There is no free in liberty.


Tuesday, August 2, 2011

Budget Busting Baseline Budgeting ...


Baseline budgeting was consummated with passage the Congressional Budget Act of 1974 in the immediate wake of the resignation of Nixon and assumes a fixed growth in the federal budget below which even budgetary growth is considered a "cut".

How does it work?

Lets say the current budget is $10 and under baseline budgeting next year's budget is assumed to be $15. But after a flurry of activity impossibly deep cuts are made in the next year's budget that brings it down from $15 to $14. Voila, budget cuts that result in an increase in the budget from $10 to $14.

Lets look at a chart of how often the debt limit has been raised since 1940:

Baseline budgeting seems to have been a mistake.



No comments:

Post a Comment