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Budgeting 101

This year, your mom gave you $100 per year with which to rent movies. Which of the following is a budget cut?

a – Next year, you get $90.

b – You tell your mom the cost of movies went up, so you’ll need $110. She gives you $105.

If you picked a, congratulations. You understand basic math and home economics. If you answered b, you should apply for a job on the Knoxville News Sentinels’ editorial board:

We are in difficult times, but the budget cuts the Republicans made had less to do with the economy than with political power, and it showed a callous unwillingness to invest in the future of this great state.

Current budget is $27.8B. The governor proposed $30B. An increase is a bit odd given that revenues for the state are declining. No worries, says the governor, we’ll just run up the charge card. If my income is less, I spend less. Not more. The state should do the same. Those evil legislators want to cut $200M from it.

8 Responses to “Budgeting 101”

  1. Yu-Ain Gonnano Says:

    If the budget was 27.8B and it’s been “cut” to 29.8B from 30B then your option “b” is wrong: Your mom didn’t give you 100, she gave you 105.

  2. SayUncle Says:

    True. Updated.

  3. Weer'd Beard Says:

    I was trying to explain this to my Sister (who’s credit cards are in MY posession…two guesses why, and the first one doesn’t count) who’s all about the Hope’n’change.

    Seems a lot of people do math like this.

  4. DirtCrashr Says:

    That’s exactly how California Media, both TV and print, report on Teh Budjit.

  5. Yosemite Sam Says:

    The real question is why a state with a population of 5.9 million needs a budget of nearly 30 billion dollars. That’s almost double the NASA budget of about 17 billion and they put people in space and stuff. If the Tennessee legislature had any balls, they would cut the budget to 10 billion this year and 5 billion the next. This crap needs to stop.

  6. Sebastian-PGP Says:

    I would think you’d have to factor in inflation and cost of living increases. If COL was six percent, then yeah, $105 would still be a cut in net buying power.

  7. Yu-Ain Gonnano Says:

    Using CPI numbers from here Annual inflation (May 09 to May 08) is a negative 1.3%(deflation). Average annual inflation since 2001 is less than 3%. The budget raise from 27.8 to 29.8 is a 7.1% increase so whichever number you choose, it’s still a budget raise, not a cut.

  8. Harold Says:

    Note that this is also the way the budget is discussed at the national level; real cuts outside of the military almost never happen and there are few that don’t keep up with the official inflation figure.

    One term for this is “baseline budgeting” and it’s a large part of the game with the “stimulus” package (and probably the massive final FY2009 bill that was passed after it). Specifically Obama and the Congressional Dems are increasing the baseline as much as they can, with the expectation that the post-Watergate system going forward will be the same and therefore no real cuts will be possible in the future.