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The 5 Dumbest Things on Wall Street: April 15

4. A Budget Battle For Bupkis

The trick to three-card Monte isn't that the hand is quicker than the eye. Fools and their money are parted because the ace they are looking for was never really on the table in the first place.

So it is with the budget wrangling we watched in Washington, a partisan battle that almost shut down the federal government. After a battle that devolved into angst over Planned Parenthood, leadership from both sides of the aisle trumpeted that the agreed upon omnibus spending bill would shave $38.5 billion from government spending.

We've now learned that not all the cards were ever really on the table. The drop in the bucket is even tinier than we thought.

An analysis released on Wednesday by the Congressional Budget Office revealed that the spending bill, approved by the House of Representatives on Thursday, really only cuts about $352 million by Sept. 30. Not only are many of the claimed reductions phased in over time, but emergency spending items -- such as the wars in Iraq and Afghanistan -- will increase and offset reductions.

The opening salvo in battling a $1.4 trillion-plus deficit is to scrounge up meager millions. It is like trying to pay down your mortgage by rolling the quarters stashed in your ashtray and between couch cushions.

Put in perspective, budget cuts and layoffs at MySpace earlier this year were estimated to have trimmed roughly $200 million from its overhead and there is speculation that another $200 million in cuts may lie ahead for the News Corp. (NWS) owned entity. So, let's get this straight -- a Web site that serves up glittery GIF files of unicorns and emo bands for tweeners may be able to slim down more this year than the behemoth that is federal government?

"The more we learn about the budget deal the worse it looks," likely 2012 Republican presidential candidate Tim Pawlenty, the former governor of Minnesota, said in a statement. "When you consider that the federal deficit in February alone was over $222 billion, to have actual cuts less than the $38 billion originally advertised is just not serious. The fact that billions of dollars advertised as cuts were not scheduled to be spent in any case makes this budget wholly unacceptable."

Pawlenty, of course, places the blame squarely on President Obama and Harry Reid. He conveniently ignores the fact that Republican leadership signed off on the deal, even though much of its rank-and-file seemed pretty eager to force a government shutdown if deficit hawks weren't satisfied. As they say, it takes two to tango. Hypocrisy knows no party affiliation.

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