WASHINGTON -- In the end, the debt ceiling debate could come down to a simple accounting question. Should the money saved from drawing down the wars in Iraq and Afghanistan count as part of a deficit reduction package?
Senate Majority Leader Harry Reid (D-Nev.) has put together a proposal, designed to break through the congressional impasse, that counts $1 trillion in savings from the Overseas Contingency Operations (OCO) fund -- the veritable piggy bank for wars abroad. His logic is straightforward.
"It's legitimate savings," said Adam Jentleson, a spokesperson for Reid. It's true that the United States will be spending significantly less money on the wars in ten years than it is today. The Congressional Budget Office, which judges future expenditures against their current levels, will "score" the savings regardless, as an Obama administration official noted several weeks ago when the OCO issue first surfaced. Why not count them as part of the current plan?
More importantly, as Jentleson notes, when Republicans were putting together their latest plan for deficit reduction, they counted the OCO savings as well. Indeed, in his budget plan that passed the House earlier this year, Rep. Paul Ryan (R-Wis.) tallied an estimated $1.04 trillion in savings from the OCO based on Congressional Budget Office estimates. When his Republican colleagues, including Speaker John Boehner (R-Ohio) repeatedly touted the $5.8 trillion in savings that the Ryan plan achieved, they did not offer rhetorical footnotes about how a good chunk didn't count because it came from pre-existing policy.
When The Huffington Post raised the issue several weeks ago, House Majority Leader Eric Cantor's (R-Va.) office drew a distinction, saying that while everyone agrees that the drawdown of troops will provide savings over time, lawmakers would be hard-pressed to call it a "cut."
"We have never counted OCO as a reduction, especially since it is happening anyway and has nothing to do with this debt deal," Cantor spokesman Brad Dayspring said at the time.
Independent budget analysts concur with this point.
"Personally, I don't think you should view this as real savings," said Todd Harrison, senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments. "It depends on what baseline you are comparing to. The Reid plan compares to the CBO baseline, which has to assume that current law will continue to the indefinite future."
"The problem is, we already know wars are winding down and war funding is falling," Harrison continued. "The president's budget for next year already calls for a 27 percent reduction in war funding. To call that a cut when we already know we are not going to spend that money seems a little disingenuous."
And yet, it's the type of disingenuousness that has been injected into budgetary standoffs before. As the White House pointed out back in March of 2009, President George H.W. Bush used the drawdown of the Cold War to pad his budget savings in 1991.
"This is a little different than at the end of the Cold War," cautioned Harrison, noting that there were deliberate policy choices made in the early '90s to reduce the size of the military.
Still, in private negotiations, Democrats have insisted that -- on a strictly numerical standpoint -- lawmakers should be able to count the so-called peace dividend as a money-saver, especially with the stakes as high as a potential default.
Reid made this very case directly to Cantor during a meeting in early July, but to no avail. Little has changed since then. Republicans are still smarting from the bad press coverage they received after the government shutdown standoff in the spring, when post-deal accounting showed the long-term savings were much less than advertised. On Monday, GOP leadership continued to oppose considering using the OCO as a deficit reduction contributor.
Reid's plan, Boehner said upon its introduction, is "full of gimmicks."