It Really Is The Spending

The following graph was posted at The Washington Examiner yesterday:

The article notes:

As shown in the chart below, in the 50 years prior to the effective date of the Trump tax cuts (1968-2017), tax revenue averaged 17.4 percent of gross domestic product, while spending averaged 20.3 percent. With the Trump tax cuts in place, revenue is below the historical average for the next few years, but by the middle of the decade, it returns to that average and then surpasses it as some provisions of the tax cut begin to expire. By 2029, the end of the CBO projection period, revenue reaches 18.3 percent — or nearly one point of GDP above its historical average.

We need some serious budget-cutting in Washington. It is time for baseline budgeting to stop. Department budgets need to start from scratch and justify every penny.

One Reason Government Spending Is Out Of Control

On Saturday the Washington Post posted an article about some of the end-of-the-year spending done by government agencies. The spending is a result of one of the side effects of baseline budgeting, which is something our government needs to get rid of. Baseline budgeting is the concept that a department’s budget is based on how much money they spent in the previous year. If they spend 90 thousand dollars and their budget was 100 thousand dollars, the department budget will be 90 thousand dollars in the following year. If they don’t spend all of the money in their budget, their budget is cut. This creates a mad rush to spend their entire budget by September 30, the end of the fiscal year. If they spend the full amount and ask for a 10 percent increase and get a 5 percent increase, that is considered a 5 percent budget cut. That is how Congress can claim they are cutting the budget while the spending continues to increase. These two concepts explain some of the rather interesting end-of-the-year spending done in the past few weeks by the government. As you read this, remember that this is under sequestration when Democrats are complaining that there is no money.

The article posts some examples of spending in recent weeks:

On Monday, VA paid $27,000 for an order of photographs showing sunsets, mountain peaks and country roads. They would go into a new center serving homeless veterans in Los Angeles; a spokeswoman described the art as “motivational and calming, professionally designed to enhance clinical operations.”

On Tuesday, the USDA bought $127,000 worth of toner cartridges (“end of year,” the order explained). VA spent another $220,000 on artwork for its hospitals.

On Wednesday, the Coast Guard paid $178,000 for cubicle furniture, replacing high-walled cubes with low-walled ones to improve the air flow in a large office area.

“Other higher-priority projects were not able to be executed, so they moved [money] to this lower-priority project” before the year’s end, said Coast Guard spokesman Carlos Diaz. “The money was going to be spent anyway.”

On Thursday, VA was buying art again. It spent $216,000 on artwork for a facility in Florida. In all, preliminary data showed that the agency made at least 18 percent of all its art purchases for the year in this one week. One-sixth of the buying in one-52nd of the year.

This is not a reasonable system. There is a spreadsheet at adelphi.edu that shows the federal deficit over the years. When President Obama took office, the deficit was approximately 12 million dollars. The deficit is now approaching 17 million dollars. That’s a pretty hefty increase in five years. However, the really interesting part of the spreadsheet is the relationship between the deficit and which party controls the House of Representatives. Remember, the House controls the spending. Please follow the link to the spreadsheet and take a look at the history of the federal deficit.

At any rate–baseline budgeting needs to go.

 

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A Great Idea That Will Probably Die In The Senate

On Friday, the Daily Caller reported that Harry Reid told reporters that the Senate would not pass a budget this year. Senator Reid did not feel a budget was necessary because he felt that the debt-ceiling agreement already covered that. Never mind that the Senate is constitutionally required to pass a budget.

To add to the confusion, CNS News reported on Friday that the House of Representatives has now passed a bill to eliminate baseline budgeting. Baseline budgeting is the practice that allows Congress to claim it is cutting the budget while it continues to increase spending. This is done by assuming every government agency will have a certain percentage increase every year. If the amount of that increase is cut, it is a considered a spending cut, even though the agency got an actual increase in the amount it could spend. For example, let’s say the Department of Education spent $100 this year. Next year they would automatically get $110. If Congress cut the budget and they were only given $105, that would be considered a budget cut, even though their budget grew.

That is baseline budgeting. That is what the House of Representatives voted to end on Friday. Is anyone willing to make a bet on how far this bill will get in the Senate?

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