WASHINGTON -- The big spending bill passed into law with much fanfare last month will cut the deficit by $122 billion over the next decade – less than half of what top lawmakers promised at the time – the government reported Monday.
Speaker John Boehner, R-Ohio, had touted the legislation as reducing the deficit by more than $300 billion over a ten-year span. His prediction was based on an analysis by a Senate aide that the $38 billion in cuts this year would translate into $315 billion over a decade.
But the Congressional Budget Office, the closest thing to an official referee, said Monday the cuts add up to much less.
Released the same day the Treasury Department announced that the government has reached the $14.3 trillion legal limit on its ability to borrow money, the CBO study illustrates the difficulty in cutting the deficit, especially for the immediate future.
Treasury has the ability to juggle the books to avoid a default for now, but legislation to lift the so-called debt limit is going to have to include significantly greater cuts than the spending bill last month.
The budget office also said the compromise negotiated between Boehner and President Barack Obama actually increases the deficit this year by $3.2 billion, because of military spending.
At issue is a $1.2 trillion spending measure enacted after weeks of difficult talks.
Republicans had initially rammed through the House a tougher version that cut more than $60 billion this year, when compared to 2010 spending levels. But the immediate budget-cutting punch turns out to be far less, partly because the government's fiscal year is more than half over.
The final version included $25 billion in cuts to domestic agency budgets. It also contained a host of curbs to programs like federal highway funding and health care for children of lower-income families that will hardly generate any deficit savings, CBO said.
A previous CBO study had predicted that the $38 billion in cuts to non-war accounts would generate just $352 million in savings through the Sept. 30 end of the 2011 budget year. That caused consternation in GOP ranks. At one point passage of the measure appeared imperiled because of disillusionment among tea party-backed lawmakers, already disappointed the cuts weren't bigger.
That prompted Boehner to highlight a study by a Senate Budget Committee GOP staff aide, which used earlier CBO data to predict the spending bill would cut outlays by $252 billion over the decade and that the actual deficit savings would grow to $315 billion once reduced interest costs were added on.
The budget office doesn't say how much the measure would reduce interest costs.