Tuesday, 26 July 2011

Budget games: Debt ceiling plan counts on war savings

NEW YORK (CNNMoney) - Senate Democrats want to cut the eye-popping $ 1 trillion of war, spending the next 10 years.

The proposal is part of the plan, Senate Majority Harry Reid, leader announced Monday to raise the debt ceiling in 2013 and $ 2.7 trillion slash in general.

But many Republicans are not likely to buy it.

The argument is this: Reid proposes spending cuts in Iraq and Afghanistan are not real because the Democrats are working out of a high number means that wars continue at full speed during the next decade.

And when the Obama administration has already begun to dismantle wars, was the extra money will never be used, and should not count as an incision.

"It will be tough sell in some sectors," said Douglas Holtz-Eakin, former director of the CBO and the President of the Latin American Conservative Action. "They will not be considered real spending cuts."

In fact, Senator Jon Kyl, the Senate No 2 Republican, called it "a bogus goal."

No Deal on Debt Ceiling

Allegations on budget savings are often centered around which the budget "baseline" for legislators to use for comparison. And Reid uses the baseline of the Congressional Budget Office as a starting point.

Because of the rules Congress has set itself is required to take the CBO current levels of funding for war in Iraq and Afghanistan and to extend into the future. Plus inflation.

"The way it is calculated the CBO baseline is a simple reality," said Holtz-Eakin. "You take what you have and prepare books for inflation."

But is not the best of reality. The costs of war have been high at the moment. It should soon fall. A lot.

Obama has already announced plans to bring a lot of troops home. It saves a lot of money, and it will happen, though Reid's plan was approved or not.

In the January budget outlook, CBO put out the difference.

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