Hearing of the House Budget Committee - The Growing Costs of the Iraq War

Interview

BREAK IN TRANSCRIPT

REP. GWEN MOORE (D-WI): Thank you so much, Mr. Chair.

I was very intrigued by a line of questioning that the ranking member was following when he indicated that perhaps the cost of the war was overstated. He said that the supplementals plus the regular budget and the debt service and the costs that you included beyond inflation -- such as, I would imagine, health care costs and unpredictable things -- were an overstatement.

And I was very intrigued -- very excited, as a matter of fact -- when he sort of suggested that if we were to diminish our commitment to certain Cold War assets and equipment that we could perhaps have a different outcome.

Just briefly, I know you haven't had time really to do any number crunching on this, but I was very intrigued by that line of questioning and I'm wondering, would that amount to a tremendous difference if we were to exclude those Cold War assets from your future calculation?

MR. ORSZAG: Well, I guess the way I would put it is there are clearly significant opportunities, many of which are identified in the CBO budget options volume that we put out, for example, at the beginning of this year, to modify the course of future defense spending through changes in policy. And there are undoubtedly -- there are many policy choices that you all could make to alter the path of future defense spending.

REP. MOORE: Thank you.

You talked in your testimony about having greater access to the cost models that DOD utilizes and I am wondering -- there was a provision in the appropriations bill that would add a little bit more teeth to the 9010 measuring stability and security reports, which do not contain metrics on war costs and are not required by law. Do you think that that would -- would that be helpful to you in your analyses?

MR. ORSZAG: I'm being told by the people who know not really.

REP. MOORE: Not really? Okay.

I am wondering if you are familiar with the "Unified Security Budget," a report of the task force -- the principal authors being Miriam Pemberton and Lawrence Korb from the Foreign Policy in Focus, Institute for Policy Studies and Center for American Progress and Center for Defense Information.

Here they basically talk about the appropriateness of, you know, number one, providing the full cost of the defense budget and war budgets as a unified budget, but in addition to that, the foreign ops budget, the diplomatic efforts -- a unified approach. They say that a unified security budget would pull together in one place U.S. spending on all of its security tools, you know, military forces, homeland security and prevention, quite frankly -- nonmilitary international engagement.

I'm wondering if you have ever undertaken some sort of analyses or would undertake an analysis of what impact a unified budget would have?

MR. ORSZAG: I think in general -- and this has arisen with regard to homeland security spending and in other areas -- efforts like that can often provide more transparency and a better trade-off across different subcomponents of related efforts.

There is a difficulty, though, in the way that the Congress is organized in jurisdiction across both authorizing committees and appropriation subcommittees in that kind of effort. So it's difficult to have an aggregate budget for some activity that is split among lots of different committees, and that often leads to complications that would need to be taken into account in evaluating that kind of approach.

REP. MOORE: Okay. In my final seconds, I just wanted to revisit some of the comments that the ranking member made as he challenged your projections of the defense budget, and he talked about balancing the budget.

I'm wondering, in his question and in your response, did you consider that defense is not subject to PAYGO?

MR. ORSZAG: That is correct. Discretionary spending is not subject to the pay-as-you-go rules.

REP. MOORE: And so what was the relevancy -- I guess I was not able to fully follow your give-and-take on that because neither of you mentioned that fact. So when we start talking about the Republicans balancing the budget by at least 2012, I'm wondering what were his assumptions as you understood them about that?

MR. ORSZAG: Let me separate two things.

One is what happens after 2012 and before under any projection in which the budget's balanced and goes into surplus after 2012 versus the question that you're asking, which is the spending we're talking about is discretionary spending. And one of the reasons that CBO traditionally doesn't attach debt service costs to changes in something like discretionary spending is it's really hard to parse out what is -- you know, you're collecting $100 in revenue and then you're spending something. How much of the existing revenue is going for this kind of spending versus that kind of spending?

It's much clearer when you're changing a mandatory program or a flow of taxes to stuff that's subject to PAYGO. If you're not offsetting it, then it's clearly adding to the budget deficit and it has the debt service implications that then follow. On the discretionary side, I think the thought concept is there's a certain level of discretionary spending that's embodied -- for example, in the baseline or that would occur in the absence of the war -- and if the war is additional spending that's not offset in the rest of the budget, that has additional debt service costs.

And as I tried to make clear to Mr. Ryan, that occurs regardless of whether the budget overall is in surplus or deficit. The key thing is whether any additional costs are offset somewhere else in the budget.

REP. MOORE: Thank you so much, and I would yield back.

BREAK IN TRANSCRIPT

Source