Monday, August 1, 2011

Promises and Base Line Promises: off the map where the monsters live.

“Base line budgeting” by Congress basically boils down to taking a current budget and increasing that budget by 5.5% every year. That is, built in budget escalators such as Social Security cost of living adjustments [COLA] , the increasing cost of health care paid by government, increases in inflation adjusted procurements, etc. cause the budget to be adjusted upward from a present level, to the next (future) budget level, then being reset at a 5.5% increase and so on.

Hence the base line budgeting concept leaves you with an ever increasing budget to account for ever increasing under lying budgetary items. The concept has several explicit and implicit assumptions:

(1) that Gross Domestic Product (GDP) increases,

(2) that tax revenue as a percentage of an increasing GDP also increase,

(3) therefore government spending baseline budgeting increases but the increases are matched by an increased tax revenue associated with a percentage of a growing GDP number.

The concept of baseline budgeting and an ever increasing revenue stream working in tandem sounds viable but the non-viable result is a $14 trillion dollar national debt and a current $1.5 trillion annual deficit. That is, the U.S. is current borrowing 41 cents of every dollar spent. In other words, the baseline budget and increasing revenue stream as a concept is one item, the result is yet another item. Why? Because its not a budget!

Budget defined:

1. an estimate, often itemized, of expected income and expense for a given period in the future.

2. a plan of operations based on such an estimate.

3. an itemized allotment of funds, time, etc., for a given period.

4. the total sum of money set aside or needed for a purpose: the construction budget.

5. a limited stock or supply of something: his budget of goodwill. (1)

Upon Further Review

One glaring point is that “budget” and “baseline budgeting” assume a budget is based on sound and known economic axioms. In other words, the entire concept is based on business and economic principles.

When is a budget not a budget? Stated alternatively, when, if ever, was a cabal of politico promises referred to as a budget? How can the U.S. federal budget even remotely be considered a budget? A collection of politico promises past, present and future is not a budget!

Hence the argument at the puzzle palace on the Potomac is not a budget battle rather it’s a politico promise battle. There is no “base line budgeting” its merely base line politico promises.

Politico promises is completely off the budget map.... where the monsters live.



1 comment:

  1. It is a fact of economics - an axiom, really - that every actor has limited means and unlimited wants. So, ideally, as you say, a budget would being with income and against that allocate expenditures. But Article I section 8 gives Congress the power to borrow money on the credit of the United States.

    The Constitution gives Congress the power to coin money. But a power is not a mandate; and in 1800 and 1802 Republicans in the Senate sought to close the Mint as a drain on the public treasury. So, while Congress can borrow money, it need not. The last time the budget was balanced with no deficit was 1832. (From 1796 to 1811 there were 14 budget surpluses and only 2 deficits. The first dramatic growth spurt of the debt occurred because of the War of 1812. In the first 20 years following the War of 1812, 18 surpluses were experienced and the US paid off 99.97% of its debt." -

    Clearly, this is a problem not of who is elected to Congress, but who elects them to Congress. In other words, the short and sad truth is that we have abandoned our republican virtues for democratic wantonness.