Early next week, the administration will reveal its latest plans for federal spending in the next fiscal year (1986) and in following years. The guide below might improve your understanding of what is actually being proposed. Important Terms:
Budget cut: Depending on the program being "cut," this can mean either that the program is being reduced sharply, cut by about 4 percent a year or given another big increase. For further aid in distinguishing between these definitions, see "freeze," "freeze-plus" and "defense cut" below.
Freeze: This term applies only to domestic programs. The program is not to spend any more dollars than it did in the previous year. Since the cost of the things usually rises, the program must curtail benefits or services by enough to offset inflation, about 4 percent next year.
Freeze-plus: The term applies only to certain domestic programs. The program is to be reduced by anything from 5 to 100 percent ("zeroed out").
Defense cut: This term actually means an increase of about $30 billion -- not quite as big an increase as would be needed to buy everything the Pentagon might want.
Inflation savings: This is an adjustment to account for the fact that inflation wasn't as high as previously estimated. It has no real effect on the budget deficit, because lower inflation also means lower revenues.
Management reform savings: This is the difference between identified program cuts and the amount needed to meet deficit-reduction targets.
Increase in unallocated offsetting receipts: This is the same as management reform savings. Frequently Used Statements:
"This budget will at last put the deficit on a declining path." Correct interpretation: "The deficits we are proposing are much bigger than any requested or experienced by previous administrations. We didn't even meet the deficit-reduction target set two months ago. But if you believe Congress will make all the ghastly cuts in domestic programs that we're calling for and that the economy will keep on growing without a pause, there's a chance that, a few years from now, the deficit will be slightly smaller than it currently is."
"Congress is to blame because the deficit is still so large." Correct interpretation: "Congress authorized just about the same amount of spending that the president asked for, and it actually cut the deficit by raising taxes somewhat. But it didn't spend the money exactly as the president wanted."
"Administration Proposes $50 Billion in Budget Cuts." This is frequently used in White House press releases. It has no definable meaning (see "budget cut" above). Seldom-Used Phrases:
Bottom-line deficit: That's the figure to keep your eye on (if you can find it).