A common debate on the news is whether or not government spending should be cut. Large numbers followed by the terms billions and trillions are thrown around for effect and we are all led to believe significant changes will be made to the way our government is financed.
The truth of the matter is that these cuts that get discussed are actually only proposed reductions in mandated increases. For example, if a government agency has a billion dollar budget this year, by law, this same government agency's budget will increase up to $50 or $100 million by default. Any cuts (or increases) proposed to this agency's funding would be against this increased budget amount.
This happens because the scorer of the cost of government, the Congressional Budget Office, uses a technique called baseline budgeting. Because of a 1974 law, all funding for discretionary programs must inflate itself to keep up with the times so all programs increase year to year by a formulaic percentage. This works great when revenues are steadily increasing. But when the economy retracts, no correction in government spending is made to correlate. Any talk of spending cuts is only against mandated increases.
So going back to that hypothetical agency....if a "cut" of 2% was proposed to its funding, the net result would be a budget that had actually increased in real dollars by $29 million. This goes on across the entire federal government.
A legislative solution has been proposed to change the CBO's technique to a zero-baseline formula, one where any changes to a program's funding must be explicit and outright. One where a cut is actually a cut. Anyone serious about solving our deficit crisis should be in favor of this legislation.