You wind up reading a lot of these days about budget cuts. Indeed, in yesterday's New York Times, you had Steven Rattner making the claim that the President and Congress had already introduced trillions of dollars in spending cuts. Using a chart from the CFRB, Mr. Rattner argues that, including the sequester, we have already had $2.8 trillion of spending cuts. And yet, as I have noted in the past, the rate of growth forecast in the budget is 5.3% over the next 10 years.
As the same time, the President likes to talk about the need for "a balanced approach" by which he means more spending and more taxes than are already projected. So let's look at the projection. What's below is the CBO forecast expressed in real per capita terms using the census forecast of population and the CBO forecast for inflation.
In real, per capita terms, spending growth over the forecast average
2.5% and that's after the spending reductions in the BCA and the
sequester. Over the same period, revenues grow by 3.4% per year. So
Mr. Rattner's claim of spending cuts to the tune of multiple trillions
of dollars flies in the face of spending growing faster already than
inflation plus population.
And the President's request
for "a balanced approach" is actually a request for spending to grow
faster than 2.5% per year in real, per capita terms and a request for taxes to grow faster in real per capita terms than 3.4% per year.
Such are the perils of baseline budgeting and the language around budgeting that is used in Washington.