In his State of the Union speech, President Barack Obama proclaimed, "Over the last few years, both parties have worked together to reduce the deficit by more than $2.5 trillion." It's a claim that the president makes frequently along with the notion that having done all that heavy lifting, Washington now needs to find a trifling extra $1.5 trillion in spending cuts or tax hikes, and debt problems will be over.
But has Washington really reduced the deficit by $2.5 trillion? "They have not," answered the Heritage Foundation's budget guru, Patrick Knudsen. "They have put in place some proposals that would reduce spending if they hold up, but most of that has not happened."
The 2011 Budget Control Act, Knudsen said, "reduced spending from what it would have been without (spending) caps, because it's measured against a baseline against inflation. The result this year is effectively a freeze on discretionary spending."
Spending in 2013 will be about the same as it was in 2012, but tax revenue will be higher. The fiscal-cliff deal negotiated with Congress ended Obama's two-year, 2-percent payroll tax holiday — that means about $93 billion in new revenue this year. The Obama tax hikes on the rich are expected to deliver another $27 billion more. Almost all of this year's deficit reduction will come from tax hikes, not spending cuts.
It's funny how tax increases materialize during the year in which they are passed, while spending cuts take forever. The Budget Control Act of 2011 mandates more than $2 trillion in cuts over the next decade — more than $900 billion in caps on the growth in spending and $1.2 trillion in the "sequester" cuts, which would further lower caps.
Caveat taxpayer: In the future, Congress will have to vote to stick with the 2011 caps in order for the cuts to hold.
"Almost immediately after a Congress enacts a spending reduction measure of any kind, there's a lawmaker behind it with a bill ready to repeal," said Pete Sepp of the National Taxpayers Union. In this case, after the president signed off on the Budget Control Act, he tried to sabotage the sequester cuts. He didn't put them in his 2013 budget. And it looked as if Republicans were going to accommodate him — until they didn't.
The 2011 law mandated $110 billion in sequester cuts starting Jan. 1. But in the fiscal-cliff deal, Congress agreed to put off the cuts until March 1 and reduce the total to $85 billion. The Congressional Budget Office expects what Washington actually spends this year to be more like $44 billion.
That should mean Uncle Sam will spend $44 billion less in this year's $3.7.trillion budget, right? But as Knudsen says, Washington passed a $50 billion "emergency" bill after Superstorm Sandy, which added to the deficit.
"You couldn't rationally cut $800 billion from the budget this year to balance the budget," Robert Bixby, executive director of Concord Coalition, noted. The economy would tank.
Bixby is leery of the claim of $2.5 trillion in deficit reduction because the Budget Control Act focused on discretionary spending, even though entitlement spending drives costs. If Washington had chosen to cut spending by reforming Medicare and Social Security, he said, it could work smoothly.
The Committee for a Responsible Federal Budget warned in a recent paper that, assuming the Budget Control Act spending cuts happen, Washington has enacted "only slightly more than half of what is necessary this decade."
That is, D.C. didn't fix the problem.
What one hand taketh away, the other giveth. The 1997 Balanced Budget Act balanced itself in part by decreasing payments to Medicare providers. But Washington cannot wave a magic wand and make health costs disappear. So periodically, Congress votes to take back the cuts with the "doc fix."
That's Washington in a nutshell. Amid much fanfare, politicians announce that they are cutting spending. Someday. Then Knudsen concluded, "they end up spending more."
Saunders is a San Francisco Chronicle columnist. dsaunders@9sfchronicle.com; @DebraJSaunders