Monday, February 21, 2011

The Problem with Baseline Budgeting

No one, outside of business schools, think The Wall Street Journal might support the D.C. status quo.

And yet … they fall for the baseline budgeting nonsense too. Consider this diagram from the February 15th edition:

The source for the diagram is a bit hard to find. Try “GOP Denounces Absence of Entitlements Overhaul”.

This is for Obama’s budget proposal, and it makes it look like he’s going to make some cuts (and in truth, he does propose some). Even so, the diagram is a stinker.

Look at the small label for the middle column, that appears only in the first (i.e, Education) row. It notes that the calculations are done relative to the 2010 budget. This is the budget enacted after a full-year of the Obama administration and a Democratic Congress. Yep … one of the budgets near the top of the hump in this chart:

This is the sort of smoke and mirrors that baseline budgeting is used for.

No comments:

Post a Comment