Budget Cuts: How Government Cooks the Books
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Budget Cuts: How Government Cooks the Books

iStockphoto/The Fiscal Times

Late on the night of April 8, 2011, Washington’s leaders announced that they’d just done something extraordinary. They had agreed to cut the federal budget — and cut it big.

“The largest annual spending cut in our history,” President Obama called it in a televised speech.  

To prevent a government shutdown, the parties had agreed to slash $37.8 billion: more than the budgets of the Labor and Commerce departments, combined. At the Capitol, Republicans savored a win for austerity. There would be “deep, but responsible, reductions in virtually all areas of government,” House Appropriations Committee Chairman Harold Rogers (R-Ky.) promised a few days later, before the deal passed.

Nearly two years later, however, these landmark budget cuts have fallen far short of their promises.

In some areas, they did bring significant cutbacks in federal spending. Grants for clean water dried up. Cities got less money for affordable housing. But the bill also turned out to be an epic kind of Washington illusion. It was stuffed with gimmicks that made the cuts seem far bigger — and the politicians far bolder — than they actually were.

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In the real world, in fact, many of their “cuts” cut nothing at all. The Transportation Department got credit for “cutting” a $280 million tunnel that had been canceled six months earlier. It also “cut” a $375,000 road project that had been created by a legislative typo, on a road that did not exist.

At the Census Bureau, officials got credit for a whopping $6 billion cut, simply for obeying the calendar. They promised not to hold the expensive 2010 census again in 2011. Today, an examination of 12 of the largest cuts shows that, thanks in part to these gimmicks, federal agencies absorbed $23 billion in reductions without losing a single employee.

“Many of the cuts we put in were smoke and mirrors,” said Rep. Mick Mulvaney (R-S.C.), a hard-line conservative now in his second term. “That’s the lesson from April 2011: that when Washington says it cuts spending, it doesn’t mean the same thing that normal people mean.”

Now the failures of that 2011 bill have come back to haunt the leaders who crafted it. Disillusionment with that bill has persuaded many conservatives to reject a line-by-line, program-by-program approach to cutting the budget.

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Instead, many have embraced the sequester, a looming $85 billion across-the-board cut set to take effect March 1. Obama and GOP leaders have said they don’t like the idea: the sequester is a “dumb cut,” in Washington parlance, which would cut the government’s best ideas along with its worst without regard to merit.

But at least, conservatives say, you can trust that this one is for real. “There has been a shift in resolve. They have been burned in these fictional cuts. And so the sequester is like real cuts,” said Chris Chocola, a former congressman who now heads the Club for Growth, a conservative advocacy group. “So I think that there is a willingness to say, ‘We’ve really got to cut stuff, and [the cuts] have got to be real.”

The April 2011 budget cuts ended the first big battle of Congress’s current era. That spring, a new crop of House conservatives — elected with tea party support — was demanding large budget cuts. The legislators would risk a government shutdown to get them.

But in both parties, leaders resisted the idea of a meat-ax cut to government. There was a recession going, after all. “Given the economic and employment crisis, we tried to limit cuts that would cause major furloughs or layoffs that would put people out of work,” Rogers said in a written statement released this week. He declined to be interviewed on the record, but his statement went on to say that the bill’s “cuts are real, and every dollar we did not provide is a dollar saved for the American taxpayer.”

The leaders found a solution, according to aides on both sides. Among the real cuts, they would mix in others that looked huge on paper but would turn out small in real life.

“The administration offered, and the Republican leadership accepted, cuts in stores of funding that . . . were unlikely to be used in the future,” said Richard Kogan, a former Obama administration official who is now at the nonpartisan Center on Budget and Policy Priorities. “This was conscious on both sides.”

The final deal itself ran to 176 pages and included more than 250 individual reductions. Some of them certainly caused real-life sacrifice: one cut to the National Oceanic and Atmospheric Administration helped delay a crucial weather-satellite program, according to the Obama administration.

But in other cases, sacrifice was minimal.

Congress, for instance, “cut” $14.6 million from its own budget to build the Capitol Visitor Center. That changed nothing. The center was already built.

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To sketch the bill’s biggest impacts, The Washington Post focused on the 16 largest individual cuts. Each, in theory, sliced at least $500 million from the federal budget. Together, they accounted for $26.1 billion, two-thirds of the total.

In four of those cases, the real-world impact was difficult to measure. The Department of Homeland Security officially declined to comment about a $557 million reduction. The Department of State, the Department of Agriculture and the Federal Emergency Management Agency — whose cuts totaled $1.9 billion — simply did not answer The Post’s questions despite repeated requests over the past month.

Among the other 12 cases, there were at least seven where the cuts caused only minimal real-world disruptions or none at all. Often, this was made possible by a little act of Washington magic. Agencies got credit for killing what was, in reality, already dead.

At the Census Bureau, for instance, officials had already said they didn’t need the more than $6 billion they had spent the year before. That money had paid for the once-a-decade 2010 Census. There wasn’t, of course, another census planned in 2011.

But to Congress, that was still a cut. The budget bill formally revoked the “budget authority” needed to spend the $6 billion that the Census Bureau didn’t want. On paper, it looked like a huge reduction. But, at the Census Bureau, no employees were laid off. No projects were finished late.

At the Transportation Department, Congress canceled $630 million in “orphan earmarks.” These were the wandering ghosts of the highway budget: pots of money assigned for specific road projects, which were still sitting unspent years and years later. Often, this money seemed unlikely to ever be spent. Many projects had been canceled. In one case, the funds were earmarked for a road that did not even exist.

In 1998, Congress had earmarked $375,000 to upgrade “State Road 31” in Columbus, Ind. But there is no State Road 31. It was a mistake. So the money sat. “That was funding that we just couldn’t otherwise use,” said Will Wingfield of the Indiana Department of Transportation.

In the 2011 budget deal, Congress took that money back. In Indiana, Wingfield said, there was no noticeable difference. The state was already spending its own money to fix the real-life road, U.S. Route 31, that Congress was supposed to help.

“Don’t count that as a cut,” said former representative David M. McIntosh (R-Ind.), whose earmark was responsible for the imaginary road. He said the mistake wasn’t his fault: The state got the name wrong when it asked for money in the first place. “It never added, and would never add, to the debt. Your whole goal here is to reduce the amount of public indebtedness.”

Both Democratic and Republican aides, however, defended this process in recent interviews. They argued that, under certain conditions, this “orphan” money could still have been spent by states or the federal government. To cut it was to eliminate that possibility.

“People tended to say, ‘Oh, these will never be used again.’ But while cuts in orphan earmarks were sitting on the Hill awaiting enactment, cities and States were spending the money, because they feared it was going to go away. It was real money,” Robert Gordon, an official at the administration’s Office of Management and Budget, said in a statement sent by e-mail.

Anyway, he said, these are the rules Washington has always played by.

This article originally appeared in The Washington Post