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The baseline budgeting scam

Posted by Richard on August 5, 2011

A new CNN/Gallup poll shows most Americans disapprove of the debt ceiling deal, and CNN claims it's because of the process. Nonsense. It's the substance. An earlier CNN poll found that 2/3 of Americans favored the much tougher Cut, Cap and Balance Act, including a majority of every single demographic surveyed, even liberals.

Most Americans recognize a failure to honestly address the spending and debt crisis when they see it. If they knew just how the baseline budgeting scam works, they'd be even more disgusted by this sham "debt control" deal, which will increase the federal debt by at least $7 trillion (that's $7,000 billion) in the next 10 years. And that's assuming some pretty rosy projections for economic growth. 

Baseline budgeting proponents began with a seemingly reasonable suggestion: "Instead of starting each budgeting process from scratch [zero-based budgeting], why don't we use the previous budget as our starting point and make adjustments from there?" Then they added, "Of course, we'll need to adjust the previous budget numbers to account for inflation, population growth, increased demand for services, and a big fat dollop of 'What the heck, we can get away with it!' to create the baseline for next year." And they've been getting away with it for years.

The result of this process is that the starting point for each new federal budget — the baseline, which by bipartisan ruling class consensus represents "no spending increase" — is about 7-8% higher than the previous year's spending. Fiscal year 2011 spending is going to be about $3,800 billion. So, under baseline budgeting, if FY 2012 spending increases only to $4,066 billion, that's no increase at all! "Look how fiscally responsible we are! We held spending to the current level!" 

Of course, a 7% annual increase means the budget will double in 10 years to about $7,600 billion. But the baseline budgeters call that a 10-year spending freeze!

So let's put this "historic" Congressional compromise into perspective. They've agreed to $900 billion in "cuts" over 10 years, and their bipartisan committee is supposed to come up with $1,500 billion more in "cuts" this fall. If they really do (and Obama, Reid, et al, are already clamoring for the $1,500 billion to be mostly "revenue enhancements," i.e., tax increases), then the 2022 budget will be "cut" from its $7,600 billion baseline to a mere $5,200 billion. 

That's a 37% increase over 2011. They call that a massive cut. The establishment, ruling class Republicans are congratulating themselves for this monumental achievement. They're telling the Tea Party that they've won, that they've "changed the terms of the debate" and "turned things around."

Um, no. They've slowed the rate at which we're approaching the apocalypse. They've bought themselves another year or two (and maybe helped Obama buy another term) before the US turns into Greece. They've once again kicked the can down the road. And a significant proportion of the American people — far more than ever before — recognize this deal as the irresponsible charade that it is.

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2 Responses to “The baseline budgeting scam”

  1. […] of the baseline budgeting scam, Senate Democrats’ refusal to pass a budget lets spending grow on autopilot. The spendthrifts […]

  2. […] of what AFP calls tricks and gimmicks. But mainly it’s the baseline budgeting scam, which I explained last August. ALG’s Bill Wilson has some numbers (emphasis added): The Office of Management and Budget’s […]

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