Have you ever heard of basline budgeting? The majority of programs funded by the federal government use this principle to determine how much their budgets will be in subsequent years.
Because of the recent hurricanes in the southern United States, President Bush has asked Congress to "slash spending," in order to provide monetary relief without raising taxes. I applaud President Bush for not forcing me or a business to pay extra for this burden. Critics of the president say that the programs he is cutting are necessary and that any cuts will cause mass riots, millions to go hungry and countless others to be homeless. While I'm not sure about those claims, if we look at the details of these "cuts" we will find that they really aren't spending cuts at all. They are, in fact, a decrease in the amount of the budget increase.
Citizens Against Government Waste (CAGW) is a non-profit group that monitors the budget Congress submits and the President signs every year. They point out wasteful spending and unnecessary programs that our representatives sometimes sneak into the budget. They also point out ways to cut spending and thus have the Federal Government be less a burden to the common citizen.
CAGW points out that Baseline Budgeting is a way for Congress to increase spending when they really claim to be decreasing it. How does it work? Let's say that a specific department, let's say, the Agriculture Department's foodstamps program is expected to grow $100 million next year. In fact, we project that its need will grow $100 million every year. But this year we only increase its budget by $30 million. The headlines will exclaim that we just cut $70 million out of the Ag. Dept. budget! The example in the link says its like expecting to gain 100 pounds, only gaining 75 and then claiming to have lost 25 pounds! Absurd!
Well, the foodstamps program is in fact a nice target for the Congress to do such a cut. Last year, $2.1 billion went unclaimed and unused. Why? This article claims that it is because of lack of knowledge or language difficulties. My guess is that the budget has continually increased irregardless of the number of people that actually need or use this subsidy. This practice should stop!
So how should Congress go about finding the proposed $62 billion in aid without raising taxes? House Majority Leader Tom Delay (R -TX), after increasing the budget deficit up to over $400 billion with the proposed aid, said he would be willing to accept suggestions on locations to cut. The Cato Institute, a free-market think-tank, has offered these suggestions. While these are legitimate cuts, even decreasing the total amount of Baseline Budgeting increases would be sure to find the $62 billion.
A worthy (and wise) goal of any individual, business or organization is to have a balanced budget. What you spend should only equal what you take in. I myself have a balanced budget and it is treating me well. It is also responsible. Is it possible to balance the Federal Budget without raising taxes? Yes. Another paper, dated 1995 has seven suggestions on finding ways to keep the government in line and prevent such frivolous spending and irresponsibility. It is as relevant today as it was then.
Next time you hear about spending cuts and the horrors that might befall us all if they are allowed, remember baseline budgeting and look into the issue some more to be sure that the Congress or other special interest groups aren't pulling the wool over our eyes.
2 comments:
Interesting and logical argument. I'm guessing that some of these government agencies subject to baseline budgeting plan on a certain amount of money every year, and if the budgeted amount gets cut it has a similar effect as an actual spending decrease. If I say "James, you're going to make $100,000 a year for the next 5 years," you go about your life making plans (investing, purchases, vacations, etc.) under the assumption that I will keep my word and give you the money. If I then say "James, you're only getting $30,000 next year," I bet it would make you think "Man, I just got $70,000 taken away" - even though it was never actually in your hand to begin with.
While it is true that the government agencies plan on that budgeted money, it may not necessarily reflect their actual need.
I have to agree that if I was promised some money, and my employer did not follow through with that promise, I would be quite disappointed. However, to continue the analogy with respect to common government practices, suppose I stopped doing the work or fell far below expectations for the job. Would I be justified to complain that I only received $30,000.
I think that baseline budgeting was originally established to factor in growth of the program and inflation. However, after countless years of increase, there has to be a point where the increases become exhorbitant in relation to the scope of the program.
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