GOP's spending cuts: Promises and reality

By Jeanne Sahadi, senior writer


NEW YORK (CNNMoney) -- The Republicans who now control the House have sworn to usher in greater fiscal responsibility. But their promises may be overblown given political and practical realities.

Take, for example, their biggest promise: to cut $100 billion in their first year.

The fact is Congress has always found it very difficult to pass any legislation that cuts the deficit. And when it does, the numbers hardly approach $100 billion over 10 years, let alone one.

So aiming to cut that much every year is highly ambitious. It's all the more so since Republicans want to exempt spending on defense, emergencies and the two-thirds of the federal budget that goes toward mandatory spending on entitlement programs.

Beyond that, the starting point for measuring their spending cuts is still unclear.

Originally, the $100 billion pledge was made in relation to President Obama's 2011 budget proposal, which was never enacted.

Now presumably the baseline is the stop-gap spending resolution that expires on March 4, since Congress failed to pass a budget for this year. Under that measure, spending is already $50 billion below where the president's proposal was, a spokesman for the House Budget Committee said.

House Republicans have recently allowed that they will only be cutting between $50 billion to $60 billion for fiscal year 2011, which ends Oct. 1.

Is that reneging?

Those who say it is point to the frequent and emphatic promises Republicans have made to cut $100 billion in their "first year."

Those who say it is not -- including Republican pledge critic Jim Horney of the liberal Center on Budget and Policy Priorities -- say cutting $50 billion to $60 billion in the months remaining in fiscal year 2011 is roughly the equivalent of cutting $100 billion over 12 months.

Return spending to 2008: Adding to the confusion over whether Republicans are backing down is their pledge to ratchet back "non-security discretionary spending" to 2008 levels -- sometimes described as "pre-stimulus, pre-bailout" levels.

It's not clear how Republicans are defining non-security discretionary spending, so it's not clear what dollar amount they will be aiming for.

Assuming such spending exempts defense, homeland security, military construction and veterans' benefits, Horney estimates they're looking to reduce spending to $378 billion from the $480 billion that is projected for non-security spending in 2011.

What's more, Republicans haven't said specifically which programs they would cut. Considering Democrats and Republicans often have very different spending priorities, such cuts could be a tough sell in the Democratic-controlled Senate and White House.

But the magnitude of what they're aiming for is on par with a recommendation from the president's debt commission -- of which new House Budget Chairman Paul Ryan was a member. The difference: that commission recommended such steep cuts begin in 2013.

And even if House Republicans do follow through with their promise, it remains to be seen whether they will negate the savings by increasing defense spending.

We won't pay for tax cuts: Deficit hawks are especially critical of a Republican change in House budget rules: Lawmakers will no longer need to pay for the cost of new tax cuts or to ever use tax increases to compensate for new spending in mandatory programs.

Under the old rules -- which still govern the Senate -- increases in mandatory spending and new tax cuts must be paid for either with other spending cuts or tax increases.

"[This] will not only make it harder to offset legislation but also exempt potentially budget-busting tax cuts from any discipline," according to the bipartisan Committee for a Responsible Federal Budget.

Lock up savings: Two other House Republican rule changes get somewhat higher marks from deficit hawks.

The first would set aside for deficit reduction any cuts in discretionary spending -- rather than letting the money be spent on other things.

The second would make it harder to pass any bill that would increase mandatory spending by more than $5 billion in the second, third and fourth decades after enactment.

That rule upends a "time-honored budget gimmick" to pass bills that don't increase the deficit in the first 10 years but then add to debt over the long term, the CRFB said in its analysis.

Pass real budgets: The previous Congress failed to pass a budget for fiscal year 2011, which began Oct. 1, 2010. Instead they passed a series of stop-gap spending bills.

House Republicans have sworn that won't happen under their watch.

But given the different spending priorities between the House and Senate and now the different budget rules, "it's going to be hard," Horney said. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,804.71 -238.19 -1.40%
Nasdaq 4,422.09 -71.30 -1.59%
S&P 500 1,946.16 -26.13 -1.32%
Treasuries 2.40 -0.10 -4.19%
Data as of 9:21pm ET
Company Price Change % Change
Bank of America Corp... 16.82 -0.23 -1.35%
Ford Motor Co 14.59 -0.20 -1.34%
Facebook Inc 76.55 -2.49 -3.15%
Apple Inc 99.18 -1.57 -1.56%
Cisco Systems Inc 25.03 -0.18 -0.72%
Data as of 4:03pm ET

Sections

In the last five years, pumpkin sales have risen 34% as people demand pumpkin in everything from beer to beef jerky. More

Facebook's chief product officer issued an apology to Sister Roma and the drag community on Wednesday for its flawed 'real name' policy. More

New York City launches a comprehensive site for all things related to its digital tech scene, Digital.NYC. More

For these seniors, the best retirement is not to retire. From a 102-year-old Wal-Mart worker to an activist park ranger, these workers have stayed on the job well into their golden years. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.