War savings loom large in debt debate

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War savings loom large in debt debate

Post by ToddS on Wed Jul 27, 2011 8:28 pm

War savings loom large in debt debate

By Stephen Dinan and Kara Rowland


The Washington Times

8:03 p.m., Wednesday, July 27, 2011

The White House on Wednesday said it is reasonable to claim future savings from wars in Afghanistan and Iraq that already were winding down, saying that President Obama should get credit for “policy decisions” to end those conflicts.

All sides are seeking a compromise to raise the government’s $14.29 trillion borrowing limit before Aug. 2, but they also have committed to offsetting every dollar’s increase in debt authority with a matching dollar decrease in future spending. That means the question of lower war costs looms large: if they are considered legitimate savings, it buys more room to raise the debt limit.

The White House said because Mr. Obama has called for ending the wars, he should get credit for reduced spending, too.

“The savings gleaned by winding down the wars in Afghanistan are savings created by policy decisions,” White House press secretary Jay Carney told reporters. “If you’re asking me, you know, are we going to save a trillion dollars because of the policy decisions that this president made, I’d say yes.”

Senate Democrats included those savings in their debt-limit bill, calling for a limit of $450 billion on war-spending over the next decade. On Wednesday the Congressional Budget Office said that means at least $1 trillion in lower spending over the next decade, which coupled with other spending cuts left Democrats saying they can raise the debt limit by well more than $2 trillion.

But House Republicans said counting on savings that everyone expected anyway amounted to “smoke and mirrors.”

“In reality, the Reid plan would only save taxpayers about $1 trillion while giving the president the largest debt limit increase in history,” said Michael Steel, a spokesman for House Speaker John A. Boehner, regarding the plan proposed by Senate Majority Leader Harry Reid, Nevada Democrat.

The House GOP’s newly revised bill, by contrast, includes $915 billion in spending cuts and a $900 billion increase in the debt ceiling.

With both sides having ruled out tax increases and settling on about $1 trillion in lower discretionary spending over the next decade, the chief sticking points are over reductions in mandatory spending, action on a balanced budget amendment to the Constitution and on whether war costs count as savings.

Though all sides acknowledge war spending will decrease inevitably, Democrats are able to claim the future savings because of the way CBO evaluates bills.

The nonpartisan agency is required to assume that current policies will remain in place and grow with inflation. That is called the “baseline,” and any changes are measured against it.

In this case, Democrats’ directive that total war-spending over the next decade be limited to $450 billion means spending would be $1 trillion less than if current troop levels were maintained for the next 10 years in both Iraq and Afghanistan.

In one sense, though, Mr. Obama is only able to claim savings because his short-term troop surge artificially inflated spending, which then got built into the baseline. The president said he always intended the surge to be temporary, but under its rules, the CBO has to assume the $30 billion-a-year cost would continue every year for the next decade.

By surging troops, the president created the shadow of hundreds of billions of dollars in future spending that he never intended to spend, but is now calling savings.

In Iraq, Mr. Obama has hewed to a 2008 agreement struck by the Bush administration to end the combat mission in Iraq. That operation ballooned the federal deficit in the previous decade as spending regularly topped $100 billion a year.

Budgeting for wars is always controversial.

President George W. Bush regularly excluded war costs from his budget and instead submitted supplemental spending bills, specifically to avoid having the costs built into CBO’s baseline. He argued that the war wasn’t a recurring cost, and spending depended on conditions on the ground.

Democrats roundly criticized his budgeting at the time, arguing it hid the costs of the war.

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“We have the wolf by the ears, and we can neither hold him, nor safely let him go. Justice is in one scale, and self-preservation in the other.”

Thomas Jefferson

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