Budget cutting a difficult task

The meat of the spending deal struck between the two parties late Friday night was revealed in a legislative omnibus released early Tuesday morning. The specifics show that finding nearly $40 billion in cuts during the 2011 fiscal year required clever accounting and, for the White House, a willingness to concede on rhetoric to find gains on substance.

For example, the final cuts in the deal are advertised as $38.5 billion less than was appropriated in 2010, but after removing rescissions, cuts to reserve funds, and reductions in mandatory spending programs, discretionary spending will be reduced only by $14.7 billion.

White House officials said throughout the process that the composition of the cuts was more important than the top-line number, and that including mandatory cuts allowed that top line to grow while limiting the immediate impact of the cuts.

The move also keeps the 2011 discretionary baseline slightly higher, a terrain advantage for the Democrats heading into the 2012 spending process.

Republican press releases are pointing out that the deal eliminates four White House policy "czars," but those positions had already been phased out by the White House -- the health care policy director after Obama's health care plan became law, and the "auto czar" following the government restructuring of General Motors and Chrysler.

Despite finding common ground on many cuts, Republicans say the bill sets the stage for further cuts in a vote to raise the government's borrowing limit and in 2012 spending, shifting the conversation in Washington.

Still, the GOP collected its pound(s) of flesh from the $1.3 trillion federal budget and Obama's priorities: $1.6 billion in reductions at the Environmental Protection Agency, though that is nearly half what the House asked for in February; nearly a billion from drinking water funds at the Department of the Interior; $2.9 billion in high-speed rail money, and hundreds of millions in public housing funds, among other savings.

Yet even where President Obama had to concede on key priorities, he could find a small advantage. The bill cuts $800 million from the Pell Grant program, for example, through the mechanism the president endorsed in his budget, ending year-round government support while maintaining the recently-increased maximum grant of $5,550, which had higher education advocates cheering.

The president also garnered an additional $700 million in spending for his competitive education funding program, "Race to The Top," and though it includes new audits of the consumer protection agency created by the Dodd-Frank financial regulatory overhaul, it also raises funds to implement reforms at the Securities and Exchange Commission and the Commodities Futures Trading Commission.

Health care reform, too, will be implemented, though now under the eyes of several Republican-imposed audits and studies. The deal does cut $2.5 billion, nearly half the funding, from an effort to set up health care co-ops that was opposed by the insurance industry, and eliminates another policy, opposed by both corporations and labor unions, that allowed individuals to use the funding from employer-provided health care benefits to shop for insurance on the individual market.

And though they were unable to defund Planned Parenthood or reduce Title X women's health care funding below 2008 levels, Republicans did block funding of abortions in the District; they also continued a scholarship program for elementary school students based in the capital city, which has no votes in Congress.

The easiest agreement was likely on defense spending, where the administration received essentially the funding it asked for, in contrast to spending on the State Department and foreign aid. While the Obama administration, including Defense Secretary Robert Gates, has emphasized rebalancing foreign policy more evenly between the two agencies, the spending deal freezes pay for foreign service officers and cuts hundreds of millions in foreign aid.

Dan Friedman and Humberto Sanchez contributed to this report.

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