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Reid's Sleight-of-Hand Debt Ceiling Plan Guts Military

Posted By Baker Spring On July 27, 2011 @ 8:45 am In Economics | Comments Disabled

Senate Majority Leader Harry Reid (D–NV) introduced legislation to raise the debt ceiling this week. In evaluating his plans for future government spending, it becomes clear that budgeting for prudent defense is considered just another line item.

While Americans intuitively know that national security is unlike any other category of federal spending, it is often treated with inherent bias through insider budgeting methods.

Congress tends to selectively ignore what are called “baselines” used for comparing different spending proposals. This is convenient if a Member of Congress wants to generate more phantom cuts to appease a core audience—or, worse, to not take into account all of the military spending cuts that have taken place over the past few years.

A prominent example of this selective ignorance by Congress is seen in Senator Reid’s legislation, where he attempts to calculate cuts, or “savings,” from funding for overseas contingency operations (OCO): operations in Afghanistan and Iraq.

The Reid legislation funds America’s wars at the President’s revised requested level of $126.5 billion in fiscal year (FY) 2012. His bill then imposes a cumulative cap of $450 billion over the next nine years from FY 2013 through FY 2021. This mirrors the Administration’s placeholder amount for future war spending of $50 billion per year and bundles them together. The first gaping flaw is that no one, including Congress or the military, expects war costs to drop that significantly from $126 billion this year to just $50 billion next year.

Some around Washington are comparing the Reid legislation allocation for war spending to what is called the Congressional Budget Office’s (CBO) March baseline number. They are not the same. The CBO estimates funding for OCO through 2021 using a basis of the $159 billion funding level for the current fiscal year (2011), adjusts that for inflation, and then extends it at that rate on an annual basis over 10 years.

Whereas Reid “predicts” $50 billion for war spending 10 years from now, the CBO baseline says it will be $192 billion in FY 2021. Barring unforeseen circumstances, no one expects the figure to be that high. However, CBO is using a reasonable baseline to make future spending assumptions. More important, the CBO baseline projection allows for apples-to-apples comparisons of budget projections as part of the flurry of debt-ceiling-related spending bills—not budget gimmicks.

Most families in America will estimate what to budget for next year relative to what they are spending this year. It’s that simple. This is essentially how the CBO baseline forecasts, except that it accounts for inflation.

The CBO baseline is also applied to all other categories of federal spending. This is what allows policymakers to compare various spending proposals sitting on Capitol Hill.

The problem is that this does not apply to defense. When it comes to military spending, Congress uses whatever baseline a particular Member chooses to bolster his or her individual argument for defense cuts.

Because Congress effectively discounts the defense cuts that have been underway for years now, military spending has continued to lose ground. Defense has absorbed a lower percentage of the programmatic federal budget in every year since the end of the Cold War (FY 1992), despite the simultaneous pursuit of two major combat operations in Afghanistan and Iraq over the past decade.

Bottom line: The CBO baseline is being manipulated in response to Senator Reid’s legislation. The CBO baseline says that war spending from 2012 through 2021 is $1.757 trillion. Thus, the Reid legislation is imposing a $1.18 trillion “cut” in OCO funding against the CBO baseline.

This is an important budget distinction, because the proponents of Reid’s legislation want to leave the impression with American taxpayers that they are exercising spending restraint. But skeptics of this legislation may want to call them “phantom savings.” While this is technically accurate, even many critics fail to admit how much is being cut in defense relative to the same baseline used for all other federal spending. Why is the military being singled out?

It is very likely that Congress would ignore the CBO baseline comparison if the Reid legislation were signed into law. Congress would implicitly deem this $1.18 trillion reduction in war spending against the old baseline to be nonexistent. Instead, the new, lower number would be considered as the revised baseline.

Conservatives in Congress should consider this unacceptable so long as the CBO baseline comparisons serve as the starting point for proposals affecting all other categories of spending.

Congress may choose any budget baselines it wants, but it is wrong to adopt different baseline applications for different categories of spending—particularly when it disproportionately and negatively impacts the military.

The fact is that this selective manipulation of budget baselines is misleading the public about the extent to which the current budget process is prejudicial against defense. The American people should know that through Senator Reid’s legislation, Members of Congress are finally admitting how much it is already being cut from defense. Defense isn’t just “on the table”; it is contributing to debt reduction when no other federal agency is doing so comparably.

America should also know that Congress fully intends to use budgetary slight of hand to avoid acknowledging what it has done and not have to answer for the consequences.


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