The federal budget — explained!

Yesterday I wrote about the federal budget for this year and how much it was going to get cut in various scenarios. As you'll recall, I was puzzled about what was really going on.

But complaining gets results around here! Today the CBO published a definitive letter on precisely this subject. Note that "this subject" is nondefense discretionary spending; defense spending is relatively untouched by all this. Here's the short version:

• Under the continuing resolution we're currently using (because House Republicans can't agree on a budget), we are spending at a rate of $777 billion.
• If the CR is still in place by May 1, spending has to be cut to its 2023 level ($744 billion) minus 1%. This comes to $736 billion.
• If we pass a budget, we have to abide by caps agreed to in the debt ceiling agreement. This comes to $704 billion.

You can stop reading now if you don't want to tear your hair out. But if your follicles are strong, read on.

First: By definition, a continuing resolution keeps spending at old levels. So if CBO says 2023 spending was $744 billion, why are we currently spending at a rate of $777 billion? This is largely because there are a few items that were prefunded at higher levels than last year. Those higher levels are in effect now but didn't exist in 2023, so they don't count as part of the 2023 budget.

Second: If we spend at a rate of $777 billion from October through April, that's $453 billion. In order to get to $736 billion for the full year, we can only spend $283 billion in the final five months from May through September. That's a run rate of $679 billion, a decrease of about 13% from current levels.

Third: If we run into this situation, then on May 1 the president has to sequester spending to the new level. This is not done by picking and choosing what to cut. It demands a 13% cut across the board. That would be devastating.

Fourth: If we do pass a budget, we're even worse off. That would require spending be reduced to $704 billion. If the budget were passed on May 1, we'd have to cut spending for the second half of the year to a rate of $602 billion. That's a 22% cut. The good news is that since it's a budget, it can cut specific programs instead of just slashing across the board. Alternatively, of course, Congress could also ignore the $704 billion cap since it's not bound by its own legislation.

Fifth: None of this is set in stone. Congress can do whatever it wants regardless of what limits it placed on itself in the past. CRs always have exceptions (the current one has exceptions for WIC and the Columbia submarine, for example), and Congress could pass a full-year CR with exceptions for the prefunded stuff if it wants to. It could also choose to fund everything at a higher level. It can do anything it wants.

So, did you get all that? Huh? Did you?

Of course you did. It all makes perfect sense, doesn't it?