brat on December 12, 2013 at 3:41 PM

The last budget passed by a Republican House, Republican Senate, and Republican President was passed in 2006 for Fiscal Year 2007.

FY 2007 Outlays were $2,728,686 Million (a.k.a. $2,729 Billion or $2.73 Trillion)
Data Source: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/hist01z1.xls

FY 2013 Revenue: $2.77 Trillion
Data Source: http://www.bloomberg.com/news/2013-10-30/budget-deficit-in-u-s-narrows-to-5-year-low-on-record-revenue.html

So let’s compare:
FY 2007 Outlays: $2.73 Trillion
FY 2013 Revenue: $2.77 Trillion

If the 2013 Democrat-majority outlays had been limited to the last Republican-majority outlays, we would have had a $40 Billion SURPLUS in FY 2013!

We don’t have a revenue problem, we have a SPENDING problem.

Paul Ryan should START with the FY 2007 budget spending amounts and negotiate from there.

Paul Ryan should remind the public that the Pelosi and the rest of the Democrats in 2006 put in writing their promises of “fiscal discipline” and “‘Pay As You Go’ budgeting – no more deficit spending“.

The current budget could spend $40 Billion more than FY 2007 and still have a balanced budget!

There is enough evidence to show that Democrats in 2006 ran and won on promises to end deficit spending.

It is only a lack of Republican backbone that has let Democrat majorities over the last six years get away with adding new debt at a rate more than FOUR TIMES that of their Repulbican majority predecessors.

Average new debt per year:
FY 96-07 Republican majority: $336 Billion /year
FY 08-13 Democrat majority: $1,345 Billion /year ($1.35 TRILLION /year!)

ITguy on December 12, 2013 at 3:42 PM

Nancy Pelosi, 2006:

Over the past decade, the Republican controlled Congress took our nation in the wrong direction. Too many Americans are paying a heavy price for those wrong choices: record costs for energy, health care and education; jobs shipped overseas; and budgets that heap record debt on our children. For millions, the middle-class dream has been replaced by a middle-class squeeze…

Democrats are proposing a New Direction for America…

With integrity, civility and fiscal discipline, our New Direction for America will use commonsense principles to address the aspirations and fulfill the hopes and dreams of all Americans. That is our promise to the American people….

Our federal budget should be a statement of our national values. One of those values is responsibility. Democrats are committed to ending years of irresponsible budget policies that have produced historic deficits. Instead of piling trillions of dollars of debt onto our children and grandchildren, we will restore “Pay As You Go” budget discipline.

Budget discipline has been abandoned by the Bush Administration and its Republican congressional majorities. Congress under Republican control has turned a projected $5.6 trillion 10-year surplus at the end of the Clinton years into a nearly $3 trillion deficit– including the four worst deficits in the history of America. The nation’s debt ceiling has been raised four times in just five years to more than $8.9 trillion. Nearly half of our nation’s record debt is owned by foreign countries including China and Japan. Without a return to fiscal discipline, the foreign countries that make our computers, our clothing and our toys will soon be making our foreign policy. Deficit spending is not just a fiscal problem – it’s a national security issue as well.

Our New Direction is committed to “Pay As You Go” budgeting – no more deficit spending.

Nancy Pelosi, 2007:

After years of historic deficits, this 110th Congress will commit itself to a higher standard: pay-as-you-go, no new deficit spending. Our new America will provide unlimited opportunity for future generations, not burden them with mountains of debt.

- New Speaker Nancy Pelosi, 01/04/2007

The FY 2007 budget that Speaker Pelosi inherited, which had been passed in 2006 by a Republican House, Republican Senate, and President Bush, featured:

Receipts: $2.568 Trillion
Outlays: $2.729 Trillion
Deficit: Less than $161 Billion

Data Source: FY 2007 budget numbers shown on the White House’s own Office of Management and Budget web site

Under Speaker Pelosi, outlays and deficits skyrocketed. Now, after six straight fiscal years of Democrats having majority control of budgeting and spending (holding 2+ out of 3 of the House, Senate, and Presidency since Jan 3, 2007), Democrats have created the SIX LARGEST DEFICITS in the history of this country!

I say that we would be just fine to return to FY 2007 spending levels… $2.729 Trillion

So, how much could we cut?

2013 Estimated Outlays $3.803 Trillion
- 2007 Outlays $2.729 Trillion
= $1.074 Trillion

That is how much needs to be cut from this budget… $1.074 Trillion ($1,074 Billion) THIS year, NOT $23 Billion over 10 years!

ITguy on December 12, 2013 at 3:43 PM

False flag. And an ugly one at that. This is just to give Boehner some cover.

oldroy on December 12, 2013 at 3:10 PM

I believe this is true. It’s just a game to them. Either yesterday or a couple days ago, there was a thread? about how this administration is implementing behavioral manipulation techniques to get their way by shaping thoughts and opinions. Manufactured consent.
This cover for Boner may be a part of that.

You know who else uses behavioral techniques to manipulate people??..criminals and con artists.

Mimzey on December 12, 2013 at 3:49 PM

Could we as nation, just buy Switzerland and let the elites go there and live out their elite lives and just start over? Seriously – Switzerland can’t be worth more than $1 Trillion. We could rent out rooms until the elites die off.

oldroy on December 12, 2013 at 3:53 PM

Could we as nation, just buy Switzerland and let the elites go there and live out their elite lives and just start over? Seriously – Switzerland can’t be worth more than $1 Trillion. We could rent out rooms until the elites die off.

oldroy on December 12, 2013 at 3:53 PM

It won’t work because they seek total domination over all they survey. Besides, they already run Europe.

Steve Eggleston on December 12, 2013 at 3:58 PM

Nearly every article I have read has stated that not extending unemployment benefits would be a deal breaker for Dems in any budget fight.

Johnnyreb on December 12, 2013 at 3:16 PM

So what?
Why is it that it’s only the dems that can use that bullshit pout and have it work?
If repubs try that, the dems laugh and expect them to “embrace the suck” and barge ahead. When the dems do it, the repubs sputter and furrow their brows and immediately cave, usually giving more than what was advertised, with a hardy “We”ll get them next time. This was just part of the 3 dimensional chess we’re playing”.

Mimzey on December 12, 2013 at 4:02 PM

I’m sorry Mr. Eggleston, I have it on the expert knowledge of a “conservative” college student that this deal is the greatest thing since sliced bread and we should be dancing in the street that our betters have saved us from ourselves yet again.

Cindy Munford on December 12, 2013 at 4:03 PM

I’m sorry Mr. Eggleston, I have it on the expert knowledge of a “conservative” college student that this deal is the greatest thing since sliced bread and we should be dancing in the street that our betters have saved us from ourselves yet again.

Cindy Munford on December 12, 2013 at 4:03 PM

Where’s my dad?

Seriously, you don’t have enough scare quotes in there.

Steve Eggleston on December 12, 2013 at 4:10 PM

Not buying that. Nearly every article I have read has stated that not extending unemployment benefits would be a deal breaker for Dems in any budget fight.

Johnnyreb

How would it even be possible? Our RINO betters have assured us that we have no power to keep things like that out of the budget.

xblade on December 12, 2013 at 4:18 PM

At least the portions where the federal workers and the lobbyists live. Get out of those safe areas and the DC metro area is as depressed as the rest of the country.

Steve Eggleston on December 12, 2013 at 3:35 PM

That can’t be…..
Don’t they have a new “liveable” minimum wage now in DC? That should make everyone there rich…….

dentarthurdent on December 12, 2013 at 4:19 PM

ITGuy +1,000,000,000,000.

Per the Daily Treasury Statement, since the October “deal” to end the partial shutdown, we have gone from a debt ceiling of $16.699 trillion to a Total Public Debt Subject to Limit of $17.185 trillion – an increase in the debt of over $400 billion dollars in 53 days – and they say they will save us $23 billion over 10 years?

Who are these guys kidding?

SouthernRoots on December 12, 2013 at 4:25 PM

ITguy on December 12, 2013 at 3:42 PM

Thanks for posting that again, along with the follow-up post.

That demonstrates one of the major problems that many of us have with the GOP Leadership and this deal – they are starting their negotiations from a fundamentally flawed position, the position of government spending AFTER Tarp and AFTER the ‘One-Time 2009 Stimulus’ are included in the Federal Government outlays.

Doing this just makes the massive spending increases of the Obama Administration established with the Democrat Congress the new normal.

Athos on December 12, 2013 at 4:25 PM

Steve Eggleston on December 12, 2013 at 4:10 PM

Sorry, I call everyone by the last name if I know it. Must be the Southern in me. It’s really weird since I am older than just about everyone.

Cindy Munford on December 12, 2013 at 4:34 PM

One of the ‘justifications’ I’m hearing from the GOP Leadership and some elements of talk radio is that the additional spending is needed to offset some of the sequester driven cuts that are said to be significantly impacting the military / DoD.

The problem with this is that this is another argument made upon a false premise.

With the sequester, as we also saw with the government shutdown, the Obama Administration set to make sure that all spending reductions would be as painful as possible to the voter and to the country. There was absolutely no effort made to eliminate waste, redundancies, or inefficiencies. There were no ‘creative’ efforts like those made during the debt ceiling crisis to keep spending even without borrowing authority – or ‘creative’ efforts to deliver the same services with less funding. It was just cut the most obvious, most painful items and to hell with the people / country – this is about the spending agenda.

Any deal built upon a false premise is little more than a false deal.

Athos on December 12, 2013 at 4:37 PM

Lies…Lies….Lies… That’s all these clowns know….

No… Dinner…. No…. Kiss…. Just Bend Over

roflmmfao

donabernathy on December 12, 2013 at 5:04 PM

Besides the $6.6 billion of increased revenues CBO scores, tucked into the package is $12.6 billion over ten years from a fee of “$5.60 per one-way trip in air transportation or intrastate air transportation that originates at an airport in the United States” that was somehow magically scored not as revenue, but as a spending cut. Huh?

You got that right. In what universe is that a spending cut? It doesn’t matter. The next time you book a round-trip flight and it is $11.20 costlier, remember you’re not actually paying a tax, you personally are reducing federal spending — even though the provision itself does nothing to actually reduce transportation security spending.

What a great scam!

Take money the federal government is paying out of the taxes they collect and make the people pay for it directly. Then count it as a spending cut because the government is making people spend it directly instead. And since it’s a fee, not a tax, you can also call it a tax cut.

This is what the Republican party has become: a party of enablers who find ways to help the Democrats increase the burden on Americans more efficiently.

There Goes the Neighborhood on December 12, 2013 at 7:00 PM

And now all the focus is not on Obamacare but the budget deal.

In some sense, the longer this drags out, the worse it is for us. It does seem like a horrible budget deal, but my only counterpoints are that maybe it’s small potatoes compared to the bigger picture, and maybe it is the best we can do with the Dems effectively being in charge. But Boehner is not helping the cause of unity by going after conservative groups and the Tea Party instead of saying something to the tune of “you got a point, but this is all we can do under these [bad] circumstances.”

anotherJoe on December 12, 2013 at 2:50 PM

Well said and fully agreed. Boehner is effing this all up for no apparent reason, and since we mostly hate the pr1ck in the first place…it’s not helpful.

Jaibones on December 12, 2013 at 7:04 PM