Congressional Budget Office Director Douglas W. Elmendorf held a news conference early in February for the release of the annual “Budget and Economic Outlook” report. Some budget observers take issue with the CBO’s projections, calling them “bookends of two unrealistic scenarios.”
“That’s a problem,” said Patrick Louis Knudsen, a senior fellow at The Heritage Foundation. Without accounting for the expected fall in war costs in particular, he said, “the alternative fiscal scenario is still misleading.” He said including war and disaster spending that is unlikely to occur allows policymakers to pretend they are cutting spending when they are really just writing off spending that never would have occurred anyway.
“To me it undermines the intent of the alternative scenario, which is presumably to show a more realistic path of spending and revenue than the baseline shows, because of the conventions the baseline is required to use,” Knudsen said.
The CBO has not in the past adjusted its alternative projections for expected declines in war spending, in part because it is difficult to estimate how much it may fall, if indeed it does fall. Even if war spending drops in Afghanistan, it could rise in other parts of the world before the decade ends, some budget experts say.
The CBO estimates the effects of declines in both war spending and disaster relief costs in its report, even though it does not incorporate these estimates into the alternative scenario.
If the number of troops deployed in what are called overseas contingency operations falls to 45,000 by 2015, it would reduce the deficit by $693 billion by 2023, according to the report.
Not continuing disaster relief spending at Sandy levels would save $353 billion over the period. But that assumes, of course, there are no other disasters of similar scale in the next decade.