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Posts Tagged ‘Baseline Budgeting’

I’ve repeatedly tried to expose pervasive fiscal dishonesty in Washington.

In these John Stossel and Judge Napolitano interviews, for instance, I explain that the crooks in DC have created a system that allows them to claim they’re cutting the budget when the burden of government spending actually is rising.

This sleazy system is designed in part to deceive the American people, and the current squabbling over the fiscal cliff is a good example. The President claims he has a “balanced approach” that involves budget cuts, but look at the second chart at this link and you will see that he’s really proposing bigger government.

This dishonest approach also was used by the President’s Fiscal Commission and last year’s crummy debt limit deal was based on this form of fiscal prevarication.

WSJ Baseline Con

Here are some key excerpts from a Wall Street Journal editorial exposing this scam.

…President Obama and John Boehner are playing by the dysfunctional Beltway rules. The rules work if you like bigger government, but Republicans need a new strategy, which starts by exposing the rigged game of “baseline budgeting.” …numbers have no real meaning because they are conjured in the wilderness of mirrors that is the federal budget process. Since 1974, Capitol Hill’s “baseline” has automatically increased spending every year according to Congressional Budget Office projections, which means before anyone has submitted a budget or cast a single vote. Tax and spending changes are then measured off that inflated baseline, not in absolute terms. …Democrats designed this system to make it easier to defend annual spending increases and to portray any reduction in the baseline as a spending “cut.” Chris Wallace called Timothy Geithner on this “gimmick” on “Fox News Sunday” this week, only to have the Treasury Secretary insist it’s real. …in the current debate the GOP is putting itself at a major disadvantage by negotiating off the phony baseline. …If Republicans really want to slow the growth in spending, they need to stop playing by Beltway rules and start explaining to America why Mr. Obama keeps saying he’s cutting spending even as spending and deficits keep going up and up and up.

You probably won’t be surprised to learn that other nations rely on this crooked system, most notably the United Kingdom, which supposedly is imposing “savage” cuts even though government spending keeps rising (and they fooled Paul Krugman, though he seems to make a habit of misreading foreign fiscal and economic data).

But let’s return to the American fiscal situation. Republicans almost certainly will lose the battle over the fiscal cliff because they meekly are playing cards with a rigged deck controlled by the other side.

They should expose this scam by using nominal numbers and looking at year-over-year changes in both taxes and spending. I did that last year and showed how simple it is to balance the budget in a short period of time.

They key thing to understand is that (barring a recession) tax revenues rise every year. Indeed, the Congressional Budget Office projects that tax revenue will climb by an average of more than 6 percent annually over the next 10 years – even if the 2001 and 2003 tax cuts are made permanent.

So all that’s really needed to bring red ink under control is a modest bit of spending restraint. This video is from 2010, but the analysis is still completely relevant today.

It’s amazing how good things happen when you follow the Golden Rule of fiscal policy.

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About this time last year, with the White House about to release a new budget, the press was filled with stories about President Obama being a tough-minded budget cutter.

Once the budget was released, I looked at the real numbers and explained how the burden of government spending would jump by $2 trillion in just 10 years if the President’s plan was enacted.

So why is there such a disconnect? Why does the establishment media report about “cuts” that would “slash” the budget, when actual spending is rising?

I explain this scam to John Stossel.

I made similar points last year in this interview with Judge Napolitano.

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One of the first things I learned when coming to Washington is that there is pervasive institutional dishonesty. A classic example is the way politicians have rigged the system so a “spending cut” takes place if the budget grows by, say, 6 percent instead of 8 percent.

This is sort of like claiming your diet is successful because you’re gaining 2 pounds each week instead of 5 pounds. I explain this scam in an interview with Judge Napolitano.

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