War Fund Gets New Attention in Both Chambers as Budget Gimmick | CQ NEWS – POLICY

By Tamar Hallerman, CQ Roll Call

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A bipartisan effort in the House seeking to codify limits on requests for war-related spending may lead to an awkward vote for lawmakers as it highlights what critics say has become a slush fund for appropriators and authorizers grappling with tight discretionary spending caps.

The same dynamic is playing out on the Senate side, where Appropriations Chairwoman Barbara A. Mikulski admitted Tuesday that she is considering shifting some State Department funding into a special war-related spending account to avoid making deeper cuts to nondefense programs.

On Tuesday afternoon, the House Rules Committee will decide whether the chamber will vote on an amendment sponsored by Reps. Mick Mulvaney, R-S.C., and Patrick Murphy, D-Fla., when it considers the defense policy bill (HR 4435). The amendment would codify 2010 guidance from the Office of Management and Budget that clarifies which programs are eligible for war funding under the so-called Overseas Contingency Operation account.

While the provision stops short of stymieing what Congress itself can designate as war spending — it instead focuses on shaping the Pentagon’s proposal — it draws more attention to an account that has, at times, allowed lawmakers and Pentagon officials to circumvent the rigid defense and nondefense spending caps established under the 2011 Budget Control Act (PL 112-25).

If the amendment is allowed to reach the floor, Republicans would have to choose between the party’s desire for higher defense spending and its push to enforce a strict interpretation of the spending restrictions.

“As the caps have gotten tighter, it’s become more and more difficult for both sides of Congress to make the cuts that are required on both the defense and non-defense side, so I think that’s why we see them using OCO as an escape hatch,” said Todd Harrison, a defense budget analyst for the Center for Strategic and Budgetary Assessments.

The underlying defense bill already includes a provision that would require the Pentagon to provide a report on all the missions expected to last beyond the war in Afghanistan» that now are funded through OCO.

“The committee believes the Department of Defense is accepting high levels of risk in continuing to fund noncontingency related activities through the OCO budget and has not fully articulated the scope of enduring OCO-funded activities or a clear path forward in migrating enduring requirement resources to the base budget,” the committee wrote in the bill’s report language.

Dodging Caps

Mulvaney and Murphy are trying to bring attention to a process that allows non-war-related funding to be moved into the OCO account, which is not subject to discretionary limits, while keeping the base budgets of annual appropriations bills compliant with those caps.

In a letter to President Barack Obama, Mulvaney and Murphy, along with Mike Coffman, R-Colo., and Chris Van Hollen, D-Md., said they were concerned about the “migration of base budget funding into the OCO budget as well as the use of war funds to finance activities and procure items that are unrelated to the war in «Afghanistan».”

“OCO budgets have remained at high levels despite the fact that war operations are winding down,” the letter said, adding, “both branches of government are to blame” for the OCO “misuse.”

The statutory criteria for what can constitute OCO spending is notably vague.

The OMB has released some of its own guidance in recent years, aiming to focus the Pentagon’s annual budget request for the war account on needs such as munitions and equipment purchase, replacement and modification, while excluding activities like training equipment and family support initiatives, which the agency says must come out of the Pentagon’s base budget.

But Congress has treated such criteria as merely guidance, frequently upping the OCO number in final appropriations bills above the amount requested by the administration.

“The only thing that matters for being declared OCO is that bills are passed in both chambers with the same language, designating particular things as Overseas Contingency Operations,” said Russell Rumbaugh, an analyst at the nonpartisan Stimson Center. “Technically, anything can be OCO.”

Most recently, appropriators shifted some $9.6 billion from the Pentagon’s base budget to OCO in the fiscal 2014 omnibus (PL 113-76) that Congress passed in January, according to the Center for Strategic and Budgetary Assessments, while the Defense Department shifted some $20 billion to OCO. In total, the shifts accounted for about a third of that year’s final OCO total.

“There’s a pretty long history of money from the base defense budget being shifted over to OCO,” said Ed Lorenzen, senior adviser to the Committee for a Responsible Federal Budget, a nonprofit fiscal watchdog group.

Senate Accounting

On the Senate side, Mikulski said she is thinking of shaving down the subcommittee allocation for the State-Foreign Operations title and shifting some of that funding to the war-related Overseas Contingency Operations account, which is not subject to the same tight budget caps.

“We used OCO in the omnibus, but we would not use it casually. In other words, OCO would not be used for housing or Head Start programs, it would be focused on those issues related to national security and diplomacy,” she said.

The proposal garnered ire from Republican appropriators last week, when they complained that the Maryland Democrat used OCO and other “gimmicks” to shield programs from a $4.3 billion cut required by an accounting discrepancy.

Mikulski emphasized, though, that her plans “literally follow Murray-Ryan” — last year’s budget deal (PL 113-67) — and that she is using “tools that have been used by both parties.”
“So I’m not inventing anything new. And I’m not inventing new money,” she said.

She said negotiations between ranking Republican Richard C. Shelby of Alabama and the other committee’s Republicans over their support of the so-called 302(b) allocations are “fluid, but not slippery” and they were still going “back and forth on some ideas.”

While the full details of Mikulski’s plans for subcommittee allocations likely won’t be clear until Thursday, when the committee votes on her blueprint, some budget observers said the chairwoman could easily shift funding from the base budgets of nondefense bills like State-Foreign Operations or Homeland Security, which include OCO components, to the war spending account to free up some room under the discretionary caps.

“You could move $4 billion within 150 with no problem,” Rumbaugh said, referring to the budget function that incorporates the government’s international activities. “It’s not a new gimmick. State has gotten significant OCO funding every single year.”

This is only one such budgetary maneuver that lawmakers or the executive branch have tried.

The committee report accompanying the fiscal 2015 budget resolution (H Con Res 96) passed by the House this spring, for example, notes with concern that OCO increasingly has been used “to circumvent discretionary funding caps.” Lawmakers in the resolution vowed to exercise oversight and largely oppose any increases to the account above the administration request.

Budget watchdog groups like the Committee for a Responsible Federal Budget and Taxpayers for Common Sense have also increasing pressure to “reexamine” and limit the definition of OCO.

Despite such efforts, some observers said they don’t expect such bookkeeping to go away anytime soon.

“I don’t see any signs that it’s going to change in a significant way,” said Harrison. “The one thing to watch out for, though, is what happens when we don’t have a war. When we are almost completely out of «Afghanistan in a few years time, how are they going to continue to use OCO as a justification or a vehicle for hiding all sorts of regular spending? That’s when the fig leaf will be removed.”

John M. Donnelly contributed to this report.

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