Budget Concepts Do Matter
Budgeteers have long argued that baselines matter. You have to know where you are going before you decide where you should be. We use baselines as benchmarks to assess the costs (or savings) of various changes in the law, and we use them to enforce certain budget rules (such as PAYGO) designed to ensure new mandatory spending and tax cuts are fully offset. Usually, though, what the baseline should look like is a budget geek discussion.
“On January 26th the Congressional Budget Office (CBO) will update its “baseline” estimate of federal program costs, including those for student loan programs and Pell grants…The student aid bill, however, hinges on a favorable estimate from CBO. The March 2009 baseline showed some $87 billion in savings would be achieved over 10 years by eliminating FFEL and making all federal student loans through the Direct Loan program -- savings that can be redirected in a budget neutral manner to other education programs, including Pell Grants….The alternative estimate done with CBO’s January baseline will certainly be less favorable to the bill’s supporters and, unfortunately, hand a legitimate argument to the legislation’s opponents. Specifically, the new spending programs will cost more and proposed savings will be less.”