The 2011 budget process finally came to a close last week when President Obama signed legislation funding the government for the remainder of the fiscal year. According to the Congressional Budget Office, the $1.05 trillion in non-emergency spending in the bill will save approximately $38 billion in budget authority but only $352 million in outlays this year.
The larger CBO estimate and earlier estimates released by the Appropriations Committees are in budget authority and the smaller estimate is in outlays– two different ways of measuring spending. Budget authority is the authority to enter into obligations that will result in spending. When the funds are actually spent, they become outlays and have an effect on the deficit.
Because many of the cuts in the new legislation were to programs that spend slowly and the fiscal year is more than half over, CBO estimated that most of the outlay savings would occur after this fiscal year. Over the next ten years, the outlay savings will increase so that the $38 billion in budget authority savings will eventually result in outlay savings of $20 billion to $25 billion.
Total outlay savings fall short of the budget authority savings because CBO concluded that many of the proposals included in the bill (particularly changes to mandatory programs) would have little or no effect on outlays. In some cases, cuts were made to budget authority that was unlikely to be spent in the first place. While this practice is frequently criticized as a budget gimmick, it has the beneficial effect of taking these balances off the table for funding future legislation.
CBO’s Cost Estimate for the Department of Defense and Full-Year Continuing Appropriations Act, 2011
Additional Details Provided by CBO
Text of Legislation
President Obama’s Signing Statement