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!