Ending our militaristic foreign policy saves money

One of the persistent criticisms of President Obama’s fiscal plan is that it counts war spending reductions as savings. Basically, the Congressional Budget Office calculates its defense baseline in part by taking the most recent war supplemental (technically called Overseas Contingency Operations, or OCO) and assuming that amount—adjusted for inflation—will be spent each year over the foreseeable horizon. This adds up to about $1.73 trillion over 10 years. The president’s proposal, however, includes only $653 billion in OCO spending over 10 years, for a savings of about $1.1 trillion.

Some critics, however, allege that these savings cannot be counted because the CBO OCO baseline itself isn’t realistic, therefore the savings are not “real.” For example, the Committee for a Responsible Federal Budget (CRFB) argues that counting these savings is a “budget gimmick” that the president uses to “inflate his savings.” According to this critique, another baseline for OCO expenditures should be used—either the president’s budget request or the CBO’s drawdown policy option—which would lower the baseline and make it practically impossible to generate budget savings from reducing war spending.

All due respect to CRFB and the other critics, but this criticism is silly. The CBO OCO baseline isn’t “unrealistic”—rather, it represents the costs of President Bush’s aggressive invasion-centered approach to foreign policy extended into perpetuity. President Obama is, thankfully, in the process of trying to change America’s approach to foreign policy, drawing down troops from Iraq and Afghanistan and moving toward a more multilateral, patient, diplomatic, and most importantly, less expensive approach. Furthermore, the fiscal plan proposes to cap OCO spending, thereby making sure those savings are realized.

President Obama’s foreign policy approach costs less money than President Bush’s, and the budget outlook should reflect those savings.


  • Anonymous

    It must be a sign of just how bad things are for progressives that EPI
    now celebrates a big puff of smoke from the Obama administration sent
    to divert attention from real budget reductions and, in particular, to
    protect the Pentagon from further cuts in the fiscal battles.  Ethan
    Pollack has worked for OMB, so he surely understands the accounting
    distortion built into the CBO baseline projections based on current
    law. 

    Not one person in the world (including those at CBO who prepare
    the baseline) believes that OCO expenditures will continue to fund the
    wars in Iraq and Afghanistan at the same level as 2011.  That’s why
    the CBO did a “draw down policy option” – to estimate likely OCO
    costs.  That latter exercise is not “silly”, nor the suggestions that
    such estimates be the basis for considering budget reduction plans.

    Mr. Pollack must also know that President Obama’s FY12 budget submission to
    Congress contains only $50 billion a year for OCO for future years.
    Which is it?  $118 billion forever or $50 billion forever?  You can’t
    have it both ways.

    CBO’s draw down option is surely better for budget (and deficit
    reduction) planning that either the unrealistic “placeholder” (which
    is simply irresponsible budgeting) or the CBO baseline artifact of
    $118 billion forever.

    If President Obama wishes to announce a plan to save meaningful
    amounts from OCO he would need to announce more rapid withdrawals from
    Afghanistan… but then no one really believes he is leaving
    Afghanistan in 2014.  So this is all smoke and mirrors… and
    progressives should feel terrible about it, not celebrate.

    It is disingenuous to claim that the CBO’s baseline OCO is somehow a
    Bush responsibility. It is simply a CBO baseline methodological
    artifact.  President Obama has been in charge for nearly three years
    and has not brought all the troops home from Iraq and has hardly begun
    a draw down in Afghanistan.  The current year OCO is purely his
    responsibility as is the phoney-ness of projecting it forward ten
    years and then claiming savings from spending “only $653 billion…
    over ten years.” 

    If he is really willing to end the war in
    Afghanistan soon he might be able to cut that OCO in half and offer $325
    billion from reduced future war costs to deficit reduction.

    And until this year’s budget imbroglio in Congress forced his hand he
    has continued to feed the Pentagon with higher and higher base budgets
    every year.   There is no evidence that President Obama’s “approach to
    foreign policy…[is] less expensive”… not as far as the largesse
    offered up to the Pentagon is concerned.

    We must not base progressive policy on smoke and mirrors.  Such
    politics only hurts us in the long run.