CBO: Ending the wars could save $1.4 trillion

(U.S. Air Force - Getty Images) It’s increasingly clear that a deal on the budget deficit will have to include a lot of spending cuts that Democrats can deny are spending cuts and at least some tax increases that Republicans can deny are tax increases. I’ll get to the tax increases in a future post. But if you’re looking for the spending cuts, look no further than the wars.

Last night, President Obama announced that “the tide of war is receding,” and that he will soon bring the Iraq and Afghanistan wars “to a responsible end.” Left unsaid is the effect that could have on our projected deficits. According to the Congressional Budget Office, we’re talking big money: $1.4 trillion, to be exact.

That has less to do with the likely cost of the wars than the way CBO officials estimate future spending. In the case of discretionary spending — which is the pot of money that goes to the wars — they simply take current spending and assume it grows at the rate of inflation. So though it’s clear our wars are winding down, they won’t count the savings from them in their projections until there’s explicit government policy that winds them down.

But if they can be convinced, they’ve made clear that they’re willing to count big savings. “In 2010, the number of U.S. troops (active-duty, reserves, and National Guard personnel) deployed for war-related activities averaged about 215,000,” CBO said its January budget outlook (pdf). “In the alternative scenario presented here, the number of military personnel deployed for war-related purposes would decline over a five-year period to an average of 180,000 in 2011, 130,000 in 2012, 100,000 in 2013, 65,000 in 2014, and 45,000 in 2015 and thereafter. Under this scenario, total discretionary outlays over the 2012–2021 period would be $1.1 trillion less than the amount in the baseline. Debt-service costs would bring the cumulative savings relative to the baseline to about $1.4 trillion over the coming decade.”

I’m told that a big chunk of these savings were included in the debt-ceiling deal that, until today, Eric Cantor and Jon Kyl were negotiating with the Democrats. But eventually, we’re going to have some kind of deal on the debt ceiling, and I’d bet quite a bit of this money will be in there. The best type of deficit reduction, after all, is the kind you were going to do anyway.