The goal of the new House leadership is to reverse the spending binge of the past three years. They have already laid out the first step: the House Appropriations Committee has agreed to spending levels for nondefense discretionary spending for fiscal year 2011. However, because the previous Congress did not pass a budget for 2011, the year will be nearly half over before the new budget is passed and this is causing confusion about what the agreed spending levels mean, as illustrated by today’s Wall Street Journal news story headlined: “Republicans Splintering on Size of Cuts.” It is also causing confusion for Economics 1 students and their teachers trying to apply the principles learned in their economics textbook to current events.
A graph might help to see what's going on. To keep it simple consider the Congressional Budget Office's data on nondefense domestic discretionary outlays in the past few fiscal years:
2007 $459 billion
2008 $485 billion
2009 $538 billion
2010 $614 billion
(You can find these numbers in the supplemental material “Historical Budget Data” Table E7, Economic and Budget Outlook: Fiscal Years 2011 to 2021, January 27.)
