PittsburghAfterDark
03-29-2006, 06:55 AM
One of the most frustrating aspects to me is how special interests, the media and politicians frame spending debates and matters in this country.??Of course the horrible misleading members of the above are able to convince the American public that one side or the other is horrible, insensitive and cares little about children, women, the elderly, minorities or insert your special interest group here.
What am I talking about?
Many people are completely unaware of how the Federal government puts its budget together on an annual basis.??If you sampled 100 people in a mall intercept method of surveying the population I would be willing to bet the number of people that could correctly identify "baseline budgeting" would be 1 or less per 100.??So what is baseline budgeting?
Baseline budgeting is the simple concept of constant spending measured by last years spending plus a percentage of growth at or above inflation.??Let's use this basic example.??If the government needs to spend $10,000,000 on a computer upgrade program for congress it budgets that amount, makes the appropriate hardware and software purchases and the project is done right???That money doesn't need to be spent the following year correct?
Wrong.
As a result of this spending the program that was created to buy those computers is extended to the following year.??Otherwise the program is eliminated and the budget goes to zero.??Does that ever happen???No, it does not.??Instead the program is extended for another year plus another $10,000,000 plus some percentage of increase that is likely above inflation, let's say 5%.??The year two budget is now $10,500,000 for congressional computers.
Want to cut it???What???You're against congress having the most up to date computer systems for Representatives, Senators and their staffers to communicate with their consituants???This program is in the best interest of the American public!??With increasing demands and expectations of the American??public congress members need the latest and greatest tools to allow them to communicate with their home districts and states.??This program is necessary to ensure continued government responsiveness.
Now let's put that into context with a more personal level.??Your budget, your family's budget or the budget of yourself and a significant other.
In 2006 you decide you're going to do the following; buy a new digital TV and since you've been promoted you want to buy that Infiniti G 35 you've had your eye on.??How would your spending decisions reflect in the world of baseline budgeting?
Let's take your TV.??You have your eye on a new Sony LCD that's going to run $2,000.??Great, love it, can afford it, made the purchase.??What about next year???Don't need one???Oh yes you do, otherwise that program you created to procure your HDTV goes away, programs never go away.??That $2,000 needs to be budgeted next year too plus a nominal program increase, let's say another 5%.??Wait, prices went down but you still need to spend that $2,000 +5%???Well you now have a $2,100 budget to spend on a new HDTV that you may or may not need.??Now go find another one otherwise that budget will be eliminated.
Now let's look at how a planned car purchase would work in the world of baseline budgeting.??You've set aside $35,000 to buy your new Infinit G 35.??Wait, something happened in your life.??Your wife got pregnant, you lost your job for two months, you needed to take care of an emergency family situation.??You can no longer afford to buy that $35,000 car.??You're going to have to make due with a Altima for $20,000.
Now how does government baseline budgeting deal with a situation like that and how do politicians frame such a scenario?
The baseline budget guideline for the year was $35,000.??Now, no money has been spent, right???You never had the car to begin with, right???So what does it mean if you want to spend $15,000 less than you initially intended???You've cut the budget 42%!??People are going to suffer under these Draconian cuts!
This was how Democrats framed the argument in the mid-90's before the government shutdown.?? One of the most demonizing positions was "Republicans want to enact drastic cuts to school lunch programs.".
So what was the reality?
If the Federal government had $5 billion budget for the school lunch program and the program was due to increase 10% to $5.5 billion, remember the baseline budgeting rule, no program ever shrinks in real value year to year.??If Republican's wish to cut the rate of growth from 10% to 6% what's the accusation Democrats will level?
If you said Republicans wish to cut funding to school lunch programs 40% you're learnning.??
Now, is that how you would ever frame spending arguments in a +/- column in your life???Would you ever view getting a new car as a horrible event even if it wasn't the car you didn't really want in the first place???Would it be catastrophic???Would it be devastating???Draconian???Insensitive???Would an undue burden be placed on you for not getting the luxury car you wanted but a very nice, reliable and functional one???
Of course not.
Then again there's no way you're going to budget $2,000+ every year for a TV and keep spending more and more and more.??You'll run out of rooms for the TV's and chances are you have a lot of other things you'd like to spend $2,000 on next year than another HDTV.
Think I'm lying???How many of you know people that work with government grants or funds???How many of them are spending cash like mad in November and December because if they don't spend what they were given they either won't get their budget next year or won't get their asked for increase???We all know this happens.
This can't go on forever right???Government programs and taxes for those programs eventually go away and are sunsetted right?
Of course they do.??In fact it only took the government 102 years to attempt to repeal the temporary tax imposed on "wealthy phone owners" to fund the 1898 Spanish American War. (http://usgovinfo.about.com/od/incometaxandtheirs/a/teletaxrepeal.htm) Bill Clinton???He vetoed the measure.
It appears we can never stop funding the Spanish American War and in the world of government we can never stop using the insanity of baseline budgeting.
What am I talking about?
Many people are completely unaware of how the Federal government puts its budget together on an annual basis.??If you sampled 100 people in a mall intercept method of surveying the population I would be willing to bet the number of people that could correctly identify "baseline budgeting" would be 1 or less per 100.??So what is baseline budgeting?
Baseline budgeting is the simple concept of constant spending measured by last years spending plus a percentage of growth at or above inflation.??Let's use this basic example.??If the government needs to spend $10,000,000 on a computer upgrade program for congress it budgets that amount, makes the appropriate hardware and software purchases and the project is done right???That money doesn't need to be spent the following year correct?
Wrong.
As a result of this spending the program that was created to buy those computers is extended to the following year.??Otherwise the program is eliminated and the budget goes to zero.??Does that ever happen???No, it does not.??Instead the program is extended for another year plus another $10,000,000 plus some percentage of increase that is likely above inflation, let's say 5%.??The year two budget is now $10,500,000 for congressional computers.
Want to cut it???What???You're against congress having the most up to date computer systems for Representatives, Senators and their staffers to communicate with their consituants???This program is in the best interest of the American public!??With increasing demands and expectations of the American??public congress members need the latest and greatest tools to allow them to communicate with their home districts and states.??This program is necessary to ensure continued government responsiveness.
Now let's put that into context with a more personal level.??Your budget, your family's budget or the budget of yourself and a significant other.
In 2006 you decide you're going to do the following; buy a new digital TV and since you've been promoted you want to buy that Infiniti G 35 you've had your eye on.??How would your spending decisions reflect in the world of baseline budgeting?
Let's take your TV.??You have your eye on a new Sony LCD that's going to run $2,000.??Great, love it, can afford it, made the purchase.??What about next year???Don't need one???Oh yes you do, otherwise that program you created to procure your HDTV goes away, programs never go away.??That $2,000 needs to be budgeted next year too plus a nominal program increase, let's say another 5%.??Wait, prices went down but you still need to spend that $2,000 +5%???Well you now have a $2,100 budget to spend on a new HDTV that you may or may not need.??Now go find another one otherwise that budget will be eliminated.
Now let's look at how a planned car purchase would work in the world of baseline budgeting.??You've set aside $35,000 to buy your new Infinit G 35.??Wait, something happened in your life.??Your wife got pregnant, you lost your job for two months, you needed to take care of an emergency family situation.??You can no longer afford to buy that $35,000 car.??You're going to have to make due with a Altima for $20,000.
Now how does government baseline budgeting deal with a situation like that and how do politicians frame such a scenario?
The baseline budget guideline for the year was $35,000.??Now, no money has been spent, right???You never had the car to begin with, right???So what does it mean if you want to spend $15,000 less than you initially intended???You've cut the budget 42%!??People are going to suffer under these Draconian cuts!
This was how Democrats framed the argument in the mid-90's before the government shutdown.?? One of the most demonizing positions was "Republicans want to enact drastic cuts to school lunch programs.".
So what was the reality?
If the Federal government had $5 billion budget for the school lunch program and the program was due to increase 10% to $5.5 billion, remember the baseline budgeting rule, no program ever shrinks in real value year to year.??If Republican's wish to cut the rate of growth from 10% to 6% what's the accusation Democrats will level?
If you said Republicans wish to cut funding to school lunch programs 40% you're learnning.??
Now, is that how you would ever frame spending arguments in a +/- column in your life???Would you ever view getting a new car as a horrible event even if it wasn't the car you didn't really want in the first place???Would it be catastrophic???Would it be devastating???Draconian???Insensitive???Would an undue burden be placed on you for not getting the luxury car you wanted but a very nice, reliable and functional one???
Of course not.
Then again there's no way you're going to budget $2,000+ every year for a TV and keep spending more and more and more.??You'll run out of rooms for the TV's and chances are you have a lot of other things you'd like to spend $2,000 on next year than another HDTV.
Think I'm lying???How many of you know people that work with government grants or funds???How many of them are spending cash like mad in November and December because if they don't spend what they were given they either won't get their budget next year or won't get their asked for increase???We all know this happens.
This can't go on forever right???Government programs and taxes for those programs eventually go away and are sunsetted right?
Of course they do.??In fact it only took the government 102 years to attempt to repeal the temporary tax imposed on "wealthy phone owners" to fund the 1898 Spanish American War. (http://usgovinfo.about.com/od/incometaxandtheirs/a/teletaxrepeal.htm) Bill Clinton???He vetoed the measure.
It appears we can never stop funding the Spanish American War and in the world of government we can never stop using the insanity of baseline budgeting.