Lack of baseline budgeting at root of debt problem (Viewpoint Tri City Times)

[William Gavette]

To the Editor: In the recent Congressional debate over which proposal would ultimately impact the debt limit and budget, two different proposals emerged. There was a Republican bill in the House and a Democrat bill in the Senate. Many believe that neither proposal addressed the huge problems of the national debt going forward. This is due to the inability to agree to make difficult choices now on major entitlement issues and something called baseline budgeting, which is politely not discussed in Congress. Looking at this concept called baseline budgeting, it is clear that if Congress does not clearly understand it, most Americans are also in the dark. What is this budget process? It is a built in method to start creating a budget each fiscal year. Baseline budgeting assumes that last year's budget is 100% spent and that more money is needed each year. It assumes there is a year-to-year increase in the cost of governing; from natural growth in government departments both in number of employees and in their wages as well. Further, there is a built in increase in the cost of our ever-growing entitlements both on a per person basis and an increase in the actual number of people covered by those entitlements. What is the rate of growth built in? Over a ten year period, it assumes 7.5% annual growth. What does baseline budgeting not cover? It does not look at each department's and program's worth, whether that program or department is still relevant or should be reduced or even eliminated. It insulates these against the concept of zero based budgeting in which an evaluation must be made starting with 'is the program necessary,' and including 'if necessary, could it be reduced?' As a result, baseline budgeting drives additional costs on a yearly basis. The effect on our national financial situation becomes ominous. Baseline budgeting currently used in Congress raises our deficit from the $14 trillion before the recent debate by $8.5 trillion to a total of $23.5 trillion. The net impact of the recent debt agreement reduces this deficit by $2.3 trillion over a ten year period. That is, if there is agreement on the $1.5 trillion in future reductions and if future Congresses honor this agreement—not very likely. With current interest payments consuming 43 cents of each federal dollar and the gloomy economic forecasts both in the U.S. and Europe, this would likely increase federal interest payments by approximately 50% or to nearly two-thirds of our spending. This is directionally a disaster financially within ten years. Sooner if, as expected, interest rates go up. I believe this is the point that the Tea Parties well understand and are trying to point out to Congress and to the citizens of America. This is another view that people must strongly consider. —Larry Leidlein Metamora

August 16, 2011