Defense Veto Opens Door to Ending Pentagon Slush Fund | William Hartung

President Obama’s veto of the National Defense Authorization Act (NDAA) last week is a positive step towards imposing long overdue discipline on the Pentagon budget. In vetoing the bill, he noted that it “fails to authorize funding for our national security in a fiscally responsible manner.” This was a not-so-veiled reference to the fact that the bill relied on a budget gimmick – a multi-billion dollar Pentagon slush fund that violates the caps on Pentagon spending established in current law. For this reason alone, the veto deserves to be upheld.


The use and abuse of the slush fund – known in Pentagon-ese as the Overseas Contingency Operations (OCO) account – has cost the taxpayer at least $100 billion over the past decade, and probably tens of billions more. The fund was created as a roundabout way of paying for the wars in Iraq and Afghanistan. The Pentagon has tried to use the fund to pay for items like F-35 combat aircraft, excess C-17 transport aircraft, and Army modernization programs that have nothing to do with fighting current wars. To its credit, Congress blocked at least one of these efforts, but most of them have gone through untouched. The use of this bait and switch tactic has intensified since the passage of the Budget Control Act of 2011, which established strict caps on the Pentagon’s base budget.


Predictably, budget hawks in Congress have decried the president’s veto as being bad for the troops and for “taking down the military’s welfare.” It does no such thing. The bill that the president vetoed sets defense policy. It can’t spend a dime. That will happen later this year when an agreement is reached on Pentagon appropriations. The distinction makes a huge difference. The Pentagon is currently funded through December 11th – so with or without the president’s veto, the troops will be paid, and the Pentagon’s normal operations will continue.


This is a fight about what happens in the future, not the present. By implying otherwise, the president’s opponents are playing politics with defense, the precise thing they have (wrongly) charged the administration with doing.


The question underlying all of this is how much to spend on the Pentagon, and how to do it. The figures contained in the president’s budget and the authorization bill passed by the Congress have one thing in common – they are far beyond what is needed to defend the country. The mix of Pentagon spending, related programs, and allocations for the department’s slush fund proposed for next year is a whopping $612 billion. The President wants to get there by lifting the budget caps on military and domestic spending, while Congress would keep the caps for now and get the rest of the money by pumping up the slush fund by approximately $38 billion. No matter how one gets there, the $612 billion figure is too high.


The Pentagon base budget is also high by historical standards. It comfortably exceeds the average level of spending during the Reagan administration. More importantly, it funds numerous items and activities that are not needed. From overpriced, underperforming F-35 combat aircraft to ballistic missile submarines that will cost at least $7 billion per ship, to unworkable missile defense systems, the Pentagon’s procurement budget is larded with items that can be delayed or eliminated without undermining our defenses.


In addition, trimming the department’s bureaucracy can save tens of billions. Of particular concern is the roughly $200 billion per year spent on service contractors, many of whom do work that could be performed by government employees. Managing the Pentagon’s mix of civilian and contractor employees more effectively while reducing their numbers could save tens of billions of dollars per year. For example, according to an estimate by the Project on Government Oversight, reducing the contractor work force by 15% would save over $20 billion per year.


A combination of the measures cited above could bring the Pentagon’s base budget well within the caps set in current law.


Then there is the war budget, which I have referred to above as a slush fund because it contains so many items and activities that have nothing to do with fighting current wars. Only $5.3 billion of the president’s proposed war budget for 2016 of $51 billion was allocated for the war on ISIS. And even if the president proceeds with his ill-advised plan to keep 10,000 troops in Afghanistan indefinitely, it will not cost anywhere near the $40-plus billion per year that’s left in the Obama war budget after accounting for the costs of the war against ISIS. The spending on ISIS and Afghanistan is huge relative to most domestic programs, but it is only a fraction of what the Pentagon has stuffed into its slush fund.


Even though there are tens of billions of dollars in the Obama war budget that are not clearly tied to current conflicts, Congress wants to up that even that inflated figure by over $38 billion. The best way to stop this abuse of the war fund is to eliminate it altogether and bring war spending back into the Pentagon’s base budget. Then Congress and the president would have to make the case for precisely how much the country needs for defense, including the projected costs of current wars. If there were unexpected developments, short-term emergency spending could be authorized. But the use of the war budget as an open-ended slush fund would be brought to an end.


Last but certainly not least, there is the question of the wars themselves. Has the bombing campaign against ISIS hobbled the organization or merely encouraged it to proliferate to other parts of the world? Given the sectarianism and low morale that has plagued Iraqi security forces, does it make sense to send them more weaponry, some of which could fall into the hands of ISIS? Have diplomacy and other non-military tools been adequately used to prevent or curb the impacts of these conflicts? Should we devote more money to helping Syrian refugees and less to bombing their country? Should we keep more troops in Afghanistan, which is already the longest war in U.S. history? These are the kinds of questions that need to be debated before spending more on these wars.


But while these larger questions are being resolved, the least we can do is put the Pentagon on a real budget. And that means getting rid of the Pentagon’s slush fund while having a vigorous national debate about how much is needed to defend the country.


William D. Hartung is the director of the Arms and Security Project at the Center for International Policy.

Defense Veto Opens Door to Ending Pentagon Slush Fund | William Hartung.