The CBO score of the newly revised Boehner bill is now out. The new bill is a good bit stronger than the original in some ways (it’s significantly more front-loaded) and weaker in others (the top-line 10-year savings are less than a trillion dollars when measured against the new CBO baseline, so although it cuts more than the original version its effect on the deficit would be less than the original claim). The former surely outweighs the latter, since the early years matter more than later years in this kind of thing and actual cuts matter more than headline claims. But the top-line number matters too.
The bill raises the debt ceiling by the same amount as the original ($900 billion) and it achieves a (slightly) greater than one-to-one ratio between the debt ceiling increase and the spending cuts, reducing the deficit by $917 billion over ten years.
In its first year, 2012, the revised bill cuts $22 billion as measured against the latest CBO baseline (while the original bill cut just $1 billion), and in the second year it cuts $42 billion (while the original cut $16 billion). These are still very small numbers in the scheme of federal spending, but the greater front-loading actually matters a lot. One reason is that the 2012 and 2013 budgets are the only ones that will actually be under the control of this congress. But even more important is the greater reduction of the baseline itself since, as we’ve witnessed in the past 24 hours, the CBO baseline is the measure of all future cuts—it sets the bar. This debt limit fight has set a precedent that from now on increases in the debt ceiling will need to be accompanied by equivalent cuts in spending, and those cuts will be measured by the CBO baseline, so cutting it by this much in the first two years will really shape the next round of the budget wars, which will come very soon. Front-loaded cuts have a kind of ratchet effect. And the larger cuts to the baseline in the following years (the revised bill’s cuts are larger every year than the original bill’s cuts) matter for the same reason—even if they don’t fully materialize (since one congress can’t bind another), they define the measure of future spending in every round of budget debates, which means that they make all future cuts larger in real terms.
This bill should not be mistaken for a dramatic slashing of the debt. It’s not that, as that was clearly not achievable in this round (indeed, it’s likely Republicans could only expect less than this from other alternatives at this point, not more). It will take a different president to make major progress. But this bill is built on a pragmatic sense that every little bit counts, and it especially counts if it makes the next little bit both larger and easier to get. The revised bill counts as modest progress on both fronts.
On the whole, then, the revision is a modest improvement. It’s basically the same bill adjusted slightly to a new baseline. It’s hard to believe they couldn’t find another $90 billion over ten years to bring the top-line number over a trillion dollars, but it seems the House leadership has its eye on getting Senate votes for this bill and getting it enacted without major amendments, which led them to keep to the general framework of the congressional leaders’ agreement from last weekend. That means this revision probably makes the bill more appealing to congressional conservatives, if not by a whole lot.