By Richard Larsen

Listening to our top politician in Washington this week was reminiscent of Chicken Little’s apocalyptic warning, “The sky is falling.” In daily appearances the loss of 2.5% of the federal budget has been lamented, implying catastrophic consequences. “It’s not apocalyptic,” he said, but the implication clearly made that it’s close to it. “It’s just dumb. And it’s going to hurt. It’s going to hurt individual people and it’s going to hurt the economy over all,” he said.

The president elaborated, “Emergency responders like the ones who are here today — their ability to help communities respond to and recover from disasters will be degraded. Border Patrol agents will see their hours reduced. FBI agents will be furloughed. Federal prosecutors will have to close cases and let criminals go. Air traffic controllers and airport security will see cutbacks, which means more delays at airports across the country. Thousands of teachers and educators will be laid off. Hundreds of thousands of Americans will lose access to primary care and preventive care like flu vaccinations and cancer screenings.”

As if to not be outdone, California Representative Maxine Waters cried, “We don’t need to be having something like sequestration that’s going to cause these jobs losses, over 170 million jobs that could be lost.” Apparently she’s unaware that our entire civilian labor force is only 144 million jobs in America! But the hyperbole seems to work, at least for the president, as he continues to blame congress for a plan that the White House concocted.

The hyperbole is, however, a far cry from reality. The sequester, which is now in effect, is actually the budget authority figure, not a budget outlay. There’s an important difference. A budget authority provides through an appropriations bill the authority to spend a certain number of dollars. A budget outlay is an actual payment made for government obligations. The Congressional Budget Office in their January update scored the $85 billion in sequestration “cuts” as an actual $44 billion outlay. Rather than representing a “cut” of 2.2% of the federal budget, it’s a reduction of about 1.25% of a $3.6 trillion budget. And to make matters worse, it’s not really a cut, as a reduction in spending, but just a cut in the rate of growth of federal spending. The remaining $41 billion is in future budget outlays, unless Congress or the president tinker with the reduction further.

We have to remember that Washington doesn’t use zero-based budgeting; they use baseline budgeting. The baseline is an inclined trend-line of spending increases each year. Washington uses the current spending levels as the “baseline” for establishing future funding requirements. They then assume that future budgets will equal the current budget times the inflation rate times the population growth rate. So rather than “cutting” spending by $44 billion, the rate of growth for future spending is reduced by $44 billion the first year. And given Washington’s creative accounting techniques, the rate of spending will likely accelerate after the first year of sequestration cuts, in spite of the …read more
Source: FULL ARTICLE at Western Journalism