My colleague, Tad DeHaven, showed us yesterday that even with the roughly $40 billion spending cut, total outlays will still rise substantially this year, fiscal 2011.

Let me throw another wrinkle into the spending equation. The cost of the TARP financial bailout bill has been re‐​estimated since it was passed in 2008, which has muddied the data for total federal spending in recent years. The CBO tells us that TARP outlays were $151 billion in FY2009. But the government later reduced the estimated cost of TARP, and it included -$110 billion in FY2010 outlays and -$25 billion in FY2011 outlays (CBO page 4). The chart shows total federal outlays excluding TARP.

Spending increased an average $170 billion a year over the last decade. Thus, the $40 billion cut reverses out no more than one‐​quarter of one year’s worth of the last decade of increases. Of course, to the extent that the cuts are “smoke and mirrors,” it reverses out even less. Clearly, fiscal conservatives in Congress have their work cut out for them in coming budget battles.