TIMOTHY NOAH FEBRUARY 8, 2012
The latest Republican budget-cutting trick is to end the longstanding practice of indexing the baseline for discretionary spending to inflation. In plain English, this refers to the practice of defining the previous year's spending level (the "baseline") as last year's spending plus a cost-of-living increase. The idea is that if you don't factor in inflation then, practically speaking, you are forcing cuts to government services. Indeed, the Center on Budget and Policy Priorities points out, you may be forcing cuts to government services anyway, since the inflation increase doesn't take into account population growth--a point you'd think would interest a party increasingly interested in curbing contraception.
A longstanding complaint about indexing discretionary spending to inflation is that in Washington a cut really isn't a cut; it is merely a cut in the "rate of increase." As House budget committee chairman Paul Ryan, R.-Wisc., recently put it, "Only in Washington--with a $15 trillion national debt--would an automatic increase in spending be assumed each and every year." Rep. Tim Griffin, R.-Ark., a former aide to Karl Rove, told the Washington Post, "A normal person cut is when you get less money this year than you got last year. In Washington you can get more money this year than you did last year, but if it's not as much as you thought you were going to get, then that's a cut." Obviously Republicans want to eliminate these inflation adjustments in order to make the budget cuts they support appear smaller. Spotlighting the issue is also a way for Republicans to sound the alarm on inflation, which they insist on calling a looming threat even as the Fed projects an inflation rate below 2 percent. And so, with great fanfare, the GOP-controlled House passed on Feb. 3 the Baseline Reform Act, which eliminates inflation adjustments from the baseline.
Funny thing, though. Republicans don't seem to mind taking inflation into account when the subject is tax rates. During the 1970s inflation pushed many taxpayers into higher tax brackets, a syndrome labelled "bracket creep," and to fix that President Ronald Reagan indexed the dollar thresholds to inflation. Indeed, some conservatives complain that wasn't enough, and that the thresholds should be further indexed to economic growth. If the House GOP are so bent out of shape about inflation adjustments, why not eliminate the Internal Revenue Service's annual inflation adjustments too? Do you really have to ask? As usual, complexity and deception are not the true enemies. Government spending is. And not even the part of the government where most of that spending occurs; that would be non-discretionary entitlements. Needless to say, the Baseline Reform Act has not a prayer of passing the Democratic-controlled Senate.