Budget Background

News reports appear to confirm that, as laid out in the State of the Union address, President Obama’s budget will propose using caps on war spending as a gimmick to either “offset” new spending or reduce the deficit. This offset is an accounting trick because it claims artificial savings from money that would never be spent in the first place.

  • The Congressional Budget Office’s August 2011 baseline assumed that war spending (overseas contingency operations or “OCO” spending) would grow every year from the $159 billion provided in FY 2011, and would cost $1.8 trillion over the FY 2012–2021 period.
  • But OCO funding will never reach these levels. Such spending for FY 2012 is $127 billion, a decrease of $32 billion from the previous year. Projecting spending from this new lower level would result in approximately $400 billion less in war spending than the amount shown in CBO’s August baseline.
  • Barring any unforeseen event, OCO spending will remain on a downward trajectory and any “savings” will be realized without artificial funding constraints such as caps.
  • With the United States borrowing forty cents of every dollar it spends, the nation has long awaited the day that war costs would drop to reduce the deficit—not to provide a new source of funds for congressional big spenders.

Decision-Makers And Federal Budget Watchers Agree… It’s A Gimmick

The CBO will count as ‘savings’ up to $1 trillion in projected war-fighting costs that everyone knows will never be requested or spent… The costs will be real. The savings will not.

- Major Garrett, November 2011

A complete deception… a phony. The $1 trillion on the surge level in Iraq and Afghanistan… is a fiction. Nobody advocated it. It wasn’t going to happen. We weren’t going to spend it. I’m told there’s an extra $10 billion in here of savings from not invading Normandy a second time.

- Charles Krauthammer, July 2011

An honest budget cannot claim to save taxpayers’ dollars by cutting spending that was not requested and will not be spent.

- Chairman Paul Ryan, House Budget Committee, July 2011

But lawmakers on both sides have already derided the idea of “using” [OCO] money--which, again, is theoretical money that the country would have spent on wars it is no longer fighting-- as an accounting gimmick.

- David Fahrenthold, Washington Post reporter, November 2011

Do you think it’s fair to take a trillion dollars of less spending on wars and claim it as your own? We all knew that we were going to spend less in the wars in Iraq and Afghanistan, but nobody really felt like we ought to be taking credit for what was already going to happen.

   - House Speaker John Boehner, September 2011

To take credit for a policy that was already intended is stretching the definition of budget savings… This is such a glaring gimmick at such a serious moment.

- Maya MacGuineas, Committee for a Responsible Federal Budget, July 2011