Wednesday, November 28, 2012

The fiscal cliff: Another phony emergency to give the government more power

What the government is calling "spending cuts" are actually decreases to future increases in spending. This starts with the concept of "baseline budgeting." The government assumes that spending in each area will automatically rise by a certain percentage every year. All of the cuts triggered by the fiscal cliff are to spending increases, not to this year's spending.

That means that if Federal Program A is budgeted for $1 billion in 2012 and projected to go up to $1.1 billion in 2013, a "$50 million cut" to Program A won't result in the program spending less than $1 billion in 2013. It will spend more. Spending on Program A will go up $50 million, from $1 billion to $1.05 billion. It just won't increase as much as the government previously projected it to.