Congress and the budget blowout
The budget of the federal government has grown exponentially over the past 3 decades to a point where Congress is spending more than $3.5 trillion annually and borrowing over 40 cents of each dollar it spends.
Many are beginning to scratch their heads and wonder how, exactly, Washington D.C. has managed to become the behemoth that it currently is.
Sure, one can point to Social Security and Medicare, who for years have run smoothly thanks to the baby boom generation and pyramidal structure of said entitlements — which is now beginning to become inverted.
But there is another culprit lurking in the halls of the nation’s Capitol, one that has spurred unbelievable growth of the federal government for the past 30 years, exacerbated the entitlement crisis and exploded the federal budget from the inside out. It’s called baseline budgeting.
Baseline budgeting has its origins in the Congressional Budget Act of 1974, where big spenders in Congress saw fit to ditch the way budgeting had been done for the country’s near 200-year history. They decided in favor of a method more conducive to the endless growth of government — heaven forbid it ever get smaller year-on-year.
Rather than debating and deciding how much Congress should spend each year and on what it should be spent, this new method consists of calculating the spending level needed to continue the “existing level of government services,” adjusting it for inflation and then spending that much.
Not surprisingly, this new method created a baseline that always increased spending from the previous year, without exception.
It also guaranteed that any newly created social programs and institutions would automatically qualify as new “government services.”
These services could invite their own endless spending projections to be cooked into next year’s baseline — almost guaranteeing that the national government would expand ad infinitum.
Clearly, Washington’s new budgeting scheme was an immensely clever sleight of hand created by advocates of big government, and unfortunately it successfully supplanted itself as the legal and rational norm in Washington.
The worst part is that it destroyed the common language surrounding budget, making it nearly impossible to have a meaningful conversation about the true level of government spending.
This cleverly sows seeds of confusion amongst the general public in regards to the definition of a budget “cut” and provides cover for politicians and their political allies who are intent on growing the central government at all costs.
The result of this seemingly obscure budgeting rule on Capitol Hill is that we are left with the paradox of ever-expanding governmental expenditures while simultaneously being told that our governmental overseers are making tough decisions and scaling back the budget
Big government advocates can scream about austere cuts and advocate more spending.
Meanwhile, advocates of smaller government are denounced for doing so much as lowering the growth rate of spending even as the absolute level continues to rise exponentially.
Back at home in reality, nothing ever changes. Since the enactment of the Budget Control Act of 1974, federal expenditures have tripled. Yes, that’s adjusted for inflation.
There are several winners as a result of this process — and none of them are you.
The spendthrifts in Washington are further empowered to make you work not for your own ends but for theirs, special interests are guaranteed that the gravy train will continue flowing for years to come and holders of government debt here and abroad will continue to reap benefits as they accrue interest on a risk-free basis.
My generation is blessed with the bill.
Given that Congress has already immersed the nation in 100 percent of the GDP’s worth of debt, the idea that our budget’s baseline should automatically increase each year based on the need to continue funding the absurd amount of tasks the government has thus far undertaken would be laughable if the consequences weren’t so painfully ruinous.
The US would be all the better for having the entire concept of baseline budgeting discarded forthright, buried, covered in cement and never spoken of again.
Steven Christopher is an economics alumnus and graduate finance student in the C.T. Bauer College of Business and may be reached at [email protected]