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Congress Finally Dials Down Its Defense Slush Fund—But the Chicanery Isn’t Over

Think they're reining in military waste? Watch the shell game.
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The Pentagon is a massive black hole of dubious spending, and its annual final budget never tells the entire story. Case in point: the Overseas Contingency Operations (OCO) fund is just one of the ways the military spends our money above and beyond their annual outlays.

Supposedly, the OCO will be reduced significantly over the course of the next two years. But before you think the government is reining in spending, think again.

In addition to the FY 2019 Department of Defense (DoD) budget of $617 billion, lawmakers agreed on February 9 to devote $69 billion to the OCO, which on the books is supposed to go to the fight against ISIS and the war in Afghanistan, but watchdogs know has become a yearly “slush fund” to pay for non-war related items, avoiding the caps placed on the Pentagon during sequestration.  

As a part of its long-term budget plan, the Trump administration is proposing to shift around 70 percent of OCO expenses back into the base budget, whittling down the fund from $69 billion to $20 billion by 2020. This will increase transparency, if it is all done above-board. The risk, of course, is that the military will use it as a sort of shell game, finding a way to label temporary war expenditures as “enduring costs” and sending them to the regular budget where they will likely grow and stick around forever. Such an ostensibly helpful change would bilk taxpayers for billions while making America weaker.

The OCO budget has had little oversight since its post-9/11 debut, allowing appropriators and defense hawks to sneak in non-war funding. Center for Strategic and Budgetary Assessments fellow Todd Harrison found, for instance, that for FY 2014, “the increase in Army and Air Force O&M costs could mean that the Services are categorizing roughly $20 billion of peacetime training activities as pre-deployment training in the OCO request.”

These funding items continually see increases regardless of America’s war footing. In 2017, the Government Accountability Office found that “the amount of OCO appropriations DoD considers as non-war increased from about four percent in fiscal year 2010 to 12 percent in fiscal year 2015,” as outdated guidelines from the Office of Management and Budget (OMB) were effectively ignored. OCO items such as the European Deterrence Initiative (EDI, formerly “European Reassurance Initiative”) are unrelated to any specific operation, and face little pressure to make future projections of any kind.

This fiscal dysfunction has led some to demand that the government rein in the OCO. Unaccountable programs like the EDI would need to submit future estimates of costs, including assumptions about cost-sharing between America and Eastern European host nations. But bringing those line items out of the shadows also means setting the stage for normalcy and permanency. By their nature, overseas operations are intended to be temporary responses to defined threats beyond U.S. borders, and incorporating them into the routine budgeting process creates a troubling new normal.

The U.S., for instance, pledged in 2016 to include a mandatory minimum of $500 million in missile funds for Israel in the base budget through FY 2028. After the House proposed funding this military aid through the OCO budget, the White House pushed back, citing concerns that the move would “complicate the funding stability for associated outyear costs.” So Congress reverted back to base budget funding for missile defense, ensuring that the mandatory minimums will be kept in place for the next decade. Even if allied nations need missile defense to respond to threats, ensuring constant and open-ended funding through routine budgets simply engenders bloat and waste in the recipient countries.

In a landscape created by the Budget Control Act of 2011, Department of Defense appropriators sneakily avoided spending caps by transferring base budget items to the OCO. By doing so, the Trump administration and Congress aim to ensure that “routine” items related to training, readiness, and basic maintenance leave the OCO budget once and for all.

But if the Department of Defense manages to define expensive, unnecessary infrastructure in the Middle East and Eastern Europe as “enduring costs,” temporary line items will morph into base budget boondoggles. OMB must maintain a close collaboration with the Pentagon to ensure that fund shifting abuse is kept to a minimum. As stated by the late Senator James F. Byrnes, the closest earthly approach to immortality is a base government operation.

Ross Marchand is the director of policy for the Taxpayers Protection Alliance.



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