Phantom “Savings” to Pay for Government-Created Problem

It happens a lot in Washington; it seems like almost every day now. First, government creates a problem, then they try to “solve” it using budget gimmickry.

In this instance, government created the Sustainable Growth Rate (SGR) payment formula to determine how much physicians would be reimbursed for costs associated with treating Medicare patients. It was a budget gimmick designed to keep costs down on paper. However, cutting Medicare’s physician reimbursement would result in fewer doctors accepting Medicare patients, Congress routinely changes the law to halt the reimbursement cuts.

This time, in order to “solve” this problem, some in Congress, including Senate Minority Whip Jon Kyl (R-AZ) have proposed using war “savings” in order to pay for a full year extension of Medicare reimbursements – or maybe even the full repeal of the SGR.

War “savings” are more phantom savings, which are calculated by pretending we’re going to continue spending on the wars exactly as we have done over the past several years, but since we don’t need that much money for them, the left over is “savings.” It’s like having a five-year car payment, but for accounting purposes you pretend you will make those payments even after your car is paid off.  You cannot say you “saved” that money because it wasn’t going to be spent anyway.

And this isn’t the only thing that Congress wants to use war “savings” to pay for. Some in Congress want to use the war “savings” to pay for the transportation bill. Last year, these “savings” were considered during the payroll tax cut extension, during the debt ceiling debate, and a whole host of other expenditures. If you listen to Congress, these war “savings” could pay for just about everything the government does!

Paying for anything with war “savings’ is irresponsible. Government needs to reduce spending, not simply reallocate spending. If the wars are costing less, we shouldn’t increase spending elsewhere to match the current level of spending. We’re borrowing roughly 40% of every dollar spent by the government, we need to stop borrowing, and continuing to spend just as much as we do now is reckless.

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