Harry Reid’s budgetary parlor tricks

Senator Harry Reid is about to become a magician. Next Tuesday he plans to introduce a bill that would eliminate the FY 2013 sequester, paying for it using ghost-like savings from the declining budgets for the Afghan war. And it sounds like the White House might just go along.

It’s another parlor trick in a budget process full of such tricks, conjuring up savings and then, in this case, adding to the deficit by spending them. Let me explain, because it is all about scoring, but not about real money.

The Congressional Budget Office projects budgets into the future. When it does so, it has to start from something. Since this is a very conservative (small "c") organization, it properly starts from what is called "current law," or what the last appropriation was for something.

In this case, it is the last appropriation for the war. The Overseas Contingency Operations account, which funds the wars, was very high in the past — nearly $180 billion at one point. The last time it was appropriated, in March this year, it was around $87 billion. So that is the current law number.

Now, when CBO looks into the future, it starts by saying $87 billion is the cost of the war. Since that is current law, the baseline for the future is $87 billion every year, plus inflation. Anything below that amount can be imagined to be "savings."

That’s the parlor trick Sen. Reid is using. He is assuming current law, inflated, for the future, and then assuming that reality will be lower. The difference between the two numbers is the "savings ghost."

When Paul Ryan and the administration both used this trick in their budget proposals last year, they scooped up the budget "savings" and applied it, they said, to deficit reduction for the next 10 years.

There’s just one problem: These savings are a phantom, a figment of Sen. Reid’s imagination. The war is already winding down and everybody, including CBO, knows those numbers are fictitious.

But, ya know, they are easy, just sitting out there in fiction land waiting to be used, instead of knuckling down to the budget discipline the Congress and the White House ought to be enforcing.

And in this case, Sen. Reid doesn’t intend to apply these savings to deficit reduction, which is bad enough. He intends to spend them, "fixing" the sequester, and, on the way, adding to the deficit.

It will be hard to resist this temptation; it’s too easy. It is also wrong, exactly the kind of conjurer’s trick that brings Congress into ill repute. It should be resisted, as the ghost of King Hamlet warned: "O horrible, O horrible, most horrible! If thou has nature in thee, bear it not."