A budget can still be "cut" while growing against inflation though. They also refer to a cut compared to projections, and the projections are usually to increase the budget faster than inflation.
While I am sure that dishonest reporting does go on in some cases, a possible explanation for that phenomenon is that many services have to scale the budget not only by inflation but also by population. For example, the health service might have a fixed cost per person and so their overall budget growth could be inflation+population growth
Mostly because when inflation ajusted they are in fact stagnant[1]
That is to say, all of the profits from technology and automation in the last 40 years or so have gone to the owners of capital. How you interpret this or propose to 'solve' I won't comment on.
It's closer to 50 years than 40--since about 1970.
I'd say it's the capital-owners' problem to solve, since everyone else can still afford to buy/build weapons. They may sometimes forget that the veneer of civilization is paper thin, when their veneer has gold leaf on top of it.
At least this is the understanding I have usually been given.