Baseline budgeting says that the budgetary estimate of government spending in any fiscal year is automatically assumed to continue at pre-ordained rates of expansion in all subsequent years. This definition, boiled down to its least common denominator, means that spending never decreases from one year to the next.
Say the federal government has a program to teach self-esteem, motivation and marketable job skills to debutantes. Call it DebSelf. And say that congress has authorized $100 million in 1990 DebSelf funding. 1991 budgeteers would then factor in 5 percent for inflation, not a 10-percent increase in the population of girls who had coming-out parties in the Standard Metropolitan Statistical Areas' civilian labor force, assume a 10-percent increae in DebSelf program utilization based on Census Bureau surveys of cotillion-ball activity and give DebSelf a $125 million baseline. (Note that using the current services baseline reasoning, DebSelf grows to be a $10 billion program in twenty years.)
Update: A minor case of link rot appears to have afflicted this post. The link to the Intellectual Conservative no longer takes you to the post. It can now be found at Philadelphia Speaks.