Understanding Baseline Budgeting

By Dan Lipka

The United States of America, for the first time since the great depression, finds itself holding a debt that has surpassed GDP. This calamity has emerged as a result of wasteful spending along with bloated entitlements. The wasteful spending has been facilitated by the intentional construction of language norms that understate the true nature of spending increases. This is known as baseline budgeting.
Baseline budgeting uses phrases like “cuts” and “increases” in ways that easily deceive the average American voter. A voter unaware of the existence of baseline budgeting may interpret a 10% cut to Department X’s budget of $100 billion as indicating that the budget will be reduced to $90 billion. This is WRONG! Because Department X was scheduled to have its budget increase by 10% to $110 billion, a 10% cut is coming out of not the full budget but rather the increase. In this scenario, a 10% cut reduces Department X to $109 billion – a cut of only $1 billion! Based on the system shown here, the public can be misled the public with their manipulation of formal budget language.
Some questions naturally arise: when and why was baseline budgeting implemented? Baseline Budgeting was established with the passing of the Congressional Budget and Impoundment Control Act of 1974. It was implemented because Congress wanted to bypass its annual debate over how much (if at all) to increase each department’s budget. Baseline Budgeting included yearly increases to compensate for the population growth that was occurring, and in 1980, inflation was included in the justification for spending increases. However, until 1985, the spending increases had to be confirmed annually by Congress. The Deficit Control Act automated the spending increases to each department based on projections by the Office of the Budget and Management.
My intention is not to state abandoning baseline budgeting as necessary to achieve a balanced budget; however, if baseline budgeting is going to be exist, the public needs to understand the nature of it. Those who understand baseline budgeting are more empowered to fight excessive spending. Finally, I encourage anyone who understands baseline budgeting to educate others and all to understand political budget language in the context of baseline budgeting.