When is a 'cut' not really a 'cut'?


It's not because you're dumb, or because you were passing notes when you should have been paying attention in math class. No, the kind of arithmetic they use in Washington confuses us because it's designed to.

"How is it possible that we can 'cut' federal spending by $2 trillion over the next 10 years, and yet federal spending will still increase over that time by $7.5 trillion?" asks Peter Ferrara, who served in the White House Office of Policy Development under President Reagan and as associate deputy attorney general under the first President Bush.

"Both parties tell us that the debt-limit deal includes $2 trillion in spending cuts, and the national media dutifully reports that those cuts are severe, yet the Congressional Budget Office tells us we are still on course for the national debt to increase by $8 trillion over the next 10 years," Mr. Ferrara reported Aug. 4 on the Forbes magazine website. "Why doesn't the discussion over the federal budget, spending and debt in Washington make any sense?"

The culprit is called "baseline budgeting."

"Here is how the hocus pocus works," explains Mr. Ferrara, who's currently director of Entitlement and Budget Policy for the Heartland Institute. "The CBO assumes a 'baseline' for federal spending over the next 10 years that includes federal spending increases of $9.5 trillion over that time. Any increase in those 10 years of less than $9.5 trillion will be reported by CBO as a cut in federal spending.

"If skinflint Republicans propose a budget with $8.5 trillion in spending increases over 10 years, the CBO will report that as an historic, unprecedented cut of $1 trillion in federal spending. The national media would then blare that the Republicans have proposed radical, severe, extreme budget cuts of $1 trillion, even though they are all the while actually increasing federal spending by $8.5 trillion.

"If Congress got some sense" and one day passed a budget that just spent next year the same as this year, and continued that into the future, with no spending increases, CBO would report that as "a spending cut of $9.5 trillion," explains Mr. Ferrara, author of the book "America's Ticking Bankruptcy Bomb."

Worst of all, though, is the fact that the public doesn't understand any of it, and so can't follow the budget debate. Whether federal spending is actually being cut or actually increasing rapidly is obscured completely by baseline budgeting.

As Mr. Ferrara suggests, the top tea party priority right now should be to replace baseline budgeting with "zero-based or family-style budgeting," under which the word "cut" could be used only if the government really spent less than it did last year.

 

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