The Economic Nonsense Of Democrats And Government Bureaucrats

Here is where the Left and much of the public do not understand how a free market economy works nor the importance of economic growth. The Lexington Libertarian has told you many times that the Democrats do not know how to grow the economy, do not want to grow the economy, that instead they just want to mandate equality of outcome (instead of equality of opportunity) by income redistribution. This puts the Democrats and the Left in a position of always bringing the top down to the lowest common denominator rather than bringing the bottom up. If you punish success you will get less of it. The successful pay the majority of taxes. If you overtax the successful you will get less tax revenues.

Once again the Democrats and the headlines of our morning paper show economic ignorance. The CBO in regards to health insurance is only measuring what the government does or does not do and the corresponding effect, leaving out altogether what the marketplace can and will provide if given a chance. The CBO is looking at the negative side – what taking away Obamacare will mean, not the positive side – what the replacement will do.

The same goes for all the brouhaha over the budget.

BASELINE BUDGETING

Baseline Budgeting is a process whereby the government adds a percentage increase built in to the following years budget. Let’s say the HEW budget is $40 billion dollars in a given year. The next year’s budget will already have a built in increase scheduled of say $2 billion (5%) making the budget automatically for HEW $42 billion. Now a Republican Administration comes along and says we are only going to increase the HEW budget by $1 billion dollars to $41 billion. Democrats will now tell you that $1 billion increase is a $1 billion cut.

Of Thee I sing reports:

Baseline budgeting is the product of the Congressional Budget Act of 1974.  That’s when this process commenced that has now, in our opinion, gone so terribly wrong.  The Act, innocently enough, directed the Office of Management and Budget (OMB) to project Federal spending for the, then, upcoming fiscal year, assuming that the, then, current level of government services would continue.  It is that assumption that has now morphed into the annual practice of casting in concrete whatever the government is spending in any given year adjusted by whatever else the government decides it will do, along with the added cost of inflation.  We are, thus, each year compounding the cost of operating the government.  What the government tells us are spending cuts are really no more than reductions in the rate of increase.  For the first few years there really was no formal definition of what baseline budgeting was other than a continuation of services as provided in the prior year.  But then, in 1987 Congress added annual inflationary adjustments to the definition of baseline budgeting and we’ve been stuck with compounding budgets ever since.

Let’s say a government agency is spending$250 billion and, using baseline budgeting, is slated to have its budget increased to $275 billion. The Administration (or Congress) may, instead, call for an overall increase to $262 billion, or, an increase of $12 billion for the next fiscal year, and then promote the new budget as a $13 billion dollar cut in spending ($275bln – $262bln = -$13bln).  This is like an obese individual who is expected to gain 100 pounds gaining only 75 pounds and then claiming he or she lost 25 pounds. Sounds absurd, doesn’t it?  Yet, that’s precisely how our government justifies its profligacy.

 

Rush reports:

I mean, yeah, the Democrats are doing what they’re doing, and it’s undeniable. But Trump’s budget. This is absurd. This is outrageous. McCain and Lindsey Graham pronouncing it dead on arrival before it shows up. The media — you wouldn’t believe — the media is accusing Trump of outright indecency by suggesting economic growth of 3%, such a thing is not possible. It’s irresponsible to make people think that it is. That Trump’s budget’s gonna kill people with all these cuts. There aren’t any cuts in the Trump budget.

As always, all there are is reductions in the rate of growth. There are no cuts. Well, look. There might be some genuine cuts at the National Endowment for the Arts, and there might be some serious cuts over at the EPA, but in general there aren’t any real cuts. There are major reductions in spending, no question about that. But the cuts are nevertheless reductions in the rate of growth. They are not below-the-line cuts.

Take a look at what’s happening with Obamacare. This is a flat-out joke, what’s happening. Or I should say what’s not happening with it. Where are Trump’s own buddies? Where are the Republicans here on the budget? You know, it’s a fine budget. The New York Times has a story here about it. “Trump’s Problematic Math: Budget Plan Adds Growth, but Doesn’t Subtract Cost.

And look at this. “When the government –” who wrote this? Binyamin Appelbaum, clearly demonstrating economic ignorance here. He says, “When the government cuts taxes, it collects less money. That is the purpose of a tax cut. But Mr. Trump’s budget does not include any hint of a decrease in federal revenue.”

Because it’s gonna grow, you…

Cutting taxes does not reduce money to the government. We’re proving that even now. And we proved it in the eighties. And if they repatriated with a lower tax rate on all this money corporations are holding overseas, you wouldn’t be able to get out of the way of the deluge of money floating into the U.S. economy, by reducing tax — Everybody knows you reduce tax rates and you produce more tax revenue.

So there’s constant ignorance or lying or history revisionism going on constantly in the media. Obama’s budgets. You know what Obama’s projected budget growth was year after year? All eight of his budgets. You know what his projected growth rate was? No! I’m talking about what he projected, 5%, 6%. Obama was promising 5%, 6% growth.

The media never said that was outrageous. The media never said it was unrealistic. And Obama’s growth never exceeded one and a half to 2%. Now, Trump is projecting 3% growth and they’re acting like he’s committed a crime here, misleading the American people of what’s possible in the United States.

You can look it up, folks. John Hinderaker published it at Power Line. Obama’s budget growth projections were five-and-a-half, six-and-a-half percent every year, and we never got even one-third of that from the guy. And here Trump has proposed 3% and they’re having a caterwauling fit at the New York Times and the Washington Post. What McCain and these people are doing, this is despicable what’s happening there.

So it’s a serious budget, I think, and 3% growth is not outrageous. And it’s being presented as almost blaspheme. Which ought to tell you something. When the leaders of the American leftist and progressive movement — which is the media. When they try to tell people, their readers, and their viewers, that 3% economic growth is a pipe dream, that it is so far beyond what’s possible, that it is near criminal to suggest it and promise it? That is scary stuff. And it goes again to just how poorly educated people in this country are.

Economic growth in this country has, on many occasions, in normal circumstances — not, for example, after a war or during a war — been there. We’ve had 5% growth, we’ve had 6% growth, sustained. It has happened. It happened in the eighties with Reagan. We had some pretty good sustained economic growth during the Clinton years because the Reagan boom was still happening. It’s just in the last eight years that we shrunk down to 1%, 1.5%, barely even 2% growth precisely due to Obama’s policies.

So remember, the left is marshaled and mobilized to defend and protect the Obama legacy. So when Trump presents a budget that features more economic growths than we ever had with Obama, it has to be destroyed. If the best we could do during the Obama years was 1.5% or 2% max, then that’s all that’s possible, as far as they’re concerned, ’cause Obama is god, Obama is the savior, Obama is infallible, Obama shall not be improved upon. It is not possible to improve upon Obama, as far as the New York Times, the Washington Post, CNN, you name it, are concerned.

So Trump proposing a 3% economic growth budget is blasphemous. But, in fact, it’s barely half of what this country is known for. Why do you think that we’re a superpower? You think we’ve gotten there with 1%, 1.5% economic growth? That’s not even enough to support entrepreneurism. That’s not enough to support wage increases; 1.5% economic growth is stagnation! But yet Obama and the media told us that was the new norm. We had to accept it.

Some budget items are targeted for elimination. But overall, the total amount of money spent next year is not gonna be less than this year. There aren’t any “cuts,” okay? Serious reductions in the rate of growth — serious, in fact — in some of the agencies. But nevertheless the Democrats, they’re out saying, “It’s gonna kill people. People are gonna die! Trump’s murdering people! Trump’s killing people.” But here’s the thing: If this budget is going to be an albatross, if this budget is gonna kill the Republican Party, if this budget is gonna doom the Republican to defeat in 2018, why don’t the Democrats vote for it?

the way this works is, you’re sitting at home and you and your wife decide that you want a new car. You don’t need a new car, but you want one, and you and your wife say, “Okay, well, what are we gonna spend on it.” I’m just know I’m just gonna pick a number here.

“We’ll spend $30,000 on the car we’re gonna buy.” So they go out shopping. And they look at cars that cost 30, not happy, cars that cost 35, 50, 55. And they can’t make up their mind. And the wife eventually says, “Look, we budgeted 30 for this. We’re not going over.” So they find a car for $25,000, they buy that, and they think they saved $5,000, when what they’ve done is spent 25. They just spent 25 because in their minds they’re gonna spend 30. They didn’t. They save $5,000.

On the other end, you say you budgeted $30,000 for a car but you end up buying one for 50, you tell yourself, “Yeah, but did you see the list on it was 65. We saved $15,000 on this.” No, you just spent 60. “No. We saved.” This is classic the way the Democrats have — and it’s not just Democrats. Republicans play this game, too, baseline budgeting, current services baseline. That is the amount of money every budget item was allocated, not spent. That’s the key.

And there is a guaranteed every-year budget increase on what was budgeted the previous year. What was spent is never calculated. So if the agriculture department got a budget item of $24 billion doll, just to pick a number, then that $24 billion plus 10% is the budget item for the next year. But what if they only spend $20 billion? Doesn’t matter. Doesn’t matter. Current services baseline is what they were given the previous year that determines how much they’ll get in the next, not what they spent. There is no zero base budgeting in Washington. It’s one of the biggest scams to ever come down the pike. Well, 95% the American people don’t know it. You people in this audience do. You were first made aware of it back in 1990, what, 5?

Okay, so here’s Hillary last night. This was the Children’s Health Fund annual benefit.

HILLARY: This administration and Republicans in Congress are mounting an onslaught against the needs of children and people with disabilities, women and seniors. This budget shows an unimaginable level of cruelty and lack of imagination and disdain for the struggles of millions of Americans, including millions of children. (applause)

RUSH: So here you have a tired, worn-out, most cheated on female Democrat leader in history spouting the same, tired, worn-out lines. An onslaught against the needs of children and people with disabilities, women and seniors, unimaginable level of cruelty, a lack of imagination, a disdain for the struggles of downtrodden.

Yesterday afternoon, Capitol Hill press conference, Nancy Pelosi, leader of the Democrats in the House, a reporter said, “Do you feel that because this budget’s so extreme that now it’s gonna make it hard to pass the appropriation bill? And the rhetoric we’re hearing from the Republicans, that this is dead on arrival, too, this is such an extreme budget and not even the Republicans like it. What about that, Ms. Speaker?”

PELOSI: With all due respect in the world for the fact that some Republicans are saying this is dead on arrival. They voted for the Ryan budget. The Ryan budget contains many of these same things. It subscribes to their philosophy that Medicare should wither on the vine. So we’re talking about Social Security, Medicare and Medicaid.

RUSH: Are you kidding me?

PELOSI: This is a killer for the American people, literally a killer. And as long as the public is aware of what is in these budgets, and that’s the important point, they have to know there is a price to pay in terms of public opinion if they would vote for this. But they all did already vote for the Ryan budget.

RUSH: This budget’s a killer, literally a killer. Medicare, wither on the vine. That is a distortion that also goes back to 1995. I’m not gonna take the time to explain it to you. But Medicare withering on the vine, everybody’s out there promoting single payer and they’re claiming Medicare is withering. Nothing is withering away on the vine. That’s the problem.

You know the people the Democrats never see? I’ll tell you the people the Democrats never see. There’s Tim Kaine, “We see the people. The Republicans, they just look at numbers.” You know the people that Democrats never see and you know the people the Democrats don’t care one rat’s rear end about, and that’s the people paying for all their compassion, and that would be you, the taxpayer. You’re just a bunch of numbers.

And, by the way, they could hit you up any time they want and you pay up and you’re not gonna complain, you shouldn’t complain. You should feel fortunate the Democrats are using your money to spread their compassion around. And it’s a bottomless pit. They never think twice about asking you for more money. And they never think twice about accusing you of not paying your fair share.

They never think twice of accusing you of being the problem because you have a job and somebody else doesn’t. The Democrat Party never misses an opportunity to blame the achievers and the successful for the problems in America. You’re the enemy, as far as their voters are concerned. The Democrat Party, they may have compassion for people, but I’ll be damned if I can find people who are living better lives because they vote Democrat.

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