After we issued a report explaining why Senator Thune's amendment to the pending jobs bill would essentially shut down much of the federal government through the end of the fiscal year (and blogged about it here), he responded that we were "confusing budget authority and outlays" (at around the 6:30 mark of this video clip). In reality, however, it's the senator's response that reflects an apparent misunderstanding of federal laws and budget processes, as we explain in a new report.
In brief, the senator argues that the large cut in budget authority he proposes for fiscal year 2010 wouldn't impair the functioning of the federal government because agencies could spread out its effects over several years. This is incorrect.
Under federal law, a federal agency can't allow employees to come to work or sign a contract to purchase goods and services if it doesn't have enough budget authority for the current fiscal year to cover the costs -- regardless of whether the actual spending (that is, outlays) will take place this fiscal year.
The Thune amendment would cut $140.6 billion in budget authority for all federal agencies other than the Departments of Defense and Veterans Affairs in the last 2½ months of fiscal year 2010. That's basically equal to the amount of the 2010 appropriations provided to these agencies for a 10-week period. So there's no way to make a cut of this magnitude without essentially shutting down much of the federal government.
James Horney is director of federal fiscal policy at the Center on Budget and Policy Priorities and blogs regularly at Off the Charts.