JONATHAN CHAIT JULY 25, 2011
The next step in the debt ceiling showdown appears to be the release of the Senate Democratic proposal. Harry Reid is preparing to include large savings from the drawdown of the Afghanistan war, and Republicans are preparing to call this a gimmick. The Washington Post reports:
[P]eople familiar with the months-long search for a debt-reduction compromise said that hitting such a large target without raising taxes or cutting entitlement programs would probably require Reid to rely heavily on savings from ending the wars in Iraq and Afghanistan — a figure budget analysts said could easily amount to more than $1 trillion over the next decade.
Counting money not spent on wars that the nation is already planning to end is widely viewed as a budget gimmick, and House GOP leaders have been reluctant to include it as savings.
Republicans may have been "reluctant" to include it as savings, but their budget did in fact include it as savings:
What’s the difference between what Chairman Ryan claims and what his plan really does? The chairman claims that his plan generates $5.8 trillion in spending cuts over ten years, relative to the Congressional Budget Office (CBO) baseline. But that number falls by $1.5 trillion — to $4.3 trillion — once one corrects for two things:
$1.3 trillion in “savings” from the official CBO baseline that comes merely from the fact that the Ryan plan reflects the costs of current policy in Iraq and Afghanistan. The CBO baseline contains a large anomaly related to the costs of the Iraq and Afghanistan wars. Following the rules governing budget baselines, CBO’s baseline mechanically assumes that current levels of U.S. operations — and costs — in Iraq and Afghanistan will continue forever rather than phasing down in accordance with current policy. The CBO baseline figures are thus much higher than the costs of current policy. Ryan himself said earlier this year on National Public Radio — in attacking President Obama’s 2012 budget proposal for not doing enough to reduce deficits — that simply showing the costs of current policy in Iraq and Afghanistan produces “phantom savings” from an anomalous baseline, not real deficit reduction.
Maybe the GOP budget should have had a category distinguishing reluctant savings from enthusiastic savings.
As CBPP points out, we've already gone through this dance one time. President Obama included $1.3 trillion in phony savings from Afghanistan, then Paul Ryan attacked him for it, and then Ryan used those same savings. Now it seems we're going to continue the cycle.