The Infuriating Truth About the Federal Budget & Spending Cuts

washington dc capitol hillA few weeks ago, Congress raised the debt ceiling on the condition that we cut some of the outrageous spending going on in Washington right now. After lots of back-and-forth and mudslinging and name calling, both houses of Congress and the President were able to agree to raise our credit limit by $2.1 trillion to $2.4 trillion, on the promise that they’ll cut spending by at least $2.1 trillion over the next 10 years.

It sounds semi-reasonable; at least it does until you find out that those “cuts” are actually increases. Say what?

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The United States uses something called a baseline budgeting. This means that automatic annual increases in spending are built right into the budget. Every year, every department in the government automatically gets a 3 to 10 percent raise. For inflation and stuff.

So the $2.1 trillion that’s going to be cut over the next 10 years is actually not a cut in spending at all. It’s a slight decrease in the rate of spending. It’s like buying a $100 sweater because it’s on sale for $75, but you really only have $50 in your purse, and then bragging to everyone that you saved $25. No, you didn’t save $25; you spent $25 you didn’t have.

Citizens Against Government Waste put it like this: 

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.

When President Obama decries budget cuts to education, or when Senate Majority Leader Harry Reid claims that Republican budget proposals are draconian, or when House Minority Leader Nancy Pelosi says that the GOP is trying to balance the budget on the backs of the poor ... they’re full of baloney.

No one is even arguing about any actual budget cuts. We’re just saying that maybe federal regulatory agencies don’t need their collective budgets increased by 16 percent over the same three years that unemployment has doubled.


Image via Alotor/Flickr

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