Negotiators for the House and Senate reached agreement on a temporary spending bill that will fund the government through December 16 and also finish off a series of appropriations bills. So now, we’ll begin to see the true impact of budget freezes and austerity measures. One of the first victims is the Commodity Futures Trading Commission.

In a blow to Wall Street reforms, President Barack Obama’s budget request for the Commodity Futures Trading Commission would be cut by more than a third under a House-Senate conference report which the Appropriations leadership expects to file Monday night.

In light of the CFTC’s increased role in overseeing the derivatives market, the administration had sought $308 million for the new fiscal year that began Oct. 1. But under pressure from House Republicans, the agreement now is expected to come in closer to $205 million, a virtual freeze at current appropriations levels.

Asked to comment on the budget numbers, Bart Chilton, a Democratic commissioner said: “We have seen the results of an ill-funded and ill-equipped regulator. It isn’t a pretty picture. Congress can fund our agency and we can do the job they have instructed us to do or we will have to pick and choose priorities. We certainly can’t do it all without the needed resources.”

Believe it or not, this is an improvement over the original Republican budget, which gave just $171.9 million to the agency. It’s still woefully inadequate.

The CFTC prevents unnecessary risk in the derivatives markets and over-speculation in the commodities markets, which leads to unwanted price spikes on necessities like food and gas. That’s not the agency you want to skimp on.

But it’s reality under a spending cap. Those who want to downplay the various budget deals this year keep saying that the damage is relatively minor in the near term. Well, we’ve already learned that the budget cuts from the April deal cost the country 370,000 jobs. And now more cuts are being piled on top of that. The CFTC, with its proposed budget slashed 1/3 under the President’s request, is the tip of the iceberg. The discretionary spending levels holding flat in FY2012 represents a cut when adjusted for inflation (it’s actually a real cut over the previous year of $7 billion). And Democrats allowed several riders to go through on this minibus, which funds the Departments of Agriculture, Commerce, HUD, Justice and Transportation, as well as NASA and the National Science Foundation.

* Republicans won passage of several measures intended to protect gun owners. These, according to a release from House Appropriations Chairman Harold Rogers (R-Ky.), would permanently prohibit the Justice Department “from consolidating its firearms sales records, electronically retrieving the records of former firearms dealers, and maintaining information on persons who have passed firearms background checks.”

*The agreement allots $1.4 billion to Amtrak, but requires a series of changes to the long-struggling railroad. These include “requiring overtime limits on Amtrak employees to reduce unnecessary costs, and [reinstating] a provision that prohibits federal funding for routes where Amtrak offers a discount of 50 percent or more off normal, peak fares.”

About the only bright spot is that funding for the Women, Infants and Children nutrition program had its budget raised slightly above the Senate Democratic levels, and well above House Republicans.

The consequences of these cuts are going to trickle out over the next year, and they are likely to  have not only an impact on the macro-economy, but in the case of the CFTC, an impact on properly regulating markets.