Baseline Accounting: Washington Funny Money

Jokes on us

If the President’s Deficit Reduction Commission uses “baseline” or “current services” budgeting as a benchmark for determining spending “cuts” and tax increases, that’s a good sign that the crowd in Washington wants to pull a fast one on the American people.

Baseline budgeting. This is the clever Washington practice of assuming that all previously planned spending increases should go into effect and categorizing any budget that increases spending by a lower amount as a spending cut. In other words, if the hypothetical “baseline” budget increases by 7 percent, and a budget is proposed that increases spending by 4 percent, that 4 percent spending increase magically gets transformed into a 3 percent spending cut.

Only in Washington, an increase is a cut.

While tax increases get the full force of law and an the entire governmental structure to enforce those increases, tax cuts whether real or baseline have essentially no constituency.

In 1982, congressional Democrats promised President Ronald Reagan $3 in spending cuts for every dollar in tax increases. Reagan went to his grave waiting for those spending cuts. Then there was the budget deal in 1990, when President George H.W. Bush agreed to violate his famous campaign pledge — “Read my lips, no new taxes,” he had said in 1988 — in pursuit of a balanced budget. But after the deal, the deficit increased substantially: to $290 billion in 1992 from $221 billion in 1990.

The Conservative and Reagan strategy of strangling the Federal Government’s ability to affect our lives by cutting off the revenue source, taxes has not worked because the government just prints or borrows (same thing actually) more money and then puts us on the hook for the increased spending.

The Federal government has become one huge political racket machine. More on that in a future post.

President Obama’s so-called Deficit Reduction Commission supposedly is considering a deal featuring $3 of spending cuts for every $1 of tax increases (disturbingly reminiscent of what was promised — but never delivered — as part of the infamous 1982 TEFRA budget scam).

There are few new tricks in Washington. The culture of deception is ingrained in Washington and has many entitled enablers in positions of power and regulatory bodies. Our best hope is to elect who we can in November then let them know we are watching.

More on that in a future post.