Monday, July 07, 2008

Reducing new debt is NOT savings

One thing that I haven't seen anyone comment on in regards to the McCain budget speech today is the fact that the so-called "savings" from victory in both current wars should be applied directly to deficit reduction. Here's the quote from the McCain policy paper:
The McCain administration would reserve all savings from victory in the Iraq and Afghanistan operations in the fight against Islamic extremists for reducing the deficit. Since all their costs were financed with deficit spending, all their savings must go to deficit reduction.
OK, unwrap this for a second. The costs of the wars have been financed with deficit spending. In other words, every dollar of war spending that's currently in the budget (not really in the Big-B Budget, since all of the spending has been done through emergency appropriations measures, but budget writ large) is red ink. So once we stop having to pay those funds for the wars, we should apply those funds to reducing our red ink. Got that?

Look at it from the standpoint of your own personal finances. Suppose you make $1,000 a month and that's all spent already. Now suppose you incur another expense that you need to go to the credit card to the tune of $100 a month. Congratulations, you're deficit spending! Now further suppose that at some point down the line you manage to eliminate that expense? Should anyone really admire your spending restraint if you take that $100 "savings" and "apply it to deficit reduction"? That just means you didn't keep going into debt $100 every month!

Really all the McCain campaign is saying here is that they're not going to take the hundreds of billions of dollar in off-budget war expenses and start spending it on something else. Applying "their savings" to "deficit reduction" just means they stop borrowing the damned money in the first place. The whole document is hand-waving silliness, but this is the most particularly vapid statement in the whole thing.