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 2011. Now imagine that the happy little piglets in the Democrat-controlled Senate and the Obama Administration propose a 2012 budget that appropriates $150 billion for the FWA — the better to spread some wealth among their political buddies. Pretty straightforward so far, and sadly very predictable:

Baseline budgeting

Now let’s say that the Republican-controlled House of Representatives objects, countering by setting the FWA’s 2012 budget at $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 “Republicans want to cut Medicare”, don’t swallow the bait without thinking. First, find out whether those sneaky politicians are playing the baseline budgeting game again.

2 comments

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