Analysis: GOP cuts will only be deeper compared to sequestration

Monday - 3/19/2012, 11:26am EDT

Steve Bell, senior director, Economic Policy Project, Bipartisan Policy Center

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The Congressional Budget Office said the President's new budget plan would produce deficits higher than what the White House has estimated. CBO pegged the expected 2013 deficit at just under $1 trillion, which is almost $400 billion more than what it projected earlier this year.

"If we're lucky, we will probably have $1 trillion to $1.2 trillion [in cuts], despite the protection of less than $1 trillion, for the next 10 years, unless something dramatic happens," said Steve Bell, senior director of the Economic Policy Project at the Bipartisan Policy Center, on The Federal Drive with Tom Temin Monday.

On Tuesday, Rep. Paul Ryan (R-Wis.), the chairman of the House Budget Committee, will deliver his party's take on the budget. It's expected to include deeper cuts to federal spending.

As part of the Budget Control Act, Congress must agree on a budget that cuts $1.1 trillion by the end of this year to avoid automatic cuts of $1 trillion — $500 billion from defense and $500 billion from all other agencies combined.

Steve Bell, senior director of the Economic Policy Project at the Bipartisan Policy Center (BPC photo)

"Most Republicans in the Senate and almost all of the Democrats who signed on to that deal last year believe that the numbers the House will produce really are a violation of an agreement between the two bodies," Bell said. "I don't think that's going anywhere."

Bell said the budget introduced by the administration in February more or less reflected the $1.1 trillion agreement made last year.

"In domestic spending, the president is actually a little bit less than a flatline budget," he said. "He is in keeping with the Budget Control Act as far as it goes with all of the appropriated accounts. Now, the big disagreement obviously is over what do you do about Medicare and Medicaid? What do you do about the retirement programs? And, what do you do about revenues?"

Bell expects the gridlock of FY11 and FY12 to continue through the FY13 debate.

"The best outcome are the levels that were outlined in the Budget Control Act of last year," he said. "The worst outcome, of course, is that we go into January of next year and we have substantial and abrupt cuts"

The takeaway for agencies at this point is to understand that they would not be receiving any more money for the next year or two compared to what you have now.

"There is some possibility that you will have to eat the cost of inflation, whether that's 2 or 3 percent," Bell said. "I think you're looking at continuing where we are now as a ceiling with some strong possibility that we'll have less spending for federal agencies." He expected it to continue this way for two or three years.

Those holding out hope that the November election would change things may be kidding themselves, Bell said.

"Republicans may retain the House by probably a smaller margin," he said. "We don't know how the presidential election is going to turn out because it's so far away, and the Senate may go plus-two Republican or plus-two Democratic, which means we have in place the same dynamic in the Congress that we have now. So to expect a different result than we have now, when you have essentially the same underlying configuration is unrealistic."

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