Saturday, March 16, 2013

Adjusting the Baseline and Changing the Message

This week saw the drop of three major budget proposals, from House Republicans, Senate Democrats, and the Congressional Progressive Caucus.  They are all bad for various different reasons.  And in particular, they are bad at the way they represent the numbers in their descriptions.  Each plays fast and loose with "the baseline" and various other definitional elements to make comparisons that are deceptive at best.

I'll be making several posts about the various budgets over the next couple of days.  I want to start with the "centrist" budget, the one from the Senate Democrats.  One major issue is the adjustment of the baseline to create false impressions.

From the Senate Budget,

Achieves $975 billion in deficit reduction through responsible spending cuts made across the federal

  • $493 billion saved on the domestic spending side, including $275 billion in health care savings
    made in a way that does not harm seniors or families. 

  •   $240 billion saved by carefully and responsibly cutting defense spending to align with the
    drawdown of troops in our overseas operations. 

  • $242 billion saved in reduced interest payments
Well, that's about 0 for 3 in terms of accuracy.  If we look at the CBO baseline, the Senate budget spends $197 billion less on interest ($5213 billion versus $5410 billion), $41 billion less on domestic discretionary spending ( $6356 billion versus $6397 billion), $626 billion less on defense ($5829 billion versus $6455 billion), and $26 billion more on mandatory spending ($28964 billion versus $28938 billion).  So if we restate into the categories used by Senator Murray and use the CBO baseline versus the one the Senator invents, we get:

  • $15 billion less on the domestic spending side
  • $626 billion less on defense spending
  • $197 billion less on interest payments
  • Total spending reductions of $838 billion
In other words, relative to the CBO baseline, it's a typical Democratic plan on spending...cut defense spending and leave everything else alone since any savings in interest payments are the result of tax increases or defense spending reductions.

At a macro level, the Senate budget is more accurate on taxes, claiming $975 billion in tax increases when, in fact, there are only $923 billion in tax increases.  But beyond describing ways the savings might be attained, the Senate budget proposal is silent on how these tax increases will be created.  In fairness, this is the same critique that is leveled against the House Republican proposal at a multiple of the size of tax increases required.

It is not the case however that the Senate budget increases taxes by $1.5 trillion as reported at the Heritage Foundation or National Review.  Yes, the budget contains discussion of replacing the sequester and other things but it does not include those things in the budget and thus it is, in my view, incorrect to claim that the budget increases taxes by more than it actually does.

So to restate, versus the CBO baseline, the Senate budget

  1. Increases taxes by $923 billion with no specification as to where those increases will fall
  2. Decreases spending on the military by $626 billion.
  3. Gets the rest of its spending reductions from reduction in interest related to the two above factors
Hardly a "balanced approach" but entirely consistent with normal democratic priorities.

The lesson here is whenever you see a budgeter building a "bridge" from the CBO baseline to one they say represents "current policy," get ready for some quick spinning.

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