THE BLOG
11/30/2010 10:35 am ET Updated May 25, 2011

Beware the Fine Print in the Obama Deficit Commission Report

Based on my experience at the Senate Budget Committee, I learned that reading different deficit reduction plans can be tricky. Some use CBO or other "baselines" as a basis for comparison, but those baselines can be a mystery to some and differ -- sometimes by huge amounts -- from more readily understood future budget proposals for departments, such as the Pentagon's. Other sources of confusion can be whether the plan applies just to the Pentagon or the larger National Defense Budget Function, uses outlays rather than budget authority, and does or does not include funding for the wars in Iraq and Afghanistan. Sometimes the dollars used are "constant"; sometimes they are "current."

Sometimes the press and others simply misunderstand elements of an overall plan, such as by reporting a plan's savings for one "illustrative" year as the entirety of the plan's savings. Sometimes uncovering what a plan really means requires close reading of the text and footnotes; in still other cases, it requires prolonged discussion with the authors.

The information below attempts to remove the various impediments to an apples-to-apples comparison of the major plans to reduce defense spending that have been publicly proposed to the Obama Commission of Fiscal Responsibility and Reform. It compares all the plans to the Obama/Gates Plan for National Defense Spending for the years 2011 to 2020; it addresses only "base" budgets (which exclude spending for the wars in Iraq and Afghanistan, and elsewhere), and it applies to budget authority in "current" dollars.

After summary data below showing the "apples-to-apples" dollar comparison, each plan is addressed briefly, pointing out its major characteristics. I have attempted to do so objectively, with as little editorial comment as possible.

Budget Authority Savings
Relative to the Obama/Gates "Base" National Defense Budget 2010-2020
Billions of Dollars, All Dollars Are "Current" Dollars

Sustainable Defense Task Force (Cong Frank-Paul Plan) Savings: $1,053 billion

Coburn Freeze/Audit Savings: $982 billion

Bowles-Simpson Co-Chairs Proposal Savings: $865 billion

Domenici-Rivlin BPC Plan (Base Budget Only) Savings: $554 billion


The Sustainable Defense Task Force (also known as the Cong. Barney Frank (D-MA), Ron Paul (R-TX) et. al. study) calculated its savings in 2010 dollars in its report (a 2011-2020 savings of $960 billion in 2010 dollars). Current dollars are shown here, using the inflation assumptions shown in the SDTF report. The current dollars savings are $1,053 billion for the 2011-2020 period. These calculations do not include additional funding to support the wars in Iraq and Afghanistan or elsewhere in 2011-2020. This plan and its specific program reductions and policy assumptions (including financial management improvements) have been extensively reported in the press.

The Coburn Freeze/Audit Plan is a "hard" freeze (no allowance for inflation) at the 2010 level for the entire 2011-2020 period. Senator Tom Coburn's (R-OK) plan would hold DOD spending at this level unless and until DOD passes a comprehensive, independent audit of all major acquisition programs, components, and contractors. Audited weapon programs, DOD components, and contractors provide the essential data and insights needed for further -- data based -- program decisions to live within continuing budget restraints. (The current DOD plan is to be "audit ready" for some relatively simple elements of DOD appropriations by the year 2017. However, the DOD Comptroller has said DOD will need an extension, and even if the DOD deadline is met, it will not achieve the criteria established in the Coburn Plan.) The Coburn Plan would not control spending for the wars in Iraq and Afghanistan.

The "Bowles-Simpson Co-Chairs' Proposal" did not report a specific National Defense spending level except for an "illustrative" $100 billion savings in 2015. However, the text of the plan appears to describe a 50-50 split in defense and non-defense savings in the total discretionary budget for 2012-2020, and staff working for Commission members have confirmed this description. (All discretionary cuts are shown on p. 16 of the plan, and a 50-50 split is depicted in the table above.) The plan's self-description for all discretionary funding describes rolling discretionary spending back to 2010 levels in 2012 and one percent cuts in discretionary BA from 2013 to 2015. Thereafter, the plan indexes BA to inflation. It is not clear if this would precisely apply to DOD spending or even whether the implied 50-50 split would continue in that amount between defense and non-defense for the entire 2012-2020 period. Clearly, the plan requires clarification. The plan does not address spending for the wars and describes it as "outside [the] cap," which the plan would impose on other discretionary funding. It articulates various "illustrative" program and policy reductions and terminations (including financial management improvements) in a document titled "$200 Billion in Illustrative Savings."

The Domenici-Rivlin Plan reports its National Defense savings at $1.1 trillion; this, however, is from a baseline very different from the Obama/Gates National Defense "Base" Budget used in this analysis. The Domenici-Rivlin Plan compares itself, for defense, to a baseline that includes spending for the wars in Iraq and Afghanistan and more inflation than shown in the Obama/Gates National Defense "Base" Budget. Using the latter as a basis for comparison, the Domenici-Rivlin Plan calculates to a significantly lower savings for 2011-2020 than any other plan: $554 billion. The Domenici-Rivlin Plan describes a five year 2012-2016 "hard" freeze at the 2011 level (without inflation) for National Defense and growth at the rate of projected GDP growth for 2017-2020. The growth rate for this 2017-2020 period would allow real growth in the "base" budget in excess of the one percent real growth assumed in the Obama/Gates budget. Thus, the savings for Domenici-Rivlin are significantly more modest than, for example, the Coburn Plan that sets a "hard" freeze at the lower 2010 level for all ten years. (The Domenici-Rivlin Plan, as stated, also calculates its savings in outlays, not budget authority.) The Domenici-Rivlin Plan, as written, further assumes (and would cap) funding for the wars in Iraq and Afghanistan: "troop levels [are] reduced to 30,000 by 2013" and are held at 30,000 until 2020 (See pp.101-102). To make the plan comparable to the others assessed here (that do not address -- or cap -- spending for the wars in Iraq and Afghanistan), the spending identified for any troops in Iraq or Afghanistan are removed from the analysis here. Thus, the table above displays "base" budget BA levels used in the Domenici-Rivlin Plan's calculations and provided by Bipartisan Policy Center staff. The plan's text does not address financial management reform either as a center piece, like the Coburn freeze/audit, or among a list of policy or program actions, like the SDTF and Bowles/Simpson plans.

Congresswoman Jan Schakowsky has released a "Schakowsky Deficit Reduction Plan." It only addresses the year 2015 and, thus, cannot be directly compared to the plans listed above for the 2011-2020 period. For defense, the Schakowsky plan would effect $110.7 billion in reductions with a list of "Options" shown for achieving them. The options do not address financial management. The amount and many of the "Options" coincide with most, but not all, of the SDTF recommendations.

There is an important lesson to be drawn when the final recommendations from the Obama Deficit Commission are made public: They must be read carefully and completely; it is very easy to hide wolves and sheep in the skin of the other by using a few of the numerous devices budget wonks have in their gimmick collections. Unfortunately some of the initial press stories will be taken in by almost any ruse or fog that the Commission cares to throw out there. One hopes the Commission will have the ethics to make its recommendations clear, easily understandable and free of gimmicks and fog.