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Do the Boehner and Reid bills actually make trillions of dollars in cuts?

July 27, 2011 by  

Do the Boehner and Reid bills actually make trillions of dollars in cuts?

Both the upper and lower houses of Congress are currently considering bills to increase the debt limit and cut spending. The one in the House is sponsored by House Speaker John Boehner (R-Ohio), and the one in the Senate is sponsored by Majority Leader Harry Reid (D-Nev.). Both bills have come under fire from the Congressional Budget Office (CBO) for not actually delivering their respective amounts of promised cuts.

The Boehner bill has been taken off the floor so it can be tweaked to meet Republican promises that cuts will match or exceed the debt limit increase, dollar-for-dollar. The initial idea behind the bill, which heavily references the “Cut, Cap and Balance” bill that passed the House but was dead on arrival in the Senate, is to slash spending while only allowing a small debt limit increase. On its initial reading of the bill, the CBO estimated that it would reduce the deficit by $850 billion, while raising the debt ceiling by $900 billion, according to POLITICO.

The Reid bill is also being re-worked, because it was estimated by the CBO to cut $1.8 trillion, reduce the deficit by $2.2 trillion and raise the debt limit $2.7 trillion, according to The Washington Times. This bill, in its current incarnation, would be accomplished through a series of cuts and, unlike the Boehner bill, tax increases. However, some have argued, according to the article, that the Reid bill’s savings are not true savings, “because the Reid plan takes credit for cutting $1 trillion in war spending in Iraq and Afghanistan. Those savings can only be claimed if one assumes the U.S. engagement there will continue at full throttle for the next decade.”

However, at least one columnist is questioning whether either plan actually contains any real cuts, because of how each bill deals with discretionary spending authority.

“Discretionary spending authority — the amount government is allowed to spend each year — actually rises over the next 10 years. Under the Boehner plan, the 2021 cap is $1.234 trillion, or about $190 billion more than authorized for 2012. Under the Reid plan discretionary spending is capped at $1.228 trillion in 2021,” read a column for Salon. “So you might well ask, if the amount that Congress is allowed to spend goes up each year, how can either side claim savings of a trillion dollars or more?”

It turns out, in calculating budget projections, “planners assume a baseline in which spending rises at the same rate as inflation,” according to the column.

“‘Savings’ are calculated by subtracting what the government will spend with the cap in place from what the government would have spent if spending rose at the full inflation rate. Voilà! Spending, overall, continues to rise, even as a trillion or more dollars are ‘saved.’”

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