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Fun with Unobligated Funds
Vacuuming up unspent appropriations is not serious budget cutting.


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Andrew Stiles

 

When it comes to liberal attitudes toward cutting spending, the word “unobligated” seems like a fairly accurate descriptor. The fact that Senate Democrats now claim to have agreed on a level of spending cuts slightly higher than the figure initially proposed by House Budget Committee chairman Paul Ryan (R., Wis.) — before a freshman class revolt prompted additional cuts — has been cited as (further) evidence that conservatives are winning the spending debate in Washington.

However, as leaders on both sides have pointed out, negotiations over a long-term spending resolution to fund the government for the remainder of the fiscal year are nowhere near the final stages. Meanwhile, Democrats are doing everything they can to ensure that any final package is as fundamentally unserious as they are when it comes to promoting fiscal responsibility.

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One way Democrats are seeking to do this is by “cutting” a significant amount from what are referred to as “unobligated balances,” which refers to funding for programs allocated in past budgets that has yet to be spent or “obligated.” In many cases, these funds are set to expire at the end of the fiscal year and thus would never be spent in the first place.

A GOP aide familiar with the appropriations process tells National Review Online that appropriation committees are constantly looking for savings in unobligated funds. The House-passed long-term spending resolution, H.R. 1, contained about $10 billion in such savings, about half of that coming from unspent stimulus money (some of which has already been enacted in a couple a short-term spending resolutions).

That said, the notion that including such savings — the lowest of the low-hanging fruit in the budget — demonstrates a long-term commitment to cut spending is simply laughable. “Of course we want to sweep up money,” the aide says. “But in terms of reducing the baselines, which creates real long-term savings, if you just rely on unobligated balances to reach a certain cut number, it doesn’t do the trick, it’s just delaying the inevitable, tougher cuts down the road.”

But when it comes to matters of federal spending, the debt, and the deficit, delaying the inevitable is exactly what most Democrats seem intent on doing. Just as President Obama, after increasing non-defense discretionary spending by almost 25 percent during the past two years, is attempting to establish a new baseline by proposing a five-year spending freeze, Democrats in Congress are desperate to preserve the status quo (except, of course, when it comes to taxes). 

Both sides acknowledge considerable differences regarding the composition of cuts. The House and Senate Appropriations Committees are currently negotiating “line by line.” House Speaker John Boehner (R., Ohio) has repeatedly disputed Democratic claims that a specific number has been agreed, and made clear that Republicans would stand firm against Democratic efforts to water down a final deal with gimmicks. “We want real spending cuts,” Boehner told reporters Friday. “We’re dealing with the discretionary portion of the budget.”

“We’re trying to undo a pattern of large increases in spending for years and establish a new trend,” says a GOP aide. “You need a dramatic reduction in baseline spending to get there, and it has to come from discretionary.”

In fact, just a modest reduction in the spending baseline would yield substantial saving in the long term. Sen. Jeff Sessions (R., Ala.), ranking member on the Senate Budget Committee calculated that H.R. 1, which contained $61 billion dollars in spending cuts, would yield $860 billion in savings over ten years.

Republicans want Democrats to simply choose from the list of cuts proposed in H.R. 1, but Democrats would like to broaden the debate to include cuts to defense spending, mandatory “savings” to programs like Medicare, as well as the elimination of certain tax subsidies. “The total number of cuts has never been as important as where the cuts come from,” Sen. Chuck Schumer (D., N.Y.) said in an interview with Talking Points Memo, attempting to dispel the notion of a Republican victory on spending.

Given the circumstances, Schumer’s argument is hardly convincing. And while Republicans are understandably more concerned with what is sure to be a more contentious debate over Paul Ryan’s 2012 budget, due out next week, the present fight over what remains of this year’s budget is far from finished. 

— Andrew Stiles is a 2011 Franklin Fellow.



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