New Congressional Budgeting Plan: Use Savings From Cutting Imaginary Spending to Pay for Real Spending


Counting savings from projected war spending is Washington's favorite budget gimmick, and both Republicans and Democrats have used the ploy to beef up the official deficit reduction tallies on various budget plans. The trick is simple enough: Thanks to a quirk in its budgeting rules, the Congressional Budget Office assumes that annual war spending will continue at the 2011 rate of $159 billion a year and cost $1.8 trillion over the next decade. But no one in either party expects war spending to continue at those levels; the Obama administration has already said it expects war costs to drop by $50 billion this year. That leaves a little more than $1 trillion over the next decade that's built into the budget, but that no one expects will actually get spent. "Cut" that spending, and you "reduce" the deficit by the same amount—despite the fact that the spending was never really going to occur. It's a trillion dollar deficit freebie. 

But why does it have to be used to reduce the deficit? Some members of Congress have asked the same question, and are now considering a different plan: Instead of congratulating themselves for cutting the deficit by zeroing out spending that was never going to happen, they're considering using the "savings" from cutting that imaginary spending to pay for other (real) spending—on the Medicare "doc fix." Via Sahil Kapur at TPM:

House Republicans are coming around to the Democrats' plan for permanently ending the Medicare "doc fix" problem — a $300 billion and growing albatross around the nation's neck that virtually everybody believes needs to be fixed. The option is now on the table, key Republicans tell TPM, just one month after some of those same lawmakers dismissed it as a senseless Washington gimmick.

Last fall Democrats began pushing the idea to pay for a full repeal of the Sustainable Growth Rate (SGR) formula with war savings from troop drawdowns in Iraq and Afghanistan. Republicans didn't much care for it, but Senate Minority Whip Jon Kyl (R-AZ) hopped on board during the Super Committee negotiations, and has since been working behind the scenes to win GOP support.

Rep. Phil Gingrey (R-GA), the co-chairman of the GOP Doctors Caucus, which leadership usually defers to on this issue, last month slammed the war savings offset as "funny money" and a "Ponzi scheme." But Tuesday after the State of the Union, he was singing a different tune.

"The SGR — we need to come up with the money to bring the baseline back to zero," Gingrey told TPM. "The Overseas Contingency Operation fund [the OCO], you know, could we consider using that money as an offset? I want to look at that very closely. There's a lot to say for that."

"You might say that using the overseas contingency fund is a little bit of smoke in mirrors, but quite honestly, the SGR is smoke in mirrors," he argued. "Let's trade one flawed system for the other, if you will. Let's bring it back to zero, and start fresh, and do the right thing."

It's like a game of budget gimmick twister! 

Lots more on Washington's never-ending attempts to "fix" the doc fix here and here

NEXT: Work for!: Deadline Extended

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  1. Please. Just give me the budget, a box of red pens, some scissors, and an incinerator.

    1. Every time I read anything about our taxes, budget, actual spending, I realize how fucked we are and feel a bottomless pit of despair open up inside me.

      1. Yeah. This is bad bad bad.

        1. The seriousness of this, the possibility that we may actually be facing an economic disaster, makes me wonder why so many in the GOP oppose Paul. Sure, he’s not a war guy, but he’ll honor our treaty obligations and can’t just turn the clock back all the way. But if our economy crashes, we’re in trouble on that score, anyway. No other candidate is going to take significant, let alone substantial, steps to solve the critical problems facing us today, none of which are bands of terrorists around the world. This ain’t the Cold War, folks.

          Our government is too big, too invasive, and too expensive. This has to change, and soon. Maybe we can get away with it for a few more years, but we’ll reach the point where even dramatic steps may come too late. The time to act is now.

          1. The problem hasn’t attained critical mass yet and therefore doesn’t warrant a serious response from the media.

            Of course, when it is too late, the media will say “Nobody saw this coming!”

          2. I cant find a non-Paul republican who cares.

            I asked one the other day why, if Paul’s financial ideas are so good and his foreign policy is the only problem, none of the other GOP candidates have adopted it?

            The answer was pretty much not one.

            1. The problem is deeper. People don’t understand economics and its impact on their lives. Fuck, they don’t even teach economics in government high schools anymore. People have been bred to think it’s a boring subject, and one that can’t be figured out by mere mortals.

              1. In California,graduating seniors are required to take a single semester of econ. But that econ class ends up being 4 weeks of personal finance, 4 weeks of basic micro concepts, and 4 weeks of basic macro concepts.

                The problem is that the teachers don’t know jack about econ and end up presenting the personal finance, macro, and micro concepts with no discernible structure to them and mashed together in a way that makes the field seem impenetrable.

          3. NRO had a piece the other day claiming that Paul was weak on entitlement spending. Now, admittedly, he’s actual run on a “let’s cut everything else first” strategy that seems either willfully blind to the magnitude of entitlements or politically calculated not to scare granny. But it’s actually the most fair criticism I’ve seen from the GOP. That said, based on his philosophy and history as a legislator, I have far more confidence in RP to make a dent in entitlements than I do any of the other GOP frontrunners.

            1. NRO had a piece the other day claiming that Paul was weak on entitlement spending.

              Gingrich, Romney, and Santorum have signed a pledge to cut entitlement spending as part of the first round of cuts? I must have missed it.

          4. As bad as the economics are, it is the fact that lady liberty is getting f*cked in the as*, mouth, and p*ssy, as well as the nostrils and earholes.

            Try to have a serious conversation with someone about the IDEA that the constitution restrains government….somehow, in someone. The average citizen thinks its a commie idea…

    2. You’ll need some firing squads before you’re done.

    3. the pens and scissors are just for you to play with after throwing the budget in the incinerator?

      1. I was going to make some of those paper angels for my little girl.

        And I’d leave in some of the budget. I’m a minarchist, not an anarchist. But we’re talking a lot of cutting and inking. A lot.

        1. Come over to the dark side, ProL. Throw that budget in the incinerator. Let the hate flow through you.

          1. No, I’ll never join you! [Throws budget in incinerator while ranting.] Oops.

            1. [Throws budget into functionally-questionable bottomless shaft]


              1. If I’m a galactic emperor, there won’t be any major drops or dangerous pathways to generators or exhaust ports in my quarters. Even if I’m a Force master of some sort. It’s just common sense.

                1. not even a trap-door-to-shark-tank arrangement?

                2. The list has been covered.

                  1. consider that list added to my list of important lists.

                    1. nine minutes late.

                    2. Peter is a wise man. People should hire him before building evil fortresses and hiring minions.

                    3. hiring minions.

                      I’m starting an Evil Temp company as we speak.

                    4. For some reason a temp agency for evil minions doesn’t sound like a real money maker.

                    5. the evil minions end up dead, so you don’t have to pay them. just make sure the overlord pays you before his demise.

                    6. Unless they’re union minions, wylie.

        2. I wasn’t making the assumption that there would be no budget, just that starting over from scratch would be easier.

          1. That’s a valid point. I amend my request to include a PC, a laser printer, and some blank paper. I won’t need too much.

            1. no, no, and no.

              Stone tablets and a chisel. If it’s worth putting in the budget, then it’s worth taking the time to do it right.

              1. Not a “laser” and sheets of gold?

                1. I’m trying to be economical. Carving the budget into gold seems like as far as you could get in the opposite direction…

                  “Oooo, what if we ion-implant gold text into a diamond substrate!”


                  1. They might take gold pages more seriously than paper ones.

                    1. might? not enough justification for the expense.

                    2. I have a cunning plan. I’ll etch sheets of some material that has a really short half-life. So short, in fact, that the material will be gone in one year.

                    3. I do believe either of the major parties could supply your needs.

  2. The double entendre of the Twister box is very powerful.

  3. Plus, the Mobile Monster is still voraciously swallowing new threads. Save us, Godzilla!

  4. so, do they get to keep the Trillion Dollars In Savings after they spend it? I’m just going to assume a “yes”.

  5. Not spending money we weren’t going to spend anyway (the no-mo-war savings) is magically transformed into a new funding source?

    I wonder how many times the no-mo-war savings will be spent?

    With both sides of TEAM STATE now on board, its inevitable that it will be spent at least twice.

    1. If we are just going to take the money we were spending on the war and spend it elsewhere, that kind of puts lie to the whole “the wars make us broke” thing doesn’t it?

      No, our spending habits made us broke. We just happened to spend some of it on wars.

      1. No, No, No. Its INVESTMENT.
        for example, I was wasting a ton of money on crack cocaine and crack hos…
        Now I am drinking cognac and boinking high class hookers, my finances are in much better shape…sure, I am spending oodles more money, but it is better spent…

    2. I wonder how many times the no-mo-war savings will be spent?

      1st time: funding SS obligations
      2nd time: funding healthcare obligations
      3rd time: Mo War
      4th time: Michelle’s next vacay
      5th time: funding expanded teacher and school administrator pensions
      6th time: Mo Mo War
      7th time: any War that was left out of 3 or 6
      8th time: the next ten years in Afganistan (not a war, so it get’s it’s own turn at that nonexistant money.)
      9th time: paying me to come up with more rounds of spending the same nonexistant money.

    3. I imagine they will start another war (Iran maybe?), spend a couple trillion on it, and then when it’s over we’ll be able to “save” more money but stopping spending on it.

  6. re: the latest spammer

    bisexual and bi-curious

    for the people who have the same sexual orientation

    what “same”?

    is it too much to ask for internally consistent spam?

  7. Here is the dirty secret of the whole thing. You could cut almost all of the bureacracy and no one other than the politicians and the people who lost their jobs would notice. That is why the politicians and the media are always so terrified of a government shut down. They know if it went on for a while people would finally realize what a waste all of this is.

    1. I kind of doubt that. I think all the people getting Medicare/Medicaid benefits (including the doctors and hospitals), the people getting SS checks, the people getting food stamps and other welfare, the people getting education loans (and the schools), and the contractors and grantees and their employees no longer getting contracts would notice. That adds up to a ton of people not getting a lot of money.

      1. Those things are not the bureaucracy. I am not talking about entitlements. I am talking about the rest of the government.

        1. Who do think makes those payments?

          1. subcontractors?

            1. A significant chunk of the federal bureaucracy (pretty much all of DOE, HUD, HHS-CMS, HHS-NIH VA, the acquistion corps of DoD etc.) is involved in making payments, auditing payments, awarding contracts and grants, etc.

      2. You missed the part about “almost all
        ” the bureaucracy, didn’t you?

    2. I agree with you John. The MN state shutdown last summer broke down when it became clearer and clearer how intrusive the government was.

      When the shutdown went into effect, the only noticeable changes were rest stops being closed, no lottery and state parks being shut.

      As the shutdown went on it became apparent how much paperwork the government generated. For example, Coors couldn’t renew their license because of the shutdown so liquor stores couldn’t sell their inventory of it.

      Also businesses couldn’t buy their liquor cards or cigarette stamps so they had to stop selling booze and smokes.

      Popular opinion was really swinging against the guv as people realized how mafia-like the licensing arrangements were.

    3. The dirtier secret is that you could literally eliminate all of those federal jobs and still not be at a balanced budget based on the ridiculous cost of entitlements.

      Without entitlement reform, nothing else matters. With real entitlement reform, we could actually afford all these stupid wars, federal funds to study the australian bumfuck kiwi, and funding for artists throwing santorum over images of the lying whore who claimed to be a virgin Mary.

      1. btw, saying we could afford all of those things is not an endorsement of spending goddamned money on any of them, for the record.

      2. The rest of it does matter. The bureaucracy does all sorts of adverse things to the economy. And regardless, you have to start somewhere.

  8. Think of government like a giant hand.

    It hovers over you to make sure you don’t get to high for your own safety.
    It waits below you to make sure you don’t get hurt if you fall.
    It gets in front of you to make sure you don’t go too fast for your own safety.
    It pushes gently from behind to make sure you don’t fall too far back.

    The sum total of its existence is to keep you from actually living your life. It’s the hand that provides loving control, for your own good.

  9. The other thing about all these CBO deficit numbers is that they assume a ton of revenue that’s never going to happen. The biggest is the planned expiration of the Bush tax cuts at the end of 2012. CBO is figuring in $3.7 trillion of revenue over ten years assuming they will expire. Second, they include revenue from the AMT unadjusted for inflation, but Congress keeps patching it each year and will continue to do so. The AMT overstates revenues by about $450B over ten years. They also assume that the estate tax exemption will drop to $1M next year and beyond, which it won’t. That’s another $80B or so.

    1. Not nearly enough. Liberals know they’d have to push for more tax hikes, and they’re just sugar-coating things until they spring it on the hated segment of people who make more than $200K a year.

      1. That’s my point. Even after assuming over $4T of revenue that won’t happen, they still show ten year deficits of $10T plus.

  10. I think we should be allowed to report our taxable income based on Congressional accounting rules.

    1. Awesome. So when I get a raise that is less than I expected, I actually lost income and I get a deduction!

  11. Its just like dieting. I start with a baseline (aka “waistline”) and assume growth of 10% calories, which I cut – draconially – by 70%!!!!
    That means in ten years I will only be 600 pounds heavier….
    Hmmmm….I don’t understand why this diet isn’t working…..

  12. Ohhh! My head hurts just reading this article! I have now become more stupid from trying to figure out the convolutions through which these politicians will go to make any sense to themselves. I’ve no doubt some of them think they’re so smart because they actually understand what everyone is talking about!
    I know I’m just preaching to the choir, none of the strange people inside the Beltway would ever read this, but how about just estimating the next year revenues, then decide how much each program will get of that amount?

  13. is this kinda like the whole covering the moon with yogurt plan tha Paul Ryan referred to?

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