Budget Deal Relies on Accounting Gimmicks

The eleventh-hour budget deal struck by the White House with Republican and Democratic congressional leaders to avert a government shutdown over the weekend depends to a large extent upon some accounting sleight of hand to achieve the claim of $38 billion in spending cuts.

NPR, whose funding was itself slated to be on the chopping block under the original Republican budget plan, cited reports in the Associated Press and other sources tracing many of the “cuts” to money left over somehow from previous years. Some of the cuts also came in programs that the Obama administration had already planned to cut in its original budget request. And about $12 billion of the cuts in the latest deal were already negotiated under previous stopgap spending measures, according to Bloomberg News.

The spending cuts included some unused money from the Children’s Health Insurance Program, the 2010 U.S. Census, and highway funds. The CHIP cut, of $3.5 billion, affects a rewards program that goes to states that make extra efforts to enroll children in the public insurance program. But since few states qualify for the bonus funds, much of the money is typically unspent anyway, and the states that do qualify will still be able to get the bonuses.

To be sure, there are deep cuts in many programs that will make a real difference to people who rely on them. Funding for the environment, high-speed rail transportation, and law enforcement will be especially hard hit.

However, many of the larger cuts appear even larger thanks to some accounting gimmickry. For example, as the Washington Post noted, the deal includes $4.9 billion in cuts from the Crime Victims Fund at the Department of Justice. However, the money was actually set aside in a reserve fund and wasn’t scheduled to be spent this year anyway. Congress had already limited the amount of money that could be spent from the fund each year in any case.

The legislation also would eliminate several of the so-called “czars” in the federal government, including the car czar, health care czar, urban affairs czar, and climate change czar. However, since there are no actual czars currently filling any of these jobs, toppling them is not going to require a Russian Revolution. Luckily the savings from defunding all these "czars" can be counted toward the total spending cuts. And it’s not likely there will be a Princess Anastasia who tries to lay claim to them.

Congress may be in charge of the pursestrings, but it also has more than a few accounting wizards who know how to stretch a dollar.