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  • Note to Congress: Swear Off Phony War Savings, Now and Forever

    Though the idea has been thoroughly discredited, the President and Members of Congress are still considering a large, thoroughly bogus “savings” option to help cover their profligate spending: They intend to claim war spending that was never going to be spent as “savings”—and then spend it on something else. It is one of the most embarrassingly transparent gimmicks in town, and it should be shunned permanently.

    The alleged “savings” come from a reduction in estimated projected spending on U.S. activities in Iraq and Afghanistan. But those activities—termed Overseas Contingency Operations (OCO)—already are winding down. The projected spending does not exist, and never will exist—and therefore neither do the “savings.”

    These Twilight Zone savings are only an artifact of the way the Congressional Budget Office (CBO) estimates future spending. As explained yesterday in a blog post by CBO Director Douglas W. Elmendorf:

    CBO, in its baseline projections for OCO spending, follows the rules set in law for projecting discretionary spending—that is, it projects appropriations in future years equal to those in the current year, with adjustments for inflation. But that is just a baseline projection; the funding has not yet been provided, and there is no “OCO fund” set aside in the Treasury from which resources can be drawn in future years.

    That is typically mild CBO-speak for: “You can’t be serious.”

    But the President and lawmakers are in a bind. They are trapped in several budget crises of their own making, and now need a deus ex machina to escape. The President wants the “savings” to spend on more Keynesian-style economic stimulus. Members of Congress want them for at least two other options: to pay for the “doc fix,” which they have adopted year after year to prevent a sharp plunge in payments to Medicare physicians, or to help finance a bloated transportation bill. But to say it again, these savings do not exist. Therefore, they cannot reduce the deficit, and they cannot offset more spending. End of story.

    President Obama has attempted this trick before, starting with his first budget, so he could claim large savings by proposing to spend less than those amounts. He used it again in his September “jobs” proposal. Senator Harry M. Reid (D–NV) made the same attempt in last year’s debt limit negotiations proposal, only to see the bogus savings lambasted by principled Members of Congress who can recognize a gimmick.

    It is bad enough for the President and Congress to claim completely unreal savings. Even worse is when they then turn around and plan to spend them. Enough is enough. Congress and the President should give up the fakery, take the budget seriously, and find budgetary savings that exist in the real world.

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    7 Responses to Note to Congress: Swear Off Phony War Savings, Now and Forever

    1. steve h says:

      At least this president has put the war costs on the books – whch the previous president refused to do. I also feel that Heritage and conservative policymakers have no standing when it comes to deficits and debt. I urge your readers to enter 'surplus' into the search box in the top right – and see all the pieces from 1998, 1999, 2000, and 2001 saying that we should not use the massive new surpluses to pay down the national debt and instead should create new large tax cuts. It's amazing how just a decade ago you said we shoudl not be paying off the national debt and paying off the debt too soon is dangerous – and now everything is about deficit and debt. Just shows how silly some of these statements are.

    2. Stirling says:

      This is a perfect example of the phrase "You know your finances are in bad shape when…" The big problem is since they have been reduced to such shaddy accounting, financially this should tell us that we are in worse shape then we are being told.. Can you say "Enron?"

    3. Lloyd Scallan says:

      It gives the Dems and Repbs cover. That why they will never "swear off".

    4. Wildcat, D-Town, PA says:

      Part I of 4 parts: When it comes to alleged savings on the federal level due specifically to cuts in military spending including the drawdown of forces Americans get taken advantage of and our national security quickly heads into jeopardy. And that does not take in account for abrupt change in the lives of those serving in the Profession of Arms that already have 10+ years in who planned to make it their first profession in adult life. There is nothing like being about 3/4th of the way to your first allowable retirement with benefits. A high number got forced out in 1992 with the alleged “Peace Dividend” that Congress quickly spend elsewhere albeit after having being briefed by different services and their private organizations concerning the emerging threats primarily from terrorism.

    5. Wildcat, D-Town, PA says:

      Part II of 4 parts: Under Clinton, for example, in the Army we suffered a 49% cut in active duty divisions and a corresponding 52% cut in reserve component divisions! Those political decisions were a function of the misperception of monetary savings only. Later the services ended up giving commissioned officers large bonuses to stay in and promotion rates from Captain to Major went from about 35% or 40% to 98% and the rate from Major to Lieutenant Colonel went from 22% to 96%! Previous to this only enlisted soldiers had an opportunity for a “re-enlistment bonus” based upon the needs of the service (to handle shortages) and officers had to make it thru tighter and tighter screens in order to retain and reward the best of the best, not move the cattle along the path upward en mass.

    6. Wildcat, D-Town, PA says:

      Part III of 4 parts: I understand budgeting for routine operations and maintenance of military forces should be a cost projection that is reliable however, budgeting for the conduct of war is something else. That is especially true when something like 9/11 happened. Even if you wanted to budget for the Global War On Terrorism (GWOT), when you consider the one identifying group that delivered that evil upon us how long do you plan to budget for it? Do you plan on simply destroying the terrorist training camp (or camps) where they were but were not when we destroyed them or do you plan to engage and kill the enemy that follows a religion that directs them to conduct combat on us (as infidels) regardless of their affiliation with al Qaeda, Taliban or other Islamic based terrorist organization? Perhaps the Congress should create a war contingency budget that is kept at the U. S. Treasury in escrow during periods of peace and tapped only to cover our cost of direct action. If money was planned and put aside similar to a sinking fund used to replace worn out equipment, we would not begin spending money that we don’t have when those times arise.

    7. Wildcat, D-Town, PA says:

      Part IV of 4 parts: Our national security situation has not improved since the close of combat operations in Desert Shield/Desert Storm and has degraded precipitously since Obama has entered office. We do not need to cut our defense budget and abilities as much as we need to restructure forces to handle the incursion along our southwestern border and along our coasts. On the land side we need more Cavalry and forces to support their target acquisition results with aviation, light and highly mobile indirect fire support. The primary U. S. Military force designed to protect our shores from smugglers, drug traffickers and pirates is the Coast Guard. That is our smallest and least offensively equipped force which needs to be grown dramatically in all aspects to counter emerging threats. After all, providing for the common defense is a Constitutional requirement, not one that could be done after all “unconstitutional” entitlements are paid for.

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