Why Baselines Matter

If you were diligently reading the news yesterday about the new House budget proposal, you might have been a little confused. It seemed like news outlets couldn’t agree on how much the House Budget Committee Chairman Paul Ryan’s (R-WI) plan for the FY 2011 budget actually cut:


House Republican Leaders Call for $32 Billion in Spending Cuts


Republicans to Seek $35-Billion Cut in Opening Fight Over Budget

Washington Times:

Republicans find places to cut $43 billion

National Journal:

House Republicans are proposing to slash $74 billion in discretionary spending this year

Why all the different numbers? The problem is that different organizations were using different baselines. Baselines are essentially the status quo, the starting point for whatever fiscal discussion you're having, and help show the change certain policies might have on the federal budget. However, as TaxVox, the Tax Policy Center's blog, pointed out in a great post last year, not everyone uses the same baseline, and some baselines are better than others.

Ryan decided to use to the President’s budget request as his baseline, saying that the Republican plan is $74 billion lower than the President’s. But this is a bit misleading, since the President’s proposal, released every February, is never passed into law. So Ryan isn’t really “cutting” anything from the President’s budget, although knowing how much Obama proposes is always a good thing.

A better baseline would be the FY 2010 budget, which is the one I used in my post yesterday. FY 2010 is the last budget passed into law, so it makes sense to compare the FY 2011 proposals against that. Subtract Ryan’s proposal ($1,055 billion) from the FY 2010 enacted budget ($1,091 billion) and you get $35 billion.

Similarly, the $32 billion figure is in relation to the continuing resolution (CR) Congress passed last year, which is currently funding the government. The CR is based on the FY 2010 budget, with a few minor changes reducing the overall spending level for the CR to $1,087 billion for the year. Since the CR is technically funding the government right now, it is a valid choice for a baseline; however, since it is temporary (it expires on March 4), it isn’t our choice. Few in Congress voted on it expecting the $1,087 billion to last the rest of the fiscal year.

Finally, some news outlets were reporting that Ryan’s budget cut $43 billion. This figure refers to the amount of actual cuts in the plan. Although the plan, in total, cuts $35 billion, it really cuts more than that from non-security spending in order to pay for an increase in defense spending. Non-security discretionary spending is reduced by almost $43 billion, with defense spending increasing by about $8 billion. Some news organizations chose to report the first number, which emphasizes the cuts to non-security spending, but it probably isn’t the most accurate number to cite. While it isn't a bad baseline, it ignores the increase in defense spending, which is itself a newsworthy item.

Moral of the story: baselines are important, and news organizations don't always get them right. As yesterday shows, different baselines can produced very different outcomes.

Image by Flickr user PinkMoose used under a Creative Commons license.

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