Last Friday, we were all awaiting a government shutdown that was expected to occur at midnight. But, with only an hour remaining, the two sides reached an agreement that was publicized as a $39 billion cut for the current fiscal year.

440px Official portrait of Barack Obama 1

Today, the National Journal revealed that, in order to arrive at $40 billion in spending cuts, the negotiators had to conjure up a series of accounting tricks to convince the public that something was being done, while, in reality, doing nothing. To figure out which cuts were not illusory, the National Journal removed all of the accounting gimmicks, including rescissions, cuts in reserve funds, and decreases in mandatory spending programs. They concluded that the real cuts in discretionary spending were $14.7 billion. Because the baseline for discretionary programs in 2011 was kept higher than they thought possible prior to the negotiation, the baseline for 2012 will also be higher, meaning federal spending will probably be higher than anyone expected.

Some of the programs that the Republicans successfully eliminated included elimination of the health care czar and the auto czar. Fortuitously, Obama had already proposed that these agencies be eliminated, since his administration had no further use for them.

The Republicans were successful in a few areas of discretionary spending, though. They cut the EPA budget for the remainder of the fiscal year by $1.6 billion; they reduced drinking water spending by about a billion dollars; and they cut high-speed rail spending by about $3 billion. Another $2.5 billion was cut from spending to implement the health care law.

The White House made a decision that they would allow the Republicans to have the rhetorical advantage and claim that the spending cuts were high, in trade for not actually accomplishing anything of value. What can we learn from this in the future?

We learn that Obama isn’t nearly as stupid or as weak as some people have wanted to think. In boxing, some fighters, like Mike Tyson, prefer to throw the first punch, and hope that this either knocks out the opponent or weakens him enough that he loses the will to continue the match. Others, like Ali, are counterpunchers. They allow the opponent to throw the first several punches until they are able to detect a vulnerable area. Then, they jab and jab, until the other guy concedes defeat. The latter is Obama’s style, I think.

So now, a few days after the negotiation, Obama has also made his ‘deficit reduction’ speech to the public. Analysts will no doubt compare his plan to the one announced by Paul Ryan a few weeks ago and to the Simpson-Bowles plan announced last year. He has moved the center of gravity to the left in negotiations, and since very few members of Congress have come out in full-fledged support of Ryan’s position (as predicted here), those few who do advocate for Ryan’s budget will have little real power; merely, the ability to engage in rhetorical flourishes.