Policymakers used this trick in the fiscal-cliff deal at the beginning of 2013, raising revenue by allowing people to shift to Roth retirement accounts where they pay taxes on their income before putting it into a retirement account but receive a tax break when they withdraw their money many years later.

This gimmick is also used to pay for $6 billion of unemployment benefits in the Senate bill currently under consideration. In this case, a provision called “pension smoothing” allows companies to contribute less to their employee pensions now and instead pay more into their pensions later. As a result, corporate taxable income goes up in the first seven years, raising $19 billion. But then it falls as companies make up for lower contributions later on, resulting in no real increase in government revenue over the long-run.

Committee for a Responsible Federal Budget

Shifting Savings Inside the Budget Window

The use of the 10-year budget window allows for some even more egregious timing shifts than those described above. Policymakers can literally identify revenue or spending cuts meant to occur in the 11th year and move them to year 10.

In the past, lawmakers have revised the dates corporations are required to make quarterly tax payments by a few days in order to bring that revenue “inside the budget window.” But recently, they learned a new trick.

Under current law, a mandatory sequestration imposes a two percent annual cut to Medicare providers through calendar year 2024. But savings in the second half of the calendar year don’t appear in the budget until fiscal year 2025.To pay for $5 billion of the recently-passed “Doc Fix,” policymakers doubled the provider cut from 2 percent to 4 percent in the first half of 2024, but cut it to 0% in the second half.

That might seem like savings in a 10-year budget window, but all it really does is reduce spending in 2024 and increase it by an equal amount in 2025.

Committee for a Responsible Federal Budget

Paying for Permanent Costs With Temporary Savings

In most cases, if a tax increase or spending cut is sufficient to pay for a new expense over ten years it is likely to do the same (more or less) over the long-run. But sometimes, policymakers use temporary savings to pay for permanent costs.

This was exactly the approach taken by House Republicans recently, when they used revenue from a five-year delay of the individual mandate to pay for the cost of enacting a permanent “Doc Fix” to increase scheduled payments to physicians. This bill would certainly reduce deficits in the short-run, since fewer Americans would sign up for government-subsidized health insurance. But after the mandate is reinstated, the savings go away, yet the cost of the Doc Fix would continue.

This particular bill would reduce deficits by nearly $50 billion over the decade, but could increase them by $200 billion or more in the next decade.

Committee for a Responsible Federal Budget

Using Phony War Savings to Finance Real Costs

The wars in Iraq and Afghanistan have cost over $1.5 trillion so far, but as we continue to withdraw our troops from the region the costs are waning. Annual costs have already fallen in half from a high of nearly $190 billion in 2008 to closer to $90 billion today, and they are likely to fall to as low as $30 billion in the next few years.