Obama's Deficits

[TonySinclair]

I know it’s a controversial topic that incites debate, but this is strictly a factual question, and googling it gives so many hits from so many blogs with apparent biases that I don’t know how to evaluate the accuracy of the claims.

I’ve heard many people say that Bush kept the cost of the wars in Iraq and Afghanistan off the budget, and that Obama put them back on the budget.

a) is that true?

b) if so, does that make the debt incurred under Obama a lot higher than if he had kept the wars off budget?

c) also if so, how is it legal to keep such huge costs off the budget?

Remember this is GQ, so please stick to facts from reliable sources. Thank you.

[John_Mace]

This is more of a question than an answer, but wasn’t the “off budget” methodology used for budget projections, so that future projections of deficits didn’t look so bad, but when measuring actual deficits for previous years, all spending gets lumped in?

[SanDiegoTim]

To both parties I ask, “Is anything “on budget” anymore?”

I’d also suggest another related question, “What budget?”

[Ravenman]

1. It is true, wartime spending was separated from standard budget requests. It was separated in that the Bush White House would make one budget request for the whole of government in February of each year, but war spending would be requested separately some months later.

Although this meant that Congress had to consider war spending separately from spending for the rest of government, it really didn’t have a huge effect on anything. Deficit and debt numbers still included all wartime spending, contrary to some people’s beliefs.

Obama changed this by including all government and war spending in a single request each February.

2. There is no impact on debt or deficits if the money for the war is on- or off-budget.

3. Since the money wasn’t actually being hidden in any substantive use of that word, there is no legal issue.

[TonySinclair]

@Ravenman

1. It is true, wartime spending was separated from standard budget requests. It was separated in that the Bush White House would make one budget request for the whole of government in February of each year, but war spending would be requested separately some months later.

Although this meant that Congress had to consider war spending separately from spending for the rest of government, it really didn’t have a huge effect on anything. Deficit and debt numbers still included all wartime spending, contrary to some people’s beliefs.

Obama changed this by including all government and war spending in a single request each February.

2. There is no impact on debt or deficits if the money for the war is on- or off-budget.

3. Since the money wasn’t actually being hidden in any substantive use of that word, there is no legal issue.

Thanks for the response. Can you recommend a link where I can verify all this?

[Ravenman]

@TonySinclair

Thanks for the response. Can you recommend a link where I can verify all this?

Yipes. I think I will have to cobble together a couple of cites, as I’m not aware of any one source for those answers:
On whether the “off-budget” war spending counts toward the debt/deficit: link.

Many Obama defenders in the comments are claiming that the numbers above do not include spending on Iraq and Afghanistan during the Bush years. They most certainly do. While Bush did fund the wars through emergency supplementals (not the regular budget process), that spending did not simply vanish. It is included in the numbers above.

On the extent to which war spending was “hidden”: Link.

We asked Michael O’Hanlon, a defense expert with the nonpartisan Brookings Institution, for his thoughts on Obama’s budget outline. O’Hanlon acknowledged Obama’s progress on this promise but questioned whether supplemental budgets for wars are really that bad.

“In broad terms, this is not nearly as consequential a decision as some people want to argue,” O’Hanlon said. “With supplementals, we debate the costs separately rather than hiding them in the larger defense budget.”

Supplementals also help make sure that defense budgets don’t grow during a time of war and then stay at the larger number permanently. “If and when these wars ever end, you want to return to the base” number for the budget, he said.

The latter cite has some other interesting information, but it kind of dances around the questions you were asking. I hope those are helpful.

[TonySinclair]

Thanks very much for the links.

[Shodan]

Don’t you have to pass a budget in order to have things on- or off-budget? Cite.

Regards,
Shodan

[Ravenman]

@Shodan

Don’t you have to pass a budget in order to have things on- or off-budget? Cite.

Short answer: the concept that war funding was “off-budget” grew out of the fact that the President’s budget request, as submitted by President Bush, did not include any estimates for the cost of the wars in Iraq and Afghanistan. (In later years, the budget would include a token figure, like $70 billion, that everyone knew was not the real cost of military operations.) The funding for the wars would occur in a request for supplemental appropriations that would be made some months after the annual budget request was submitted. Therefore, the request was divorced from the normal government budgeting process, both in the Executive Branch and in Congress. This is the genesis of the “off-budget” perception.

Again, this two-stage process for how the President proposed his budgets has nothing to do with the size of the debt or the deficit. The debt and the deficit is an accounting of every dollar that is actually spent by the government, and it matters not in the slightest the method by which those funds were requested.

Expanding on that “short” answer: The President’s budget request is the basis for a congressional budget resolution, which, like the President’s request, lays out a general picture of revenues and expenditures. A budget resolution does not make any money available for the government to spend. It is not law. It does not have any real-world effects by itself on fiscal policy. Whether a budget resolution is passed or not, war funding is still a category of costs that is separate from regular budgets.

So, in practical terms, Obama is now including war-related budget requests within his annual budget request made in February each year (as opposed to Bush’s requesting the money later in the year.) But there is still a distinction made between “regular” budgets for the DOD (let’s call that $530 billion or so in “base” funding) plus “Overseas Contingency Operations” budgets (maybe another $150 billion or so.) Regular or base budgets are subject to spending caps that are re-examined each year whether or not a budget resolution has been passed. OCO spending is not really subject to those spending caps in any meaningful way. So, OCO spending is sort of still “off-budget” even though it is requested at the same time as the regular budget.

I wish I could explain this in a clearer way, but it’s just a complex subject.

Oh, and one more thing: it isn’t terribly unusual for Congress not to pass a budget resolution. It has happened quite a few times recently, like 1999, 2003, 2005, 2007, and 2011. The Budget Control Act passed last year set up spending caps and budget enforcement procedures (like sequestration) for fiscal years 2012 through 2017 or so that are virtually identical to a budget resolution, so budget wonks can debate back and forth as to whether a budget resolution is actually needed for 2013. That’s better fodder for Great Debates, though.

[rbroome]

Thank you so much for this post!
It is complex, and you explained this part of it quite well. At least according to my limited understanding.
Thank you for explaining the actual effect of the OCO spending on previous budgets. While I knew the actual deficits included the war spending, I couldn’t explain how that worked in practice or why it was done in the first place. Now I can.

[ABraut]

@Ravenman

Obama changed this by including all government and war spending in a single request each February.

But the war spending never got put in the budget because we are still operating off the Democrats’ 2008 budget. The President’s annual budget request is only meaningful if Congress decides to follow it. When Democrats gained congressional majority in 2007, they wrote the 2008 budget and no budget has been passed since.

The budget resolution is a “concurrent” congressional resolution, not an ordinary bill, and therefore does not go to the President for his signature or veto. It also requires only a majority vote to pass, and its consideration is one of the few actions that cannot be filibustered in the Senate.

[Ravenman]

@ABraut

But the war spending never got put in the budget because we are still operating off the Democrats’ 2008 budget. The President’s annual budget request is only meaningful if Congress decides to follow it. When Democrats gained congressional majority in 2007, they wrote the 2008 budget and no budget has been passed since.

You are making the same mistake I addressed earlier. There is a lot of confusion on this topic because of the amiguity of the word “budget.” The president submits a budget, Congress passes a budget resolution, and Congress passes appropriations bills to provide a budget to agencies. They are interrelated but totally separate products.

Government agencies are not operating off of a 2008 budget. Congress has passed appropriations bills every year to fund agency operations, including appropriations that pay for the cost of the war.

Those appropriations bills are required to conform to spending caps that are typically set by a non-binding budget resolution, which is not law and is never sent to the President. Although it has been several years since Congress has passed a budget resolution, the spending caps that are required for the appropriations process were actually established in law last year by the Budget Control Act of 2011. Those spending caps cover only agencies’ budgets for the next five years (meaning they don’t address entitlement spending), meaning that Congress doesn’t really have to pass a non-binding budget resolution during those years, unless it decides to change the spending targets for agencies.

In any case, war spending is most certainly now “in the budget” for virtually all useful definitions of that term. War spending is included in annual budget proposals from the President, and the deficit numbers include all war-related spending, as they always have, even under George Bush.

[ABraut]

I see what you’re saying about the Budget Control Act of 2011 partially replacing the budget resolution with select spending caps, but every source I found says that war spending is not capped by the act. The CBO and CBPP are using the President’s budget request for war spending in some of their estimates and projections, but the President’s budget request has absolutely no control over anything; it’s only a request/proposal.

I never said or even thought that the war spending was not included in the annual deficits/debt increases. I’m just saying that it’s still not really in the budget, though I do know it’s in the President’s budget requests. Placing unknowable spending in the budget request is a bigger deception than leaving it out. The reasons for leaving it out are to provide flexibility and to guarantee that it will not remain in the budget when the war is over. Additionally, considering it separately increases transparency and awareness by not burying it in the rest of the budget and budget negotiations. Placing it in the request does nothing but convince people the matter is already settled when in fact, the President’s budget request settles nothing whatsoever.

[Ravenman]

@ABraut

I see what you’re saying about the Budget Control Act of 2011 partially replacing the budget resolution with select spending caps, but every source I found says that war spending is not capped by the act.

War related spending is capped at $450 billion over the next ten years in the Budget Control Act. There are not year-by-year estimates of what war spending will be, because it is impossible to predict in 2011 what war spending in 2015 should be.

I’m just saying that it’s still not really in the budget, though I do know it’s in the President’s budget requests. Placing unknowable spending in the budget request is a bigger deception than leaving it out.

Your last sentence makes no sense. It is impossible to have “unknowable spending” in a budget request, as least as far as appropriated (including war) funds are concerned. A budget request presents actual numbers of funds that are requested for that year.

The reasons for leaving it out are to provide flexibility and to guarantee that it will not remain in the budget when the war is over. Additionally, considering it separately increases transparency and awareness by not burying it in the rest of the budget and budget negotiations. Placing it in the request does nothing but convince people the matter is already settled when in fact, the President’s budget request settles nothing whatsoever.

Again, you are simply confused. War spending is requested at the same time as regular (base) funding requests, but the budget for the Department of Defense is separated into war and non-war budget lines. War spending is not being buried in other spending, it is readily transparent. I can provide a link to DoD budget documents that illustrate this, if you want me to.

[ABraut]

It is impossible to have “unknowable spending” in a budget request, as least as far as appropriated (including war) funds are concerned.

That is my point. Claiming to know the unknowable is deception.

War related spending is capped at $450 billion over the next ten years in the Budget Control Act.

The President’s budget request does this, but not the Budget Control Act. This statement from the White House about the President’s budget request specifically states that the Budget Control Act (BCA) does not cap Overseas Contingency Operations (OCO) spending:

The Budget also reflects the Administration’s efforts to constrain OCO spending in the years beyond 2013. The BCA established year-by-year caps on discretionary spending for agencies’ base budgets through 2021, reducing the 10-year budget deficit by about $1 trillion. However, the BCA did not limit OCO funding. Leaving OCO funding unconstrained could allow future Administrations and Congresses to use it as a convenient vehicle to evade the fiscal discipline that the BCA caps require elsewhere in the Budget. With the end of our military presence in Iraq, and as troops continue to draw down in Afghanistan, this Budget proposes a binding cap on OCO spending as well. From 2013 through 2021, the Budget limits OCO appropriations to $450 billion. Given the need for ample flexibility in budgeting for overseas contingencies, this is a multi-year total cap, rather than a series of year-by-year caps.

War spending is requested at the same time as regular (base) funding requests, but the budget for the Department of Defense is separated into war and non-war budget lines.

Requested by DOD but not budgeted by Congress. If that were true, there would be no discussion about whether or not it was in the budget, in the first place. Please give a link to those documents; I suspect that they are requests or after-the-fact accounting totals, not Congressional budget appropriations.

War spending was neither in the 2008 budget resolution nor capped by the Budget Control Act. War funding was, and still is, done through supplemental appropriations. We just don’t hear so much about them since Obama took office. The “war spending negotiations” were continually in the news during Bush’s Presidency because it was well known that they were not in the budget, but now that Obama has people convinced that the spending is in the budget, it’s not really in the news. I suspect that you don’t know that there has been at least one supplemental appropriations bill for war funding every year since Obama took office, just like when Bush was President, and two in 2010. When was the last time you heard anything about war spending negotiations?

[Ravenman]

@ABraut

That is my point. Claiming to know the unknowable is deception.

Your point makes no sense. The president’s budget request contains specific numbers each year for war spending. It doesn’t project those numbers into the future. I don’t understand what you’re saying about “unknowable numbers.”

The President’s budget request does this, but not the Budget Control Act.

Whoops, you’re right. My mistake.

Requested by DOD but not budgeted by Congress. If that were true, there would be no discussion about whether or not it was in the budget, in the first place. Please give a link to those documents; I suspect that they are requests or after-the-fact accounting totals, not Congressional budget appropriations.

Please stop using the term “budgeted by Congress.” It is a vague term that leads to confusion. Are you saying that war spending isn’t included in a budget resolution? That’s true. Are you saying that war spending isn’t appropriated by Congress? That’s false.

Please just help me understand what you’re driving at here: are you saying that the cost of the war is still being hidden? Or are you just concerned about the process by which Congress completes the annual appropriations process without passing a budget resolution which is not law? What, exactly, is the problem that you’re concerned about?

As far as the budget request, look here. Click on the PDF for Operation and Maintenance programs (O-1), toward the bottom of the page. Look at the date on the cover, February 2012, which is when it was submitted to Congress. Scroll down to page 6 of the PDF, where you will see that fiscal year 2012 funds were appropriated for “base” (non-war) and “OCO.” Scroll down another page and you will see that fiscal year 2013 request is also broken into base and OCO. Scroll through every page, and you will see that funds are distinguished among base and OCO on every program: that means that war funds are not buried within the “peacetime” budget.

War funding was, and still is, done through supplemental appropriations. We just don’t hear so much about them since Obama took office. . . . I suspect that you don’t know that there has been at least one supplemental appropriations bill for war funding every year since Obama took office, just like when Bush was President, and two in 2010. When was the last time you heard anything about war spending negotiations?

A supplemental appropriations bill is generally considered to be a stand-alone measure to provide appropriations for items that are requested by the president after his annual budget request. There has been one wartime supplemental appropriations bill enacted during Obama’s term, in June 2009. All other wartime funds were appropriated in a separate section of the annual appropriations bill. I can provide cites to each of those bills if you wish. Perhaps you can provide cites to the war supplementals for 2010, 2011, and 2012?

[Ravenman]

@ABraut

Requested by DOD but not budgeted by Congress. If that were true, there would be no discussion about whether or not it was in the budget, in the first place. Please give a link to those documents; I suspect that they are requests or after-the-fact accounting totals, not Congressional budget appropriations.

Oops, I misread this the first time around. Please google “defense appropriations act,” and pick any year from 2010 to 2013. Titles 1-7 are appropriations for the “base” budget of the Department of Defense, title 9 is for war spending.

Both the budget request and appropriations bills separate the base and the wartime budget. They are not combined into one lump.

[ABraut]

No, I’m not saying that the spending is not accounted for or really hidden. The President’s budget request is only a request. Sometimes it is called the President’s budget proposal. That is all it is; it has no control of anything, whatsoever.

If you had followed the the first link I gave to the Introduction to the Federal Budget Process and read it, you would be much less confused about what I mean when I say “budgeted by Congress.” It is not the least bit vague. You would also already understand what I’ve been trying to tell you about the President’s budget request; It is practically meaningless.

The budget resolution has some control, in that it is easy to appropriate money for things that are in the resolution, AKA “the budget.” Budgeting and appropriation are two different things. The budget resolution authorizes the spending in general, then appropriation bills do the spending in detail. There is budgeted and off-budget spending. Budgeted spending is already authorized by the budget resolution and may easily be appropriated. Off-budget spending is not pre-authorized by the budget resolution and requires some extra steps to be appropriated. National Defense Authorization Acts contain budgeted (pre-authorized) spending and off-budget spending.

National Defense Authorization Act for Fiscal Year 2012

TITLE XV—AUTHORIZATION OF ADDITIONAL APPROPRIATIONS FOR OVERSEAS CONTINGENCY OPERATIONS

Subtitle B—Financial Matters

SEC. 1521. TREATMENT AS ADDITIONAL AUTHORIZATIONS.
The amounts authorized to be appropriated by this title are
in addition to amounts otherwise authorized to be appropriated
by this Act.

As far as the budget request, look here. Click on …

I’ve already said that I know it is in the President’s budget request. What I am getting at is that no actual change in the war spending appropriation process has occurred since Obama started putting guesses for it in his budget proposals; it is still not “in the budget” but people think it is so little to no attention is given to it. It’s not really hidden, but when it’s addressed in a meaningless document with thousands of other issues, at the same time, the issue is drowned out to some extent and people are deceived into thinking the matter is settled for the year. The only thing that has changed is the focus of the public’s attention; they are now looking at the magician’s lovely assistant instead of what the magician is doing. There was no such distraction when everyone knew the truth. Even after Bush started putting war spending in his proposals, people still said it wasn’t in the budget, because it wasn’t in the budget resolution. It still isn’t.

Here is some progressive propaganda that explains what I was saying about supplemental appropriations before, along with the real reason they want it changed.

there’s a deceptive budgetary maneuver that is costing you billions in defense dollars, forcing progressive members of Congress into uncomfortable votes on Iraq and Afghanistan

Of course, like most propaganda some things are completely backwards, like saying that the separate funding is a way to hide the funding as if they forgot Bush wasn’t President anymore and Obama wasn’t performing his magic act. “Progressive” Congressmen wouldn’t be so uncomfortable about the votes if the process really was hidden. If you can stand to wade through the bullshit, you can see that they actually want to make the process more opaque so that the can cut war spending without letting it be known that they cut war spending.

[Ravenman]

This is getting silly. You are mixing up terms to the extent that you cannot make a valid point. A budget resolution does not contain an authorization for funds. An authorization is the legal authority of an agency to take some action, typically spending funds. A budget resolution isn’t law, so it cannot authorize funds.

There is no such thing as “budgeted (pre-authorized) funds.” Pre-authorized is a meaningless term in fiscal law. It has no legal significance because the term pre-authorized does not exist.

You also linked to a defense authorization bill which is not an appropriations bill. The defense authorization bill does not make one red cent available to spend. I asked for a cite to a defense appropriations bill, which you haven’t provided.

There is no truth to your statement that it is easier for Congress to appropriate funds for things in the budget resolution. All the budget resolution does for the appropriations process is establish spending caps. That’s it. It is no harder for Congress to appropriate funds for something that is “in” the budget resolution than not in it. As long as the aggregate, non-emergency total of appropriations bills stay within the discretionary caps established by the budget resolution, the appropriations process can spend money on literally any thing Congress desires.

The progressive site you linked to is factually wrong. There have been no supplemental war appropriations acts since 2010. All war funding since then is contained in a separate title of appropriations acts.

There are no “guesses” in war spending in Obama’s budget requests. Each year, the request contains a precise request for war spending for that upcoming year. It does not estimate or request future years war spending – there are no guesses.

There is no “magic” that can make “opaque” the amounts spent on the war. The amounts being spent on the war are contained in separate line items so that it is plainly obvious to anyone who looks what funds are for routine department operations and what funds are for war spending. Those funds are requested in the president’s budget in separate line items, and provided by Congress in appropriations in separate line items. If anyone in Congress claims that the amount being spent on the war is somehow hidden or difficult to discern, they are simply idiots or lying. All one has to do is look on page 12 of this PDF from the 2012 defense appropriation act and it is right there in black and white: Title IX, Overseas Contingency Operations (GWOT), $118,567,277,000. The routine annual funding items are presented above, in titles 1 through 7. There isn’t anything opaque there, it is right there on paper for you to look at.

To recapitulate the differences and similarities between Bush’s and Obama’s approach to budgeting for the war:

Annual budget requests under Bush pre-2006: Contained no requests for war spending. All war spending requests were made months after the annual budget request was submitted to Congress.

Annual budget requests under Bush post-2006: Contained token figures (e.g., $70 billion) for war spending, but did not formally request those funds. Months after the annual budget request was made, a separate request for supplemental funds for specific amounts (typically more than $150 billion) were submitted to Congress.

Annual budget requests under Obama: In 2010 and after (2009 was a “transition year”), the annual budget requests contained both requests for annual funding requests and, in different budget lines, requests for that year’s war spending.

Appropriations bills under Bush: Appropriations bills contained primarily funds for routine operations of agencies (in some years, a token amount was provided for war costs, called a “bridge,” often around $30 billion.) A separate supplemental appropriations act was passed later in the year to provide the bulk of war spending.

Appropriations bills under Obama: After 2010, one appropriations bill contained both routine defense operations funds and, in separate funding lines, the full cost of that year’s worth of war funding. No follow-on supplemental appropriation acts have been passed since 2010.

[ABraut]

Are you saying that war spending isn’t included in a budget resolution? That’s true. Are you saying that war spending isn’t appropriated by Congress? That’s false.

I didn’t quite catch that the first time. The budget resolution is budgeting and appropriations are spending. The President’s budget proposal is not “the budget.” The budget resolution is “the budget” and when I say “budgeted by Congress” I mean Congress included it in the budget resolution. All spending is appropriated whether it’s in the budget or off-budget. War spending is not in the budget, no matter what’s in the President’s proposal or what anybody says about it. Congress could put it in the budget, if they pass one before the war is over, but it’s not really a good idea. There are good, honest reasons why it was and still is not in the budget. Bush put some war spending in his later proposals to try to get some people to shut up about it, but they knew better. Obama put in some nonsense about a multi year cap and Congress didn’t even pass a new budget. Suddenly everyone thinks it’s in the budget. It’s not; nothing has changed, but perception.

Putting it in the proposal, but not in the resolution (the real budget) is a bigger con than what they accused Bush of doing. There was nothing sneaky about the way it was done while Bush was President. It drew more focused attention to the process and negotiations. Now they’re saying it’s in the President’s budget proposal and convincing people it’s in the real budget drawing a more general focus to the meaningless proposal and away from the real, unchanged process.