What the "Cuts" Actually Cut
An important distinction is that these cuts are not actually cuts in the budget, nor are they reductions in the deficit. The amount of government spending will, in fact, increase every year over the next ten years. Rather the cuts made in the deal are to future increases in spending.
So, say $50 billion is scheduled to be cut in 2013, which has a baseline budget of $13,000 billion. Rather than decreasing the budget from $13,000 billion to $12,950 billion, what instead will happen is that the $13,000 will increase by $50 billion less than the amount it was projected to increase – so instead of increasing by the projected amount of $150 billion, it can only increase by $100 billion. So next years baseline budget will be $13,100 billion, instead of the $13,150 billion it would have been if there were no cuts.
The Congressional Budget Office (CBO) estimates that the legislation as it stands now, without the additional $1.5 trillion in cuts to be proposed by the joint Congressional committee, will reduce budget deficits by $917 billion between 2012 and 2021. If you add to that the minimum of $1.2 trillion that will be triggered if the committee’s recommendations are not adopted, the legislation will reduce the deficit by at least $2.1 trillion in total.