Congratulations America! With the sequestration implemented, we finally cut spending!
Wrong! Unfortunately, the American public has just been deceived by politicians and the mainstream media.
Too often we hear politicians boasting about "cutting" spending and how they are "reducing" the federal deficit. During the recent sequestration debate, the vast majority of the media, Congress and President Obama all referred to the sequester as "cuts."
During the past few weeks, we have been told these sequester "cuts" will be detrimental to firefighters, teachers and seniors. In order to realize what they mean by a "cut," we must first look at the definition of "cut." A cut, according to Washington math, means a reduction in the amount of increased spending. The mainstream media and demagogues in Washington are trying to keep our citizens in the dark by neglecting to point out that the net result of these "cuts" is actually an increase in spending!
How is this deception possible? How can Washington "cut" spending, but then end up spending more? It is because of an accounting method Washington has used for years called "baseline budgeting."
The beginning of baseline budgeting started in 1974 with the Congressional Budget Act signed by President Nixon. This bill required the Office of Management of Budget to release projections of federal spending for the upcoming fiscal year. These projections are designed to naturally anticipate population growth, inflation and other market tendencies. When baseline budgeting was implemented, it gave Congress a "baseline" of spending from the previous year. For example, if Congress allocated $50 Billion last year to the Department of State, then the next year their budget would automatically start with the "baseline" of $50 Billion. When you incorporate the automatic increases in spending, for example, a 10% increase, then spending would increase to 55 Billion without Congress acting at all.