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Debt Deal May Hinge on How War Costs Are Counted

Posted by Colin Clark on



Washington: Those billions of wonderful dollars that live in the Overseas Contingency Operations funds — as war funding is known nowadays — may be the key to a final deal to raise the debt ceiling and save the United States from a default that could have enormous national security implications.

Senate Majority Leader Harry Reid’s budget proposal “counts $1 trillion in savings from the overseas contingency fund,” reports my Huffington Post colleague Sam Stein.

“It’s legitimate savings,” Stein quotes Reid spokesman Adam Jentleson. Since the United States will spend significantly less money on the wars in 10 years than it does today “why not count them as part of the current plan?” asks Stein. Republicans now say that such decreases in funding should not be counted as spending cuts, although they have counted them in past budget plans. Stein notes that Rep. Paul Ryan included an estimated $1.04 trillion in savings from the OCO in his budget plan.

“Personally, I don’t think you should view this as real savings,” Stein quotes one of Washington’s best defense budget analysts, Todd Harrison, 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.”

To call the 27 percent drop in war spending, “a cut when we already know we are not going to spend that money seems a little disingenuous,” Harrison said.

But when politicians are faced with the need to find money they can call a cut when they really need one, there’s a good chance they will try and make the sobriquet stick. Now both sides need to write some legislation and save their country from the ignominy — and economic calamity — of default. Who cares what names they call the money?

What do you think?