Inside the Pentagon’s ‘Slush Fund’: The Secret Budget That Just Won’t Go Away | US News

Paul D. Shinkman

It’s been called war planners’ crack cocaine, a shifty accounting scheme or a habit-forming opiate imbibed government-wide. Barack Obama pledged to eliminate it at the beginning of his presidency, but its potency has only grown stronger since. Now, it accounts for the unregulated spending of $60 billion or more in taxpayer dollars per year, with no end in sight.


Get used to the Overseas Contingency Operations budget.


The OCO was known from 2001 to 2009 as “the supplemental” and is now considered a de facto slush fund. It began as the war budget President George W. Bush needed for the conflicts in Iraq and Afghanistan without having to go back to Congress every time the Defense Department needed to modify its main half-trillion-dollar budget to account for changing battlefield conditions or the development of new technology.


It is necessary at times. When insurgents intensified attacks using improvised explosive devices to blow up coalition convoys in Iraq and Afghanistan, the military tapped the fund to quickly purchase and deploy newly developed mine-resistant, ambush-protected vehicles, or MRAPs, which ultimately replaced Humvees.



But another benefit for war planners is that the Pentagon does not have to release details publicly on how specifically this money will be spent.


As a result, what was once restricted to a fund to replace blown-up tanks, get more bullets and transport troops in and out of faraway war zones has ballooned into an ambiguous part of the budget to which government financiers increasingly turn to pay for other, at times unrelated, costs.


The contingency fund has been used to buy sophisticated fighter jets that never dropped bombs on Middle East war zones, for example, or to pay soldiers while serving stateside. And it has not decreased under Obama’s withdrawals from protracted war in the Middle East. Quite the contrary – this year the proposed budget actually grew by $200 million despite thousands fewer combat troops in Afghanistan and, technically, none in Iraq.


It’s not just Obama. Limited during budget negotiations this year by sequestration caps, the Republican Congress proposed bypassing the across-the-board spending cuts by funneling increases in defense money into the contingency fund.


“Everybody in the whole system has drunk the magic elixir,” says Gordon Adams, a senior adviser for national security in Bill Clinton’s Office of Management and Budget who served on Obama’s transition team in 2009. “The administration will put in their stuff they want to test the base budget with. The Pentagon has put the stuff in there that won’t stress out the service chiefs. The appropriators put stuff in there that serves their interests. And they move money around like Three-Card Monty.


“Now everybody’s corrupt with regard to OCO.”


The president this year released an OCO budget of $58.8 billion, in addition to the $582.7 billion base budget, up from the contingency fund’s $58.6 billion budget last year and a base budget of $580.3 billion. This year’s contingency actually accounts for an expansion of the U.S. presence overseas, including a new line item for counterterrorism operations in Africa and more than quadrupling the $800 million needed last year for operations in Europe to counter Russia’s aggression.


These funds could go to bolstering the U.S. drone base in Djibouti, or pay for special operators to infiltrate Libya to fight the Islamic State group. Or, as it has previously, the fund could purchase new F-22 Raptor fighter jets, which are used in a limited capacity overseas, or to modernize the M-1 Abrams tank fleet – all items that should be included in the bulging, but public, defense base budget.


Add to that the $53 billion budget request Director of National Security James Clapper announced this week – a classified budget he said the intelligence community will use to contribute further to the contingency fund.


Obama through the OMB asserted early in his administration that he wished to do away with OCO spending in keeping with his campaign pledge to end the wars in Iraq and Afghanistan.


“We haven’t made a lot of progress on that,” Mike McCord, the Pentagon’s comptroller and general budget guru told reporters this week. “And I would say the budget deal that was enacted last November went exactly the opposite direction from that.”


This leaves the future of the contingency fund uncertain, particularly as government officials prepare to turn over responsibility to a new administration. The next president will likely take a new look at that part of the budget to add more predictability to overall budget requests, but the lack of progress during this administration doesn’t bode well.


“And I think the battlefield’s fairly confused now, I have to say,” McCord said, “In terms of, ‘Is there going to be an OCO budget in the future that looks like it does now?’”


It almost certainly will.


Congressional action to reign in spending on what should be the war budget has failed in recent years. Rep. Mick Mulvaney attempted to add an amendment to the military budget in 2014 that would have limited the contingency budget. The South Carolina Republican framed the restrictions around a memo OMB put out in 2010, cataloguing specifically what could and could not be included in OCO.


“The war budget has been used for years as a slush fund of sorts to get around budget limits,” Mulvaney told McClatchy at the time.


This rule would have prohibited, for example, the Air Force buying more F-15s, since none were lost in the wars in Iraq or Afghanistan, or purchase more Stryker vehicles for the Army, which should be included in its long-term planning. It also would have stopped, as Mulvaney frequently cited, the purchase of a V-22 Osprey destroyed during a training exercise in Florida.


Janine Davidson, who is awaiting Senate confirmation to become undersecretary of the Navy, wrote last year about the perils of letting this budget remain unchecked.


“Without a frank conversation about these defense spending trends and (perish the thought!) a bit of bipartisan compromise, the OCO may instead become a ‘second defense budget,’ stuffed with items from the Pentagon’s base budget request. This will frustrate long-term planning and impair congressional oversight – a bad bargain for all parties involved,” she co-wrote in a blog post for the Council on Foreign Relations.


Adams believes the increased reliance on this budget “fractures budget discipline” for the Defense Department and demonstrates that normal budget process “is completely broken.” It leaves the Defense Department all the money it needs for operations and paying its bills, and then some.


“When you’ve done that, you’ve basically said to all the people who run the Pentagon, ‘You’re awash with money. Priority-setting is no longer necessary.’”

Inside the Pentagon’s ‘Slush Fund’: The Secret Budget That Just Won’t Go Away – US News.