Capitol Hill Reports - Most of White House's Deficit Reduction Proposals Based on Improbable Assumptions

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Most of White House's Deficit Reduction Proposals Based on Improbable Assumptions
Tuesday, March 3, 2009
10:00 PM

Office of Management and Budget Director Peter Orszag today acknowledged that roughly $1.6 trillion of the $2 trillion in deficit reduction proposals contained in President Obama's budget is derived from lower Iraq war costs compared to last year's peak of $200 billion that funded President Bush's "surge" strategy. Testifying before the House Budget Committee, Orszag said that the White House assumes that fiscal year (FY) 2008 war spending will continue each year over the next decade. The former Congressional Budget Office director noted that this baseline assumption is the "traditional way" to extrapolate spending in the out-years.

Orszag said in his prepared statement that the combined cost of Iraq and Afghanistan operations would slow by approximately $50 billion in FY 2009 and $65 billion in FY 2010 compared with the FY 2008 level of $187 billion, as adjusted for inflation. "Beginning in 2011, the budget reflects a placeholder cost of about $50 billion per year, which is included to be responsible but does not reflect any specific policy decisions," Orszag continued. "Several strategy reviews are underway that will inform out-year costs, and it would be premature at this time to prejudge those reviews."

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House Budget Ranking Minority Member Paul Ryan (R-WI) contented that the $1.6 trillion in war cost savings are inflated.

"We assume we are going to have a surge for 10 years," Ryan said, adding that the rest of the administration's deficit reduction initiatives will be derived from tax increases.

Orszag informed the panel that the administration will be sending Congress a war supplemental "slightly in excess of $75 billion" later this month.

Throughout the hearing, Orszag emphasized that the primary culprit of the projected long term fiscal imbalance is rising healthcare costs, which directly affect and exacerbate Medicare's increasing share of the federal budget.

"Healthcare reform is entitlement reform," he said. "We want to get healthcare reform done this year." The OMB director also used the hearing to promote the president's health IT initiative, saying that it will help doctors practice more efficiently.

Across the Capitol, the Senate moved closer to final passage of the FY 2009 omnibus appropriations package (H.R. 1105) after defeating an amendment by Sen. John McCain (R-AZ) that would have frozen discretionary spending for eleven cabinet-level departments at FY 2008 levels. The Senate adjourned at approximately 7:20 PM, leaving the following amendments pending until Wednesday:

Coburn - Requires competitive procedures to award contracts, grants and cooperative agreements under the legislation.
Coburn - Provides funding for Emmett Till Unsolved Civil Rights Crime Act.
Coburn - Prohibits funding for congressional earmarks.
Coburn - Prohibits earmarked funding for clients of a lobbying firm under federal investigation for making campaign donations in exchange for political favors.
Wicker - Requires that amounts appropriated for the United Nations Population Fund cannot be used by organizations which support coercive abortion.
Murkowski - Modifies a provision relating to the repromulgation of final rules by the Secretary of Interior.
Thune - Regarding funding for the Emergency Fund for Indian Safety and Health.

Click here for the text of floor amendments that were available at presstime.