Does It Matter If the President's War Savings Are Fake?

Yesterday, I described the war savings proposed in the president's debt plan as "Washington's favorite budget gimmick." The administration is artifically boosting its plan's total deficit reduction figures by a little more than $1 trillion by telling the Congressional Budget Office to factor in savings that would likely occur even if the plan didn't pass. 

At The Washington Post, Ezra Klein argues that it's not very important whether the Obama administration's $1.1 trillion in war savings are "fake." After all, the issue with the savings isn't that they won't happen at all. It's that they'll happen no matter what. 

Instead, Klein suggests, the plan should be judged based on whether or not it effectively stabilizes the federal debt:

The real question for the president’s plan — or any plan — is whether it stabilizes the debt-to-GDP ratio at an acceptable level. If so, then it’s good enough. If not, then it’s not. That’s what the market cares about, and that’s what we should care about. According to the White House’s projections, their plan will leave debt-to-GDP at slightly above 70 percent in 2012.

Long-term debt stabilization is important. By that measure, though, the president's plan still isn't up to spec. In general, a stable federal debt is one that holds steady at less 60 percent of GDP. In the long term, that's going to require substantially slowing the projected growth of entitlement spending. The $320 billion in Medicare and Medicaid cuts the plan offers don't even come close. That's why the debt wonks at the Committee for a Responsible Federal Budget (CRFB) had this to say about the plan: 

[The president's plan] would not be big enough to bring down the debt to sustainable levels. Also, the plan does not make the kind of changes to entitlement programs that are needed to stabilize the debt over the long-term, and completely avoids offering solutions for Social Security reform.

Yesterday, CRFB President Maya MacGuineas told The Washington Post that the administration's plan “doesn’t produce any more in realistic savings than the plan they offered in April." The White House, MacGuineas said, "filled in details, repackaged it and replaced one gimmick with another. They don't even stabilize the debt. This is just not enough.”

Of course, when it comes to debt and deficit reduction, the Obama administration has never offered enough. Back in 2010, then-budget director Peter Orszag admitted to Rep. Paul Ryan that the president's budget didn't actually hit the administration's own deficit targets without the aid of the president's deficit commission—a commission whose eventual recommendations the president has essentially ignored.

The larger problem with the war-savings claim is that it gives the sense, yet again, that the administration is intentionally trying to mislead the public about its budgeting, especially since the Obama team ran on a promise to eliminate budgeting BS and be straight with the public about the deficit. I doubt most people hear that the president has a proposal to cut the deficit by $4 trillion and immediately think, "Ah! So the president has a proposal to reduce the deficit by $3 trillion through taxes and other reductions from baseline spending projections, plus tell the CBO to account for $1 trillion or so in war savings that were already expected to happen." 

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  • ||

    My God! Obama's incompetence knows no bounds. Did he actually think the GOP would let this slide by? If not, did he think the public would be happy about being intentionally misled? This man is incapable of running a 7/11 and we're stuck with him running our country for another year and a half...with the threat of another four years after that.

  • ||

    Even if all four trillion in cuts were real, who believes that's enough to avoid disaster? We are piddling around the edges.

  • ||

    It matters if they are fake for two reasons:

    (1) They are being used as political cover for an equal amount of tax increases.

    (2) They will happen, or they won't based entirely on dynamics that have nothing to do with budgeting. So they shouldn't be counted.

    If they happen anyway, well, let's all get together and decide what to do with the peace dividend. But planning for them, that opens the door only for more pain when they don't fully materialize.

  • ||

    I'd say they're being used for cover to refuse cutting medicare and Social Security in any meaningful way. Everyone knows this must be done -- simple math and all -- but Obama is beholden to the hard left's refusal to consider touching the entitlements that are bankrupting us.

  • kilroy||

    So if the savings are theoretically in the future, how do you make sure they don't get counted again in the next big budgeting scam?

  • Tony||

    Typically, not a word on the employment crisis, which if not resolved will lead us to forever chasing debt until there's nothing left to cut. Almost as if that's the point.

  • ||

    Oh, so stripping megabucks out of the private sector is the solution to the "employment crisis"?

  • MJ||

    RC, you are thinking too small. it is giga & terabucks we are talking about here.

  • sevo||

    "will lead us to forever chasing debt until there's nothing left to cut"

    Hey! Shithead has a good idea!

  • Scruffy Nerfherder||

    Yeah, let's tax so we can spend it and tax it again and then spend it and tax it again.... It's pure genius!

  • Gilbert Martin||

    Seeing as how neither you nor anyone else is the least bit capable of proving that any government on earth has ever created so much as one single job on an overall net basis, there really isn't any reason to mention.

  • Tony||

    I went to a public school. Every one of the employees there was paid by government money. There, proved.

    What you can't prove is that a laissez-faire economy will provide full employment and a strong middle class.

  • Tman||

    Pete Suderman: Reading Ezra Klein so you don't have to.

    Thanks Pete!

  • Jerry||

    And the Bush tax cuts will also expire no matter what, Ezra?

  • Brett L||

    That's different! For reasons that nobody cares to explain other than to mumble something about 'paying their share'. How about quit spending double everyone's current share fisrt?

  • sevo||

    "Bush tax cuts" = not taxing even more.

  • Dylan||

    I have an idea. Instead of cutting from the budget we have now, let's start from zero and let our senators and representatives add from there, up until we get a balanced budget.

    Here's how I'd do it:

    Total budget $2.1T

    Each rep gets $1.05T/435 = $2.4B
    Each Senator gets $1.05T/100 = $10.5B

    They each choose which program(s) they want the money to go to, whether its defense, medicare, paying off the debt, foreign aid, whatever.

    Bam. Budget balanced and we get a crystal clear view of where each congressman's priorities lie.

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