By Tony Bertuca
Congress, by refusing to allow the Defense Department to cut aging weapon systems and enact compensation reform in fiscal year 2015, has put the Pentagon in a $70 billion budget hole as it contemplates the FY-16 budget submission, according to Deputy Defense Secretary Robert Work, who sees DOD’s embattled overseas contingency operations fund as a way to address the situation.
Work, who spoke Tuesday at the Council on Foreign Relations in Washington, said Congress should allow the Pentagon to indefinitely continue using its OCO budget to address America’s global security responsibilities amid the onset of sequestration and the political unwillingness to allow DOD to put its fiscal house in order. He likened the current budgetary relationship between DOD and Congress as something out of “La La Land.”
“If you add up all the things where Congress told us ‘no’ after we submitted our budget, it’s $31 billion [worth of] no’s,” Work said. “No, you can’t get rid of the A-10; no, you can’t get rid of the U-2. No, you can’t get rid of those cruisers; no, no, no, no, no. And then, no, you can’t do compensation reform and that’s another $11 billion to $39 billion.”
Work said the Pentagon was starting its fall budget review “trying to figure out if we have to re-shuffle the deck to the tune of $70 billion.”
Work laid out several budget scenarios involving the future of OCO spending that could provide DOD some breathing room to address America’s global security responsibilities if sequestration remains in place.
First, Work said, the Pentagon and Congress must address any OCO priorities that actually belong in the DOD base budget, though he did not provide a figure.
“There’s a lot of money in the OCO that should probably be in base,” he said. “It’s not because we didn’t want it to be in the base, it’s just happened over 12 years. That money . . . has to come into the base with [an] increase in our topline, which Congress has indicated, no, they’re not ready to do.”
If Congress does not increase DOD’s topline, the second option involves the Pentagon simply moving its OCO priorities back into the base budget “where we eat it, which really constrains us,” Work explained.
The third scenario would involve establishing the OCO budget as a long-term account with various “rules” and congressional oversight, according to Work.
“We agree that OCO will continue in the future and we’ll establish some rules to doing it,” he suggested. “I believe that latter one is what we’re going to have to do. With the crisis of Ebola . . . with the European Reassurance Initiative, we’re going to have to have operations contingency funds for some time. That is in debate now.”
Work said all current U.S. operations in Iraq and Syria are being paid through the OCO account, “and for the foreseeable future we believe that is the case.” The Pentagon estimates that current operations in Iraq and Syria are costing between $7 million and $10 million per day.
The White House submitted the $60 billion FY-15 OCO funding request to Congress in July, on top of a $496 billion base budget request for DOD. Congress, however, approved a continuing resolution Sept. 17 that would fund the government at FY-14 levels until Dec. 11, providing an $85 billion OCO budget, or $25 billion above the president’s FY-15 request. It remains unclear how much OCO the Pentagon will spend between the end of the current fiscal year (Sept. 30) and Dec. 11. The president’s base budget request is $115 billion above sequestration levels and OCO is exempt from spending caps.
Critics of DOD spending, however, have consistently called OCO a “slush fund” that has contributed to the slow erosion of budgetary discipline at the Pentagon. Defense Secretary Chuck Hagel acknowledged as much when he testified before the House Armed Services Committee on Sept. 18.
“We all have different opinions on whether there should be an overseas account or not and whether it’s a slush fund or not,” Hagel said.
Joint Chiefs Chairman Gen. Martin Dempsey has also said DOD is facing budget problems as it goes into its fall FY-16 review due to “assumptions” the department made that Congress would allow it the necessary authorities to cut weapon systems and enact compensation reform.
“We didn’t get any of those, actually, or very few of those, and the commitments have increased,” he told the Senate Armed Services Committee on Sept. 16. “We do have a problem and I think it will become clear through the fall.”
Dempsey has also asserted that the underlying budget issues could not be solved through OCO funding alone.
“OCO is gas money,” he said at a Sept. 26 press conference at the Pentagon. “The baseline budget is what builds and sustains, trains and equips and organizes a force. We have to separate those when we talk about budget.”
Meanwhile, Work said “it is likely the Pentagon will have to submit a budget in February in the midst of another continuing resolution,” noting that budgetary planning under a CR which freezes all government spending at previous-year levels is never “ideal, but unfortunately it’s the norm now.”
Ultimately, Work said, America will have to pay the necessary costs associated with being a global power if it is to remain one.
“If you want to have a global posture . . . you’re going to pay a premium for that,” Work said. “Sequestration will not work. Period.”