When are funding cuts real?

An old dispute in the political world keeps returning, and it is now back in spades in the Obamacare fight. When are funding cuts real?

Let’s take an analogy that might strike a bell personally. Suppose you are a highly valued employee and are accustomed to receiving a generous 10% salary increase year after year. Then suddenly your employer tells you that business conditions have worsened so that all you can expect for the foreseeable future is a cost of living increase. This year that will be about 2%. Did you just get a salary cut?

Can a loss of anticipated salary accompanied by an actual increase be seen as a real loss? Many people would think so. They might argue that without the change they would be richer, so obviously the change hurt them financially. Impartial observers might respond, “Wait a minute. Won’t you actually earn more even after the change? How can that be a cut?” In other words, is it reasonable to “bank an expectation”? Which viewpoint seems more valid to you? I am honestly torn on this question. I see some validity in both views.

Politicians argue this point vociferously whenever changes are proposed that reduce future spending on a government program. A concrete example from the Obamacare issue is what Republicans are proposing to do to the Medicaid program. Are they cutting it or not? Here is the actual projection by the Congressional Budget Office.

On this question, the award-winning Politifact site says that the Trump administration claim that Medicaid isn’t being cut is “mostly false”. However they are really addressing an important but peripheral issue rather than the funding itself. Their conclusion is based on eligibility changes. Their argument is that regardless of how much you spend, if you eliminate some prospective recipients, then it must be viewed as a cut. That is a reasonable position, but I am not so sure it is germane. How funds are distributed is quite distinct from how much is allocated. Each aspect can and should be assessed separately.