Championing Responsible National Security Policy

Loophole in Law May Allow Pentagon Savings to Escape

More than two years ago, Congress enacted landmark legislation to constrain and reduce the size of the Pentagon’s budget over the coming decade. But, a significant loophole in the law gives congressional appropriators wiggle room as they finalize a massive omnibus appropriations package that must conform to new defense spending limits implemented last month.

In 2011, Congress enacted the Budget Control Act (BCA), which set limits on both defense and non-defense spending for the following nine years. Despite these funding caps, over the past two years the Pentagon continued to submit budget requests that ignored the spending limits enshrined in law.

In Fiscal Year 2014, defense spending was capped at $498 billion, but late last month Congress enacted a budget resolution, developed by Senator Patty Murray (D-WA) and Representative Paul Ryan (R-WI), that increased the defense spending cap to $520.5 billion. Neither the original BCA spending cap nor the new Murray-Ryan cap place any limit on the amount of war funding that can be provided through the Overseas Contingency Operations (OCO) account.

Now, Congress is crafting an enormous new spending bill, known as an omnibus, that will fund the Pentagon for the remainder of FY 2014. However, congressional appropriators must cut approximately $30 billion from the Pentagon’s FY 2014 budget request in order to meet the new Murray-Ryan spending cap.

Because the OCO account is not constrained by statutory spending caps, it provides a tempting place to park funding that otherwise would have to be cut from the Pentagon’s base budget accounts. Shifting funds from the base budget into the OCO account would not represent a new tactic for either the White House or Congress. “This has been successfully done in prior years in an effort to alleviate the strain on the budget as resources for defense have declined,” Jim Dyer, a former Republican staffer for the House Appropriations Committee, recently told CQ Roll Call (subscription required).

Since 2002, the Pentagon has separated funding relating to the war in Afghanistan and other counterterrorism activities from its base budget, which includes such accounts as procurement, personnel, operations and maintenance, and research and development. However, the distinction between war-related activities and base-budget programs has grown increasingly murky over the years.

In FY 2013, for example, the Pentagon’s budget request shifted approximately $4.5 billion in military personnel costs from the base budget to the OCO account, according to a report by analysts at the Project on Defense Alternatives and Cato Institute (which I coauthored). It does not take a leap of imagination to envision the White House and Congress engaging in the same tactic again this year.

In its FY 2014 budget submission, the White House requested nearly $80 billion in OCO funding—which is roughly ten percent less war funding than was provided in FY 2013. However, according to the Pentagon's own documents, from FY 2013 to FY 2014 it expects to have approximately 39 percent fewer personnel deployed in Afghanistan. After you take into account the costs of extracting U.S. hardware and troops from Afghanistan, which is estimated to cost $5-7 billion this year, you have to wonder where the extra OCO funding will go, and if it’s not an easy way to escape the statutory spending cap on the Pentagon’s non-war activities.

Indeed, according to Politico (subscription required), “appropriators are eying OCO funding as a way to help ease the Pentagon’s fiscal pain as they seek final agreement on how to cut roughly $30 billion from its 2014 budget submission.” An anonymous defense lobbyist told Politico that appropriators plan to pad the OCO account by roughly $6 billion above what the Pentagon requested for Fiscal Year 2014.

Interestingly, a similar effort by the House Appropriations Committee to cushion the OCO account failed last year. When the House of Representatives took up its version of the Fiscal Year 2014 Defense Appropriations Act in July, the bill, as marked, included billions of dollars in excess war funding that the Pentagon had not requested. With the strong support of the Project On Government Oversight, a bipartisan group of lawmakers led by Representatives Mick Mulvaney (R-SC), Chris Van Hollen (D-MD), Mike Coffman (R-CO), and Patrick Murphy (D-FL) successfully amended the bill to cut war spending by roughly $3.5 billion—bringing it closer in line with the funding levels requested by military leaders.

With less than a week to go before the current stopgap Continuing Resolution expires, Congress must enact a full-year omnibus appropriations act to keep the federal government’s doors open. Instead of using the OCO account as an escape hatch from which to avoid budget constraints, Congress should take a hard look at overpriced, outdated, and behind-schedule weapons systems that contribute little to America’s national security.

Just this week, a broad-based coalition of organizations from across the ideological spectrum, including POGO, wrote to Members of Congress highlighting numerous defense policy reports that have been released over the past three years. These reports include recommendations, which, taken together, could save the Pentagon and American taxpayers hundreds of billions of dollars over the coming decade. Even the nonpartisan Congressional Budget Office has ideas for ways to draw nearly half a trillion dollars in savings from the national security budget.

Shedding excess waste and enacting smart policy reforms will help enhance America’s global security posture for generations to come. It is time for Congress to make tough decisions about military spending priorities instead of using the war funding account as a slush fund in a desperate attempt to evade fiscal responsibility.