Sunday, 05 February 2012

House Passes Bill to End Automatic Spending Increases

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moneyFor nearly four decades Congress has ensured that federal spending rises inexorably by guaranteeing that every budget item increases automatically each year. And woe to anyone who seeks merely to reduce these automatic increases, for he shall be labeled a heartless, slash-and-burn budget cutter!

Finally the House of Representatives is doing something about this fiscally irresponsible practice. On Friday that chamber passed, on a practically party-line vote, the Baseline Reform Act of 2012, which would do away with the automatic spending hikes and force federal agencies to justify any increases they seek.

“Only in Washington — with a $15 trillion national debt — would an automatic increase in spending be assumed each and every year,” House Budget Committee Chairman Paul Ryan (R-Wis.) said in a statement following the bill’s passage. “This is not what hardworking families and small businesses deserve from their government, and this reform will level the playing field for those who want to control Washington spending by removing the pro-spending bias in our budget process.” explains how the current budget process works and how the Baseline Reform Act would modify it:

Under current federal budget law, the amount of money a federal agency will automatically get for the next year is based on the current year’s amount, plus inflation, which is the “baseline” for the next budget year.

So the “baseline” establishes an assumption that discretionary spending will at least be as much as the previous year, with an inflation increase. Thus, in some cases, spending the same dollar amount on an agency or even increasing the agency’s funding has been called a cut in the budget. This budgeting method was adopted by Congress in 1974.

The legislation would eliminate the automatic increase. Budgeting would still be based on the current year’s budget, but it would not provide an automatic inflationary increase, according to the Congressional Budget Office.

Rep. Rob Woodall (R-Ga.), who sponsored the legislation, stated in a press release: “Americans balance their budgets based on how much money they actually have, not using ‘automatic future increases.’ It is time for Congress to do the same. The Baseline Reform Act ensures that all future ‘cuts’ to spending will be true ‘cuts’ — not merely reductions in rates of increase.”

Although Woodall was the sponsor of the bill, the prime mover behind it was Rep. Louie Gohmert (R-Texas), who said he has been trying to get the bill brought up for a vote since he arrived in Congress in 2005. “But,” he said in a statement, “even when we had the majority in 2005-2006, I could not get them to bring it up for a vote,” perhaps because the GOP controlled both houses of Congress and the presidency and saw no reason to mend the government’s profligate ways at that time. Now, with Democrats in charge of the Senate and Barack Obama in the White House, Republicans are a bit keener to be viewed as deficit hawks, and so Gohmert’s dream is closer to becoming reality.

Prior to the vote on the bill Gohmert declared that passing it “could be the most responsible financial thing this Congress has done, this House has done in the whole last year.” He even suggested that it could accomplish the work that the budget “supercommittee” failed to complete last fall: “It could be $1.4 trillion in cuts over the next 10 years and all we’re doing is just stopping the automatic increase.”

Of course, the House vote on the bill will be purely symbolic if the Senate fails to pass it also, which seems likely to be the case. All but four Democrats opposed it in the House, and the Senate leadership may very well refuse even to bring the bill up for a vote.

Still, the symbolism is unmistakable. On the one side are those committed to a budget that increases on autopilot with no concern for taxes and deficits, and on the other are those who care enough to demand that Congress carefully consider whether or not each budget item should go up (or down) on a case-by-case basis. Enacting the Baseline Reform Act won’t guarantee that the flow of red ink will be stanched, especially since the bill doesn’t lay a finger on entitlements; but it will ensure that individual Congressmen and Senators can more easily be held accountable for every drop of it.

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