If we really desire a return to fiscal sanity at the federal level; baseline budgeting must go.
The entire budget/debt ceiling battle that has been going on inside the beltway for the last two forever's, as we say in these parts, is nothing but one grand deception being foisted upon the American people. Allow me to explain.
The grandest deception is the government concept of baseline budgeting. This concept originated almost a generation ago in the federal legislature. Baseline budgeting says that the budgetary estimate of government spending in any fiscal year is automatically assumed to continue at pre-ordained rates of expansion in all subsequent years. This definition, boiled down to its least common denominator, means that spending never decreases from one year to the next.
For example; if the baseline built into the Department of Health and Human Services is 10% then the budget for that department is automatically slated for a 10% increase in its budget next fiscal year. The most incredible revelation of this concept is if there is a budget battle (and there always is) and conservatives succeed in gaining a 4% cut in this baseline; then democrats stampede to the microphones, rend their clothing and lament the draconian 4% cut suffered by HHS! No real cut has occurred mind you. In fact the departmental budget of HHS has actually increased by 6%, yet it is publicized at a 4% budget cut
Since fixed rates of expansion are built into the budgets of individual departments and programs automatically, in essence it becomes absolutely impossible to cut the federal budget. Here's an example that should really drive the point home. First the set-up:
The Congressional Budget Office is a federal agency within the legislative branch of the federal government. It is a non-partisan agency charged with providing analysis on the economic impact of pending legislation in either house of the Congress. We'll leave for another time how easily such analysis is manipulated by jigging the numbers in a legislative proposal.
The CBO provides scoring of legislation, usually by estimating economic impact over a ten year period. Now that we've finished the set-up, here's the punch line. Total federal spending amounts to $3.73 trillion for FY 2011. If both Houses of the Congress were to vote to freeze spending for FY 2012 at FY 2011 levels; the CBO would have to score that legislation as a $9 trillion budget cut over ten years! We wouldn't actually spend one dime less in FY 2012 than we did in FY2011; but because of the baseline budget rules CBO would have no choice but to report a $9 trillion cut to federal spending over that following ten-year period.
This is exactly why we're in the calamity we're in. When Congressional leaders can, with malice of forethought, lament a 6% budget increase as a 4% cut because the original baseline called for an automatic 10% increase, it's no wonder we're perched on the economic precipice.
This is not a Republican or a Democratic issue as both parties are complicit in this fiasco. If we are to return this country to fiscal sanity, the first thing that must happen is that baseline budgeting must be discontinued. Why shouldn't both Houses of Congress and the President have to generate and propose a budget in exactly the same manner as any American Corporation; stating a number for each program and department and backing those up with history, facts, and figures? The current method of budgeting in Washington can only be called The Enron model and is a path to fiscal disaster.
The proposed Balanced Budget Amendment to the Constitution isn't enough. Such an amendment must include phrasing that mandates that the US government must adhere to all the same generally accepted good accounting practices that all small business, mid-cap companies, and large corporations are legally bound by.
A proposed departmental budget must include the amount spent last year and the ROI on that investment of capital. Departments and programs with terrible ROI's should be cut back or eliminated entirely.
If this Republic ever intends to get its arms around federal spending, we must adopt Generally Accepted Good Accounting Practice at the federal level. Either that; or we all book passage to Athens.
The best method would probably the zero based budget model where each administrative unit has to justify it planned expenses each year starting from a zero base. This means that it is much easier to cut their budget because there is no built in growth factor or even an assumption that they will be able to spend the same amount as last year. Of course the bureaucrats would scream bloody murder at this.
If government were made to adhere to GAAP we would have an overcrowding problem at the minimum security white-collar-crimes prisons from stuffing the entirety of the federal government into them – and that is barely an exaggeration.
One problem with subjecting government to traditional finance principles like ROI is that most government programs aren’t actually designed or expected to R anything from the I in the first place – they exist to spend money without the expectation of any return. In fact, the lack of a return is actually held out as a positive. Remember that the pursuit of profit is, at best, cold hearted and unfair, and more often outrightly evil and corrupt, but in all cases immoral. The beneficent government, unconcerned with such crass financial considerations, is free to operate out of pure, unadulterated altruism. You may be laughing at this characterization, but it is the standard model in modern politics, including among conservatives. The only difference between the major political factions is the degree to which they believe the government should extend its altruism. All regulation, however, including ostensibly “sensible” conservative regulation, is premised upon the concept that, given the opportunity, private enterprises would abuse, kill, maim, rape and devour their customers and employees (because there is clearly so much profit to be had from doing so, I suppose) if not for the boot of beneficent government placed tightly at their neck to prevent them from doing so. Changing the mechanism by which the government guarantees perpetual spending increases is a political impossibility until the perception of government as savior is seriously challenged. After all, who wants to cut the budget of the altruistic advocate without which he would surely be mercilessly terrorized and victimized? And that, of course, ignores the other percentage of people who would be left without a livelihood if that gravy train ever tapped the brakes.
There is no question that baseline budgeting is a deception, but it is, unfortunately, a mostly willful self-deception.
It’s also worth mentioning that your budget method, whatever it is, doesn’t really mean all that much anyway if you refuse to pass a budget for 2 and a half years, as the Democrats have.
Patrick,
“…we would have an overcrowding problem at the minimum security white-collar prisons…”. You say that like it would be a bad thing. Actually just welding bars across most all the windows & doors of the capital sounds like a better idea to me. Something about Harry Reid standing in the Well of the Senate lecturing on some piece of legislation while wearing prison orange sends a tingle up my leg. They could be sentenced to 20 years of deficit reduction and working for the actual benefit of the American Public or a balanced budget and a retired national debt; whichever comes last.
Almost your entire description of how government works comes from the progressive model. This is something I’ve been rubbing progressives’ noses in for quite awhile.
They invariably complain about the inconvenience and rudeness of dealing with people in public; wondering aloud where peoples’ moral character, their politeness, and regard for others has gone. I tell them this is their Utopia; this is the society they’ve deliberately created.
My Father-in-Law owns a rental house. He’s always complaining that he has to drive over there and issue threats to get his rent, his renters don’t care for the place, etc. He says that they act as if they are entitled to his property and they act as if they may do whatever they wish.
They have a child, my Sister-in-Law (age 50) who has her RV parked on their property; hooked to their water, sewer, and electric. Yet she traipses through their house at all hours; using the bathroom, the shower, the laundry room, etc. She says; “The shower’s too cramped. I’ll stink up my RV, It’s too far to drive to the Laundromat.” and gives them no end of grief. She’s rude, foul-mouthed, doesn’t work, and is always pointing out, what she believes, is everybody else’s shortcomings. You can’t go over there without him and his wife (my wife’s mother) engaging in non-stop complaining about her.
I say in return; “Welcome to the society you created. You voted liberal for the last fifty years. This is the way you wanted things. Your ideology says that all persons should have absolute equal access to all resources, regardless of station in life or how that station was achieved. Unmanageable debt, an overwhelming dependency on government, an over-developed sense of entitlement among the people. A belief that they should be immediately ‘given’ whatever they desire.”
I tell him; “You should be ecstatic! This is Lyndon Johnson’s Great Society writ large. This isn’t the destination you had in mind? Well today is the sum total of the consequences of your actions. Enjoy the fruits of your genius!”
They wring their hands over their Social Security and Medicare; worried that the checks might not come or the entitlements cut back. I tell them; “All you are is a way to get a headline; a way to gain political advantage. If you don’t think, for one minute, that the current progressive administration won’t throw you under the bus to get what they want; you’re being naïve. You’re nothing but a route to a sound-bite. That’s all you’ve ever been; just useful idiots.”
By-the-way; did I mention that that my In-Laws don’t like me very much? But I think we’re making some progress. I went over there last weekend to mow their fields and he was outside, scraping the ‘Obama/Biden’ bumper sticker off his ’85 Volvo. Hope springs eternal!