Boner's last stand...

Boehner, Obama flagged for budget deal gimmick

GOP leaders scramble as the Congressional Budget Office raises issues with the two-year agreement.

By David Rogers

The tricky part about budget gimmicks is they are just that — tricky — and capable of biting the hand that feeds them.

That explains what’s been happening behind the scenes for the past 24 hours as Congress and the White House try to square their year-end budget deal with the official scorekeepers at the Congressional Budget Office.

To a surprising degree, that bargain rests on getting essentially free money by taking advantage of the CBO’s artificially high baseline for emergency appropriations to fund Overseas Contingency Operations — money typically used to pay for the war in Afghanistan, for example, or the refugee crises in Africa and the Mideast.

But when CBO turned around Tuesday and released a score that charged the deal more than $10 billion for the added OCO funding, it upset the apple cart and showed the package did not fully pay for itself over the critical first decade.

The red ink adds up to $7 billion to $14 billion, depending on how much leeway is allowed. But it is nonetheless awkward for the White House and outgoing Speaker John Boehner (R-Ohio), rushing to bring the bill to the House floor Wednesday.

So the Republican leaders went to the House Rules Committee Tuesday night with a late amendment to try to turn around the CBO scoring. And seem to have succeeded, as CBO released a fresh score Wednesday morning in which the costs for OCO have disappeared.

The new five-page table from CBO credits the bill with about $4.5 billion in added savings, largely related to the Rules changes in the pension provisions in the package. And the outlays attributed to appropriations suddenly drop from $89.7 billion to $79.4 billion, reflecting the OCO maneuvering.

These changes in the Rules amendment consist of two parts.

First, it corrects an admitted drafting error that had defined the OCO figures in the bill as a minimum floor for such emergency spending, not just a target.

Second, it reaches back three decades — before Boehner was even in Congress — and invokes a 1985 deficit reduction law that also defines budget adjustments for OCO scoring. The key word in the old statute appears to be “total," meaning OCO dollars should be addressed in a lump sum, not broken out between defense and nondefense spending as CBO had done.

“The bipartisan leaders of the House and Senate worked to address a drafting error in the bill filed Monday night that created a scoring gap,” a spokesman for Boehner said in a statement. “The amendment offered at the Rules Committee (1) includes a technical fix regarding OCO in response to the drafting error; and (2) adjusts the existing offset policies to ensure the bill is fully offset. With this amendment, all budget cap relief is fully offset with mandatory spending cuts and other savings.”

Left out of this explanation is the fact that CBO’s baseline for OCO is itself inflated and therefore can be used as a device to disguise new spending.

That’s because the budget office bases its OCO projections on the prior year’s OCO numbers, not the real needs going forward.

At one level, this seems prudent. But it’s inherently outdated as events change overseas, and the result can be a false perception of extra dollars created as a war ends. For example, in the post-Iraq years, House Republicans widely criticized Senate Democrats when they tried to claim such war savings to offset new domestic spending.

Yet something like that is happening in the new budget deal, only in reverse.

Back in January Obama said only $58 billion was justified for OCO in 2016 and that created a $16 billion window between himself and the CBO baseline of $74 billion. In the deal now, the negotiators essentially reclaim that same $16 billion as free money and distribute it between defense and nondefense accounts, hoping to be charged nothing by CBO.

In 2017, the second year of the agreement, the same model is largely repeated, again with the expectation that the added OCO funding would come within the CBO baseline and therefore not be scored.

In the case of OCO dollars for defense, this assumption proved correct. But the great catch was the budget deal directed so much of the extra OCO money to nondefense accounts that it set off a tripwire at CBO.

That’s because the budget office has refined its baseline to better track OCO dollars designated for defense vs. those for foreign aid and nondefense accounts. Yes, the total baseline remained at $74 billion for 2016. But the nondefense portion was only about $9 billion of this based on the appropriations record for 2015.

When the budget deal came back with almost $14.9 billion for nondefense — a big concession to Obama and twice his request in January — CBO opted to score this as new costs above its baseline. The difference came out to be just over $5 billion for 2016 and 2017, which largely explains the origin of the $10 billion added cost over the decade.

How much this will matter to the passage of the bill remains unclear, but the leadership now has the score it wanted.

Both parties have a stake in getting some spending agreement in place and the OCO games don’t diminish other more genuine budget savings in the bill. But it does make for a clear contrast with the last time a similar two-year package was negotiated in 2013 by then House Budget Committee Chairman Paul Ryan (R-Wis.) and his Senate counterpart, Sen. Patty Murray (D-Wash.).

That bill came back with a CBO score showing more than enough offsets up front. And it stayed away from OCO.