When is a budget cut not a budget cut?

A cut is not a cut when you’re playing games with the federal budget.
Imagine that the Federal Whatchamacallit Administration (FWA) has a current budget of $100 billion for 2006, and the Bush administration requests $120 billion for 2007.
Now imagine that the happy little piglets on the House Appropriations Committee draft their 2007 budget with another $30 billion in the FWA authorization bill … the better to fund several Congressmen’s pet projects. Pretty straightforward so far, and sadly very predictable:

Baseline budgeting

Now let’s say that the full House of Representatives, backed by the Bush Administration, objects to the pork. They change the FWA’s 2007 budget back to $120 billion, which looks like this:

Baseline budgeting

Naturally, if you’re a tax-and-spend Washington politician and you hate being told “no”, you immediately call a press conference to denounce the horrible “cut” in the FWA budget.
But wait! How can it be a “cut” if the budget went up? It’s a common scare tactic that comes from a system called “baseline budgeting”, and it’s a deceptively easy way to scare uninformed voters into supporting the tax-and-spend piglets in expensive suits.

The Congressional Budget Office defines the baseline as a benchmark for measuring the budgetary effects of proposed changes in federal revenue or spending, with the assumption that current budgetary policies or current services are continued without change. The baseline includes automatic adjustments for inflation and anticipated increases in program participation. Baseline, or current services, budgeting, therefore builds automatic, future spending increases into Congress’s budgetary forecasts.
Baseline budgeting tilts the budget process in favor of increased spending and taxes. For example, if an agency’s budget is projected to grow by $100 million, but only grows by $75 million, according to baseline budgeting, that agency sustained a $25 million cut. That is analogous to a person who expects to gain 100 pounds only gaining 75 pounds, and taking credit for losing 25 pounds. The federal government is the only place this absurd logic is employed.

You can also sometimes see the flip side of this silliness in action when politicians try to paint themselves as budget-cutters, while actually spending more. You’ve heard of stores that fool consumers by artificially raising prices just before a “deep discount sale”, right? Politicians pull the same trick regularly.
So the next time you hear scary stories like “Republicans will cut veterans’ benefits“, or “McCain will cut Medicare“, don’t swallow the bait without thinking. First, find out whether those sneaky politicians are playing the baseline budgeting game again.

One comment

  1. lisa ward

    That was very interesting and it doesn’t surprise me that they not only play games with the numbers, but that many don’t seem to realize it.