Bold Prediction: the 2011 budget

Tuesday - 1/5/2010, 1:00pm EST

Douglas Holtz-Eakin

Economist Douglas Holtz-Eakin, a former director of the Congressional Budget Office, warns that your agency could fall into the crosshairs of budget cuts for FY 2011, and explains why, in our continuing look at "Bold Predictions for 2010."

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By Suzanne Kubota
Senior Internet Editor
FederalNewsRadio.com

As Federal News Radio continues our "Bold Predictions for 2010" we turn to the federal budget for 2011.

This year, the requested federal budget for 2010 is $3.5 trillion dollars. We predict that the 2011 budget will remain flat.

Douglas Holtz-Eakin, a former director of the Congressional Budget Office, explained to the Federal Drive that "flat" from 2010 to 2011 isn't really that much of a bite because of the expanded spending in the 2010 budgets.

"The rumors around town are that the administration sent out to agencies planning for a five percent cut," said Holtz-Eakin. "I don't think we'll see anything like that. I think flat is the best prediction. Next year, one more year after this, hopefully we'll see the spending start to come down."

At the heart of the move, or non-move as the case may be, are the mid-term Congressional elections. Holtz-Eakin said with the President being able to tell the electorate he has ordered agencies not to raise budget, the administration gains the rhetorical high ground.

Although the top line will be flat, Holtz-Eakin predicted there will be priorities for the administration with increased spending, including education, education reform, and initiatives within the health bill. At the same time, reminded Holtz-Eakin, there are programs with mandatory increases "such as medicare and medicaid, social security, farm programs and the like..." which will continue to grow.

Holtz-Eakin also sees elements of the budget he called "unrealistic."

The expectation that somehow medicare is going to grow at six percent a year instead of eight percent just because of a stoke of a pen. They haven't done anything to reform the system in a way that would suggest you can actually get $480 billion dollars less in spending there.

Looking at stimulus spending, Holtz-Eakin said the real budget issues of the future "come when the stimulus effort comes to expiration. What will the Congress do? What will generally be allowed to expire and what will not? That comes at the same time that all the Bush era tax cuts expire, so there's a lot of action the year after next, but next year I think is going to be a relatively modest, hold the line effort."

When the real cutting begins, expect Congress to be taking a long, hard look at the smaller, easy targets. "We're not going to see anything that looks like real restraint in the overall budget," said Holtz-Eakin. "The focus is just going to be on the annual appropriations to agencies."

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