Reid Sequester Bill Is Unserious

Before the recess, and in the midst of the FAA debate, Majority Leader Reid introduced and placed on the Senate calendar S. 788, a bill to cancel the sequester. Instead of a serious debate about priorities, this bill proposes a fake offset – the war spending gimmick – for the higher spending that results from canceling the sequester. Unfortunately, Senator Reid has misled the American people in his attempts to portray his bill as common sense and a responsible way to budget. It is neither.

“Mother of All Budget Gimmicks”

Reid’s charade to “offset” his higher spending with war spending is only possible because of the way CBO is required to estimate future war costs. Despite changes in war policy, CBO is required to extrapolate current-year war spending throughout the 10-year budget window. Current Administration policy is for complete responsibility for Afghan security to transfer to Afghan forces by the end of 2014. The Administration has yet to say what a post-2014 U.S. presence in Afghanistan might look like. However, we know that war spending in the CBO baseline is much too high, and much of the money in the baseline will never be spent. What Senator Reid’s bill would do is to “cut” spending in future years, which will never be spent anyway, in order to spend more this year.

The idea of “cutting” unrealistic baseline war spending has been tried before. It was rejected during the debt limit debate of 2011; it was rejected by the supercommittee later that fall; and it has been routinely panned by budget experts. Robert Bixby, executive director of the Concord Coalition, called it “the mother of all budget gimmicks.”

“I’ve got a better idea. Let’s pass a bill to cover the moon with yogurt that would cost $5 trillion today. And then let’s pass a bill the next day to cancel that bill. We could save $5 trillion … this stuff is fiscal fantasy ... only in Washington can you add up math like that.”

-- Rep. Paul Ryan, July 28, 2011

Reid Misleads on Ryan Budget

Senator Reid has said that the war spending cuts were included in Paul Ryan’s budget. This point is both misleading and irrelevant. It is misleading because the Ryan budget does cut war spending, but only in relation to the CBO current law baseline, which is not Paul Ryan’s preferred baseline for comparison. His fiscal year 2014 budget document states (on page 82) that comparing the Ryan budget to the CBO current law baseline “overstates the actual deficit reduction.” Table S-5 in the Ryan budget “eliminates these distortions … by adjusting the CBO current-law baseline to remove this elevated war spending to reflect current policy spending.”

Senator Reid’s point is irrelevant, because even if the Ryan budget did count these war “savings,” the supposed savings would simply go to deficit reduction; they do not increase spending in another part of the budget. The Ryan budget’s cancelation of elevated war spending levels is a more honest description of what future war costs will be, while the Reid approach is budgetary sleight of hand the sole purpose of which is to increase spending.

The Reid Bill Is a Future Tax Increase

The Democrats’ February bill to eliminate the sequester included tax increases in exchange for a spending increase. This new bill's increased spending will add to the debt. Unless spending is cut and a budget surplus is produced, Americans in future years will eventually have to pay back this extra debt by paying more in taxes. So, while the Reid bill does not look like it contains a tax increase now, without future non-gimmick spending cuts, this bill will mean higher taxes for Americans in the future.