Higher War Costs Driving Large Part of Pentagon’s Budget Shortfall | CQ NEWS – POLICY

By John M. Donnelly, CQ Roll Call

Lawmakers, defense industry advocates and Pentagon officials blame sequestration for eroding U.S. military operating budgets so much that civilians will have to be furloughed, Air Force squadrons grounded, Army brigades deemed unfit to fight and Navy warships left in port for lack of repair money.

But as much as one-third of the up to $30 billion shortfall for fiscal 2013 in the accounts that fund U.S. military readiness is caused not by automatic budget cuts but by the Pentagon’s own underestimation of its war costs, Defense Department figures show.

Pentagon officials say war is unpredictable and so is budgeting for it. Even so, the inability to accurately gauge the cost of “overseas contingency operations” — more than a decade into major combat operations in Afghanistan — has caused military leaders and members of Congress to shift billions of dollars each year to keep the flawed projections of the price of front-line actions from costing the military in other areas.

“Underestimating war costs is contributing to their readiness problem, and it hasn’t gotten enough attention,” said Gordon Adams, a defense budget expert with the nonpartisan Stimson Center think tank. “After 12 years of war, we should know how to price it. There’s no mystery meat here.”

At issue is the Pentagon’s “operations and maintenance” account, which covers training costs, equipment maintenance, food, fuel and civilian pay.

According to the Defense Department, sequestration will have subtracted $20 billion from readiness accounts by the time fiscal 2013 ends on Sept. 30. But on top of those effects, the readiness accounts will be anywhere from $6.8 billion to $10.1 billion short because of the higher-than-anticipated costs of war.

The Army’s share of the shortfall is up to $7.8 billion, most of it from underestimating war costs. And the budgetary fallout from battlefield events could change again as the year progresses, officials have said, because the 2013 warm-weather “fighting season” in Afghanistan has just begun.

In order to make sure that troops in Afghanistan and other areas of the world are funded adequately, officials are shifting funds to the war zone from the non-war readiness accounts.

In turn, in order to replenish those non-war readiness accounts, Pentagon officials say they will send to Congress in the next week or two a reprogramming request for fiscal 2013 that will attempt to redirect billions of dollars, largely from weapons modernization. But that won’t be enough to fully pay back the readiness accounts, they hasten to add, because the Pentagon is limited in how much it can move around each year, even with congressional authorization.

At least two members of Congress — Maine Sens. Susan Collins, a Republican, and Angus King, an independent — want the Pentagon to solve the problem by simply asking Congress for more money. They suggest officials submit a budget amendment for fiscal 2013 that requests enough funding for overseas contingency operations to solve the readiness problem. So-called OCO money is not subject to budget caps.

A Pentagon spokeswoman, Lt. Col. Elizabeth Robbins, said the department is “considering all options” for addressing the shortfall but pointed out that, even if OCO money is not capped by law, spending more of it would still add to the deficit.

War Budgeting

Until a few years ago, the Pentagon submitted its war budget request as a supplemental months after the regular budget went to Capitol Hill, so they didn’t have to forecast costs too far in advance. Even so, there have always been reprogrammings needed to adjust to changing events.

Still, this year’s shortfall in war spending may be surprising to some, and not just because of how long the U. S. military has been engaged in Afghanistan.

The price spike is also raising some eyebrows on Capitol Hill because the administration, for its fiscal 2013 budget request, assumed that 68,000 U.S. troops would be deployed in Afghanistan for the entire fiscal year. The current figure is already lower, and their ranks are projected to decline to 34,000 by February.

According to the Pentagon, the shortfall in war money occurred, despite the lower-than-expected troop numbers, because officials were surprised to find that costs didn’t decline in direct proportion to lower troop numbers.

“What we are seeing in actual execution is that many of these costs will not decline until bases are closed,” Robbins said.

Dov Schwartz, an Army spokesman, struck the same note: “Estimates are derived from the best information available at the time, but conditions on the ground in Afghanistan are fluid.”

Behind the High Costs

A number of factors are driving up war costs, and the relative significance of each is hard to judge.
There are more civilians and contractors, Robbins said. Operating tempo, or the pace of fighting, is more intense. Higher fuel costs played a role. So did the fact that land supply routes through Pakistan were closed for longer than expected, requiring more expensive ways to supply troops.

Extracting the troops’ equipment is also going to cost more than officials thought. And there are other costs that are higher: logistics, communications, intelligence systems maintenance, food service and more, according to officials and briefing documents provided to Congress.

In addition, Robbins said, there are more U.S. forces than planned engaged elsewhere in the Middle East and Southwest Asia beyond Afghanistan.

“The department is also maintaining a larger presence within the U.S. Central Command area of responsibility, not just Afghanistan, than originally planned,” Robbins said.

Some say war costs should be more predictable, and they wonder whether other factors may be at play. Adams, for example, who oversaw defense budgets at the Office of Management and Budget during the Clinton administration, finds it difficult to believe that the operating tempo is higher in Afghanistan, given that U.S. troops are supposedly handing over lead duties to Afghan forces and U.S. casualties are down, he said.
He added that, in addition to the reprogramming authority that Congress will provide, the Pentagon has authority to shift money around if each move falls below a certain dollar threshold, and it did that for $10 billion or more in all but one of the past 12 years, he said.
“There’s huge flexibility to manage the problem,” he said.

Indeed, the Army’s Schwartz disclosed that the service has obtained $5 billion of its $7.8 billion shortfall but still needs help from Congress for the rest.

On Capitol Hill, many lawmakers are scratching their heads about the higher war costs. For example, Rep. John Garamendi, D-Calif., a member of House Armed Services, has asked the Pentagon for more details on the up to $10.1 billion shortfall — but his solution is to bring U.S. troops home.

“At a time when we are cutting funding for fundamental programs that serve hardworking Americans here at home, it is deeply disturbing to me that we are continuing to allocate over $80 billion a year for the war in Afghanistan,” he said in a written statement responding to a query.

The rising costs of war operations will be a key issue going forward because the size of the war budget may not decline by much, even as the Afghanistan war winds down.

Pentagon Comptroller Robert F. Hale, in an interview with Defense News this week, signaled that the Pentagon has halted plans to shift many of the programs from the war budget to the so-called base budget.

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