Only in Washington is a cut not a cut

Winningreen Issue Alert       A080111

Only in Washington is a cut not a cut

By Gretchen Randall

Date: August 1, 2011

Issue:
  Neither deficit raising bill voted on this past week, nor the final bill to raise the debt ceiling, contains real cuts to federal spending.  All that will be done is to reduce the rate of spending increases.  How, you ask, can this be called a cut?  Only in the language of politics in Washington can an increase in federal spending be called a cut.

It all stems from what is called baseline budgeting.  This baseline increases each year because the Congressional Budget Office, required by law to set the baseline, adds an automatic increase to each department’s budget for inflation.  It also reflects automatic cost of living increases for Social Security recipients, raises for federal workers and the elimination in 2013 of the Bush tax cuts.

The current baseline projects an increase of the federal debt of $10 trillion over 10 years.  The cut in the latest deal of $2.5 trillion will only reduce the increase in our debt so that it may only rise about $7.5 trillion instead of $10 trillion.  In the end, the debt still increases but at a slower pace.  This is why several Republicans such as Senators Jim DeMint (R-SC) and Rand Paul (R-KY) are opposed to the deal.

Some Republicans have proposed changing the baseline budget process to zero budgeting which would require Congress to  justify any spending increases each year and could lead to actual cuts.  Zero budgeting is what every family operates on each year.  If income goes down, then spending must decrease also to balance your budget.  Under zero budgeting, no agency budget would automatically increase each year but would be zeroed out at the end of the year and a new budget would be created for the  next year.

Comment:  Zero budgeting should be the next cry of Republicans who truly want to change the way Washington thinks.

Background and links: Two Republican bills have been introduced in the House to address this issue:  Rep. Louie Gohmert’s (R-TX) Zero-Baseline Budget Act  (HR920) and Rep. Dennis Ross’s (R-FL) bill HR821 which would require government agencies’ budgets to return to zero at the beginning of each year. 

Contact: Gretchen Randall
Winningreen LLC
Chicago, IL
Phone: 773-857-5086
e-mail: grandall@winningreen.com