When President Obama released his fiscal 2012 budget back in February, House Budget Committee Chairman Paul Ryan (R-WI) criticized the administration for counting “phantom savings” from the wars in Iraq and Afghanistan:
The savings that they’re talking about, they suggest that they’re going to be in Afghanistan and Iraq at current levels for 10 years and then they have a withdrawal that saves $1.1 trillion. So a lot of the savings they’re claiming, I think, are phantom savings.
But as it turns out, Ryan’s budget counts these same “phantom savings” as actual savings:
$1.3 trillion in “savings” from the official CBO baseline that comes merely from the fact that the Ryan plan reflects the costs of current policy in Iraq and Afghanistan. The CBO baseline contains a large anomaly related to the costs of the Iraq and Afghanistan wars. Following the rules governing budget baselines, CBO’s baseline mechanically assumes that current levels of U.S. operations — and costs — in Iraq and Afghanistan will continue forever rather than phasing down.
For budgeting purposes, the Congressional Budget Office assumes that war spending in Iraq and Afghanistan will remain stable over the course of the entire ten-year budget window, when in reality troop reductions are scheduled. So Ryan’s budget garners “savings” from an inflated CBO baseline that assumes military spending in those two theaters never decreases. When that spending actually decreases, Ryan’s “savings” will vanish:
Discounting these phantom savings — and accounting for “$200 billion in lower interest savings due to an error by Chairman Ryan’s staff” — make the deficits in Ryan’s budget about $1.6 trillion higher than he says they are.
The health care savings in Ryan’s budget are, as Ezra Klein put it, “absurd.” There is also very good reason to question the revenue assumptions in his budget, as his Roadmap for America’s Future depended on wildly optimistic revenue totals. And the Heritage Foundation analysis that Ryan included with his budget was so laughably bad that Heritage had to throw its numbers down the memory hole and produce new ones. And, as it turns out, his deficit reduction numbers aren’t any better.