By Ethan Rosenkranz , Erica Fein and Stephen Miles
Recent flare-ups around the world have Washington politicians and their sympathizers predictably sounding the alarm bells over sequestration and calling for an increase in the Pentagon’s budget. Dire warnings by credible and powerful voices deserve to be taken seriously. Yet, a closer look reveals that the Pentagon has plenty of money sitting around with which to fund new contingencies.
Last week, the Washington Post lamented that current Pentagon efforts to combat Islamic militants in the Middle East, curtail Ebola in Africa, and contain Russian aggression in Eastern Europe are straining the United States’ national security budget: “These are all justified initiatives with broad support from Congress and the public. But the budgetary foundation needed to sustain them is crumbling,” said the Post.
Over on Capitol Hill, Sen. Lindsey Graham, R-S.C., more predictably is warning, “If we don’t replace the cuts in sequestration, we’re going to compromise our ability to be successful against [the Islamic State] and other emerging threats.” His colleague, Sen. John McCain, R-Ariz., who is due to take over the Senate Armed Services Committee next year if Republicans win the Senate in November, is even more blunt. “I know that if we don’t, we will cripple the United States’ ability to defend this nation.…That isn’t my view — that’s [the view] of every military leader I know,” he said.
Indeed, even the Commander-in-Chief has joined the fray, with President Barack Obama calling for an end to the so-called “draconian” cuts while visiting the Pentagon last week.
Here’s the reality. Over the past few years, the Budget Control Act has kept the Pentagon’s base budget relatively flat at just under half of one trillion dollars. Nonetheless, the Pentagon has found ways to avoid fiscal discipline and Congress has let them, twice offsetting a portion of the act’s mandatory defense reductions with other nondefense savings.
More importantly, unlike most other federal agencies, the Pentagon has an off-budget war chest slush fund, known formally as the Overseas Contingency Operations, or OCO, account. It is not subject to statutory spending caps.
This account has allowed the Pentagon to escape the majority of the deficit reduction savings required by the BCA. As Gordon Adams, defense budget official during the Clinton administration, notes, “OCO has become everybody’s safety valve.” In fact, this OCO account is exactly where the Pentagon is finding the money to prosecute a new war in Syria and Iraq, not to mention funding efforts to “reassure” skittish European allies and pay for the Pentagon’s campaign against Ebola in West Africa.
According to the Pentagon, military action against the Islamic State has cost the United States just over $1 billion. Looking forward, budget experts estimate that long-term action against the Islamic State could cost $2.4 to $22 billion per year depending on the pace of escalation. But there is no need to panic: The Pentagon will not run out of uncapped war funding anytime soon. Estimates for the current war in Iraq and Syria still fall well short of the trillions spent on the previous wars in Iraq and Afghanistan. Moreover, there is plenty of slush in the OCO account from which to fund these activities.
Because this special account is unconstrained, over the past few years, the Pentagon and Congress have migrated around $30 billion per year from the Pentagon’s base budget into its OCO account. Speaking at a Council on Foreign Relations event recently, Deputy Secretary of Defense Robert Work admitted as much: “There’s a lot of money in the OCO that should probably be in the base.” But he also said the OCO account was here to stay. The Air Force last year, for example, used the war funds to replace a V-22 Osprey that had crashed during a training exercise in Florida—completely unrelated to the war in Afghanistan. More recently, the Pentagon proposed using $2 billion in war funds to purchase, among other items, eight new F-35 Joint Strike Fighters. The F-35 has never flown a combat mission in Afghanistan, Iraq or Syria. In fact, it won’t be fully operational for another couple years at the earliest. Fortunately, House Defense Appropriations Subcommittee Chairman Rodney Frelinghuysen, R-N.J., rejected the Pentagon’s reprogramming request.
Congressional appropriators are just as guilty for enabling the Pentagon to avoid the belt tightening demanded of the rest of the federal government. In fiscal year 2014, Congress provided an additional $5 billion in unrequested war funding on top of the $80 billion that the Pentagon did request. And just before Congress recessed for the election, it enacted a short-term spending bill that ignores the most recent war budget request of $58 billion, and instead spends at last year’s higher $85 billion level, an astonishing $27 billion more than requested.
Between tens of billions of dollars of slush sloshing around the current war budget and the half a trillion dollars the Pentagon retains in its base budget, there is no shortage of money readily available for our latest military contingencies, be it an air campaign in Iraq and Syria, efforts to contain Ebola in West Africa or the perennial need to reassure NATO allies in Europe.
While uncertainty remains about exactly how much these efforts will cost, one thing is clear: we do not need to abandon fiscal discipline at the Pentagon to pay for them.