Overseas Contingency Operations Serves as Off-Budget Pentagon Slush Fund | US News

Ryan Alexander

Last Tuesday was the day the Obama administration submitted its last budget request to Congress. The budget again included both the “base” budget for the Pentagon of $524 billion as well as a “war” budget, officially referred to as the Overseas Contingency Operations account.


This extra war account has dropped from an all-time high of $187 billion in fiscal year 2008 (albeit not on a straight downward trajectory) to a request of just under $59 billion this year. There is a fair amount of pressure from Congress to keep this special budget in existence.


Why? Because it’s “off budget” and, therefore, doesn’t count against the caps set by several budget agreements over the last few years, including the Bipartisan Budget agreement of last fall.


Knowing that, think about this quote from Michael McCord, the under secretary of defense (comptroller) and chief financial officer of the Pentagon, last Tuesday: “In the last couple years there’s been an effort, especially from OMB … to try and find a way to get OCO costs down and get everything back into the base budget. We haven’t made a lot of progress on that. And I would say the budget deal that was enacted last November went exactly the opposite direction from that.”


Again, why? Because the portion of last fall’s agreement that dealt with the war budget was written as a “floor.” No less than the $59 billion outlined in the agreement may be spent in this overseas contingency account. And that fact led to this very strange statement by McCord as he was explaining a budget chart to Pentagon reporters. “We came up with everything that we felt we needed to do at OCO, and then at the bottom, you see kind of what was left to use up the rest of the head room that was made available to us by virtue of the wording in the budget agreement.”



Earlier in the day, the Deputy Secretary of Defense Robert Work was even more direct during his press briefing: “So, this OCO budget provides us everything we need, we believe, right now to execute our global operations. That left over about $5 billion to cover base needs.”


So which is it? Are these actually base needs, which therefore should have been paid for out of the $524 billion cap from the agreement signed just three months ago? Or are these war needs? I think it’s clear from what these two senior officials have publicly stated – the war budget is being used, in an off-budget way – to meet requirements that should actually be paid for by the main Pentagon budget. Let’s call this what it is – a slush fund for the Pentagon. My organization has repeatedly pointed out that if the war budget were an actual federal agency, it would be one of the largest in terms of discretionary spending.


And this year is no different. If the war budget agency were separate, it would be the fifth largest in the federal government. This beats the Department of Homeland Security, in sixth place with a $40.6 billion request, by a wide margin.


Unfortunately, this is not the only outrageous machination over the war budget in the latest budget request. One of the ways this or any administration can make its budget look better is by making the most positive “projections” possible. So if you look deep in the justification documents for the budget, you find the table “Effect of Budget Proposals on Projected Deficits.” And that table has exceedingly rosy projections on what planned yearly reductions to the Overseas Contingency Operations requests will do to reduce the deficit. So what does the president’s budget say the federal government will save by planned reductions to the war account? Well, as so often happens with these assumptions, nothing would be saved this year. But starting just as soon as the president is out of office, we should save about $37 billion in fiscal year 2018. That quickly ramps up: $55 billion in savings, $63 billion, $67 billion in each successive year. Through the planning horizon of this table (fiscal year 2026), the president’s budget states that deficits will be cut by $636 billion.


If only that were remotely believable. Unfortunately, very recent history shows us that any time this administration attempts to cut the war spending budget, or even puts some controls on how it can be spent, this Congress lards the account back up again.


It’s time for fiscal discipline to apply to all aspects of the Pentagon budget. When there aren’t enough overseas contingencies to spend all your war money on, let’s save the taxpayers that $5 billion.

Overseas Contingency Operations Serves as Off-Budget Pentagon Slush Fund – US News.