WHAT IS BASELINE BUDGETING? IT IS A LIE WITH THE FORCE OF LAW.

Trump just submitted his budget for next year. Of course bunches people immediately trashed it. One of the complaints is all the cuts. We need to look at this complaint in particular.

Do you wonder why Congress cannot balance the budget? The answer is that our political system is now so corrupt it is almost illegal to do so. Here is how Rush Limbaugh once described the situation on his show.

CALLER: Okay. So it seems like those one-time things like TARP and bailouts and I don’t know what all, somehow got added into the annual spending, and I don’t understand that.

RUSH: Well, it’s a great question. It really is. You know, I shouldn’t say the answer is complicated because it makes sound intimidating. It really isn’t. But the reason why those one-time expenditures seemed to build on themselves is because of the budget process that’s known as “baseline budgeting,” which was begun in the 1970s, I believe. The simplest way to explain the baseline budget is the federal budget is not like your household budget.

In your household budget, if you do one (let’s hypothetically say that you do), you look at what you spent last year, you look at this current year, and you estimate as close as you can what your income is going to be. You then budget what your spending is going to be, and every year you do that starting from zero. That’s not how the federal government does it. There is a thing in the federal government called “the Current Services Baseline,” and that is the starting point every year, not zero.

There is not one government department or agency that looks at what it was given to spend every year, and then what it did spend, and is then budgeted accordingly. So let’s say that agriculture was budgeted X. I’m just gonna make up some numbers here. Let’s say the agriculture department was budgeted $100 billion and they spent $70 billion. You would think, “Okay, next year they’ll be budgeted $70 billion.”

No. Because of baseline budgeting, the more they spend, the more they will be allowed to spend or budgeted to spend the next year. The Current Services Baseline essentially — and I’m gonna cut through a bunch of legalese to explain this to you. The Current Services Baseline requires, mandates, whatever, that every line item in the federal budget be increased by anywhere from three to 10% every year, no matter what is spent on that line item.

(from here)

Think Limbaugh was joking? Check it out.

So what happens when the news media and the Democrats tell us that President Trump or some budget hawks are cutting the budget? Well, we need to know whether those honorable so and so’s are talking about a cut in comparison to last year’s budget or the “baselined” budget increase. That is, what the political class and the news media usually calls a budget cut is outright lie.

You care about the country? You care about the prosperity of your children and grandchildren? You care about honest government and a balanced budget. Then write your congressmen. We have Republican majorities in the House and Senate. We have a Republican in the White House. What is their excuse for not getting rid of the deceit perpetuated with baselined budgeting?

You can find your representative in the House at house.gov.

You can find your senators at senate.gov.

Please correct a delusion that these ladies and gentlemen seem to acquire inside the Beltway. Money does not grow on trees. Spending more and more and more just makes us poorer and poorer and poorer.

25 thoughts on “WHAT IS BASELINE BUDGETING? IT IS A LIE WITH THE FORCE OF LAW.

  1. “There is not one government department or agency that looks at what it was given to spend every year, and then what it did spend, and is then budgeted accordingly.” Absolute bull. When National Guard units are being phased out because they don’t have people filling slots on their MTOEs–basically just the list of authorized personnel–then Rush’s comment is immediately proven false. Just look at the DC National Guard. An entire MP company was deactivated last year because there were not enough people filling up the roster. By the start of the new fiscal year, the unit was essentially disbanded. This happens in sundry ways all across the federal government. People have to justify their jobs every year, especially during sequestration.

    Rush is also wrong about when baseline budgeting was implemented as a matter of statute. The 1974 Congressional Budget Act didn’t formally establish baseline budgeting. That was accomplished in the 1985 Balanced Budget Act. What is the most surprising is that you decry baseline budgeting but it was formally and statutorily established by Ronald Reagan and the Republican party. Even the 1974 Act was signed by Nixon.

    The CBO and the OMB make their projections based on current appropriations and services and then adjust for inflation. I know Mulvaney wants us to believe that the lack of the 6% increase for inflation and normal expansion is not a cut, but in essence, it is.

    Consider the following: had Trump applied this cut to call federal branches, the application it would have to the DoD would be that there would be less admission to the armed forces, less money spent in R&D, and less to accommodate the natural growth of DoD programs. Somewhat like companies, federal agencies expand. For the DoD, that means new planes, recruits, missions, etc. It is no different than any other agency in this regard.

    There are arguments for a balanced budget. Lies and misdirection are not among them.

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    1. I was thinking the same.
      We’ve been on Continuing Resolution since they can’t pass a budget, so the funding is 80 percent of what it was last year. The way that works (the way I’ve had it explained to me) is…military funding stays at 80 percent until a budget is passed. But when it is passed, it is too late and the consequences are huge. 100 percent budgeting will result in 100 percent training at the required levels. Their budget is cut to 80 percent of the previous year and that month they can only train 80 percent. THat’s assuming they don’t need to increase their output (people who aren’t trained can’t train others so it’s a cascading snowball of consequences). Over time the problem gets worse. Now they decrease the requirements because there aren’t enough resources to sustain them at that level. Typically a budget is passed later in the fiscal year…then there is a deluge of money, often too late to work with. They can start training again, but there are fewer people qualified to be instructors and you need them to train the rest…and so forth.
      It actually is a very very complicated problem (especially now that they have more civilians working on short term contracts). There are ARTs (Reservists who are considered to be civilians), TRs (traditional reservists), Guard members, Active Duty, and government contractors. That’s just military alone and each of those is funded from a different pool of money in the budget and each is impacted from cuts in a different way.

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        1. If it worked as you claim there wouldn’t be “accounting headaches”.
          What I have written is true.
          I don’t need to do a Google search, I’ve lived it. I don’t know where it is written, I only know that is how it works. Under continuing resolution, they are only allowed to spend 80 percent of the prior fiscal year’s budget….until the new budget is passed and then the money opens up.

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        2. Just thinking further, it might be a buffer in case something along the lines of the Sequestration of 2013 ever occurred again. They’d have some padding to live off of (unlike then, when cuts were made across the board and overnight just about every TR lost active duty orders).

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        3. BTW, just one more thought (sorry for the triple post)…
          The link you supplied concerns the Guard and their problems. As I mentioned above each is unique. The 80 percent (or previous fiscal year budget) pertains to the active duty (USAF specifically). I’m not sure about Reserve or Guard….I know a bit about the Reserve side but almost nothing about the Guard.

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        4. Here is a link that defines what a CR is.
          => http://www.rollcall.com/news/policy/what-is-a-continuing-resolution

          Here is a link that goes into more details about the problems.

          => http://www.politico.com/agenda/story/2015/10/congress-federal-budget-continuing-resolution-000270

          Due to the nature of the way they operate, some agencies will have more issues, but I have never heard of a CR that restricted the military to 80 percent of its budget. I suspect you may have the CR confused with the so-called government shutdown. They can still function, but shutdowns still tie up agencies like the military in knots. “Nonessential personnel” go home. Programs like Social Security and Medicare are considered a bit more important by the politicians.

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        5. “I suspect you may have the CR confused with the so-called government shutdown.”

          Nope. We were there for that as well. Believe me, it wasn’t just a “so called” shutdown it impacted the base we were at, along with a lot of families (to include ours), greatly. Active duty orders were rescinded overnight…and those paychecks for work already done (but still needed to be put into the system) were delayed for about two months.

          “They can still function, but shutdowns still tie up agencies like the military in knots. “Nonessential personnel” go home. Programs like Social Security and Medicare are considered a bit more important by the politicians.”

          True in a sense. But “functioning” is relative. For example, the folks who do orders, finance, and a lot of other things are out of a job for a while. So…new applicants to the VA or VA cases get backlogged because those aren’t considered essential functions, finance is backed up because that isn’t essential. Take cogs out of the process, the whole line is impacted.
          People who process the paperwork for training and deployment aren’t available so new pilots (for example) have to wait for training and the whole system backs up. Pilots that can’t fly lose their currency. When they lose their currency they have to be retrained. Instructors have to train them and their currency depends on that as well…
          When the funding is restored everyone needs to be retrained and that costs much more money ultimately in time and resources than it would have if the funding hadn’t shut down. 
Often to compensate they decrease training requirements out of necessity.
          Since DOD civilian personnel lost a lot of time (btw, it might interest you to know DOD civilian personnel do have unions…at least ARTs do…which includes personnel in potential combat positions. That has some implications as well and adds another layer of bureaucracy) that impacted other things like medical treatment. The paperwork doesn’t get processed, so medical treatments can’t be approved. The system backs up and when the civilian employees return they have to work on weeks of backed up documentation approving this or that treatment. Patients would have to wait for treatment until approval. In our case, waiting about 10 weeks to get paid is an inconvenience. In the case of a person with metastatic cancer, a wait like that for treatment or screening could be a death sentence.
          One thing that always rings true when politics are involved…the truth can be very hard to find. When things go well everyone scrambles to take credit, and when things go badly everyone scrambles to place the blame elsewhere. I’m very hesitant to blame new Commanders for that reason. This includes the president. When they take over all of the problems that bothered them before (and likely got them elected) become instantly their fault. A lot good can be done (as Reagan observed, aptly) if one isn’t worried about who gets the credit. But in the internet age…how long will that last?
          Sorry for the off topic ramble there at the end. But perhaps it isn’t too off topic.
          Anyway, I’ve probably said enough.

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        6. Those stories are more in accord with the article I cited earlier.

          I retired in 1994. Congress has become more chaotic since then. So I am reluctant to draw upon my experience. However, as a government contractor I did not see much trouble from CRs. However, I expect the reason is my position was not the sort that would have been affected. That would relate primarily to new business. My guess is that this clause in Article 1, Section 8 of the Constitution creates issues for the Army and the Air Force.
          To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;Depending upon how a CR is written, that is going to create a mess.

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        7. I should add when I say “active duty orders were rescinded” I’m speaking of the TR (traditional reservist) system. Essentially funding was rescinded and they didn’t know what to do so they just cut everyone on orders (I don’t know how many bases that impacted. It’s a complicated system).

          Like

  2. @Stephen

    The problem is the way the numbers are reported, and that is quite clear in this post. Here is another example of an article reporting the same problem => http://www.investors.com/politics/commentary/in-trump-budget-what-media-call-cuts-are-really-increases/. You disagree? Whenever I write something, you do that. I would be surprised if you didn’t.
    😆

    When people are told that some agency is getting a cut, and they don’t know that there was no cut, just an increase that was smaller than baselined, that’s deceptive. Almost nobody (no doubt there is somebody) else talks about budget cuts that way.

    Here is the inflation rate. =>http://www.usinflationcalculator.com/inflation/current-inflation-rates/
    Here is the rate of population growth => https://www.nytimes.com/2016/12/22/us/usa-population-growth.html?_r=0
    Here is the President’s budget proposal. => https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/budget/fy2018/budget.pdf

    Since the Federal Budget grew 5.5 % in 2017, and that is almost double the rate of inflation plus the rate of population growth, the growth in the 2018 doesn’t need to be much, and it ain’t. As a taxpayer, I don’t see cause for concern.

    Like

    1. I just checked…apparently the budget passed earlier this month (about two weeks ago).
      It expires in September. That’s Continuing Resolution since October. That’s eight months at 80 percent of the previous year’s budget (not six percent more, twenty percent less).

      Like

        1. We were on Continuing Resolution until earlier this month. The budget for 2017 only passed a little over two weeks ago (which expires in September).

          Like

    2. “Almost nobody (no doubt there is somebody) else talks about budget cuts that way.” Because government budgets aren’t like other budgets. They never have been.

      Before the president submits his budget, the OMB analyzes the budgets of each agency and department. Most agencies operate on a use it or lose it basis i.e. the OMB figures out what they spent and why, and then makes projections as to what they should get based on the future projections of their programs. The increases cover more than just inflation and rising populations.

      For example, federal salaries operate on a step system as well as a yearly increase of about 1%. This is how they are able to circumvent any salary negotiations and pay federal employees bottom dollar, as well as the costly system of determining who gets what raise.

      So for every employee that says a while, there is a yearly increase and step increases based on longevity. This system makes sense. We don’t want our public servants unionizing and trying to bargain more money from the public. We also don’t want them pulling a PFC Manning or Edward Snowden. So a stable and methodical pay system is a wall against both threats.

      Now, to reduce the increases and still call it an increase is absurd when the effect is not keeping government at its current level but actually a reduction in the resulting agency budget. For example, if you were being paid X and your employer gives raises annually of Y%, if he then reduces the raise to Z% which is less than Y%, would you call that an increase when the activities you plan on for the year are based on the Y% raise? Sure, its a raise, but you can’t do what you needed to.

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      1. The object of communication is correctly convey information. If we tell somebody something, and we know they understand what we say to mean something that is not true, then we are lying. I don’t know how to make it clearer.

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        1. “If we tell somebody something, and we know they understand what we say to mean something that is not true, then we are lying.” This is convoluted. Not to mention a shifting of the goal posts. Mulvaney represents the numbers one way that doesn’t relate the actual complexity of the budget to dupe people with less experience in it and the press points that out. I am not sure how I can make that clearer.

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        2. I suppose I could have stated that better, but even describing the process of lying does complicate matters.

          What if I wanted to ingratiate myself with a bunch of Socialists like yourself? What if I represented myself as a Socialist even though I am a Conservative? That would be lying? Right?

          Anyway, your attack on Mulvaney is typical. I guess somebody told you the best defense is a good offense. So that is what you do. And a I guess being vague is a plus. Supposedly, I am supposed to waste time looking up and trying to figure out what you are talking about.

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        3. “What if I wanted to ingratiate myself with a bunch of Socialists like yourself?” Seeing as I am nor have every advocated a Socialist, this question is moot. You must agree that perception does not equal reality and no matter how hard you may try to argue, nothing I have said is remotely Socialist. On the contrary, Socialism and Socialists would be immensely opposed to practically everything I support.

          “Supposedly, I am supposed to waste time looking up and trying to figure out what you are talking about.” My mistake. I thought you had researched the issue enough to know what I was talking about. The fact that I can criticize Mulvaney for misrepresenting facts and show how is not a testament to how vague I am but how little you actually know about the federal budget process.

          Like

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