To get around spending caps, Congress and the Pentagon have increasingly turned to a warfighting account to pay for items that would normally be in its base budget, and it’s a practice that will likely continue even with a request for a $54 billion increase in defense spending for the coming year.
Speaking at a forum at the American Enterprise Institute Wednesday, Mackenzie Eaglen, AEI resident fellow there, said one reason for using the Overseas Contingency Operations account to modernize and grow the force is: “We don’t pay for it.” Congress “puts it on the credit card,” and the overall budget doesn’t have to show corresponding cuts to match spending hikes paid from that account.
The OCO account was used that way to grow the Army and the Marine Corps during the Iraq War. The account itself dates from Operations Desert Shield and Desert Storm.
Michael O’Hanlon, of the Brookings Institution, said the administration will “have a problem of how we’re paying for” the projected budget increase under the spending Budget Control Act of 2011. He estimated that $20 billion to $25 billion of the $60 billion in emergency defense spending this year is going to items that would be in the regular budget.
The revised budget for the Trump administration will be sent to Congress Thursday. In addition to the increase in defense spending, it will call for offsetting cuts in other discretionary spending accounts. A revised Overseas Contingency Operations request is expected in May.
Steve Kosiak, who worked in the Office of Management and Budget during the Obama administration, said Congress is “changing how to interpret the rules” covering the use of the emergency spending account. He said it was a process that accelerated after 2007 to fight the war on terrorism. “Some of those costs [for equipment] are not temporary and extraordinary” to fighting a war and remain in the services’ inventory years later.
When asked about including buying F-35 Lighting II Joint Strike Fighters (JSF) from this account, he added it is “abundantly clear that is not for military operations.”
Using OCO money is a way “of trying to dig out of the hole” in defense modernization caused by the Budget Control Act, Roger Zakheim, a former House Armed Services Committee staffer, said. He added d even when the account is used for modernization it can be attributed to restoring deterrence, for example, through the European Reassurance Initiation to counter Russian moves in eastern and northern Europe.
But Zakheim added that using the emergency account that way is, in a sense, “Congress talking out of both sides of its mouth.” It allows members to say they are fiscal hawks or defense hawks. “We’re back to playing small ball,” rather than reaching a grand bargain.
A grand bargain would mean addressing entitlement spending — Social Security, military retirement, Medicare, etc., Kosiak said. He also said that it would have to look at increasing taxes. Entitlement reform is not likely in this submission. On raising revenue, “I think what we’re going to do is cut taxes.”
Kosiak added the Budget Control Act did cut the deficit by $4 trillion since its passage.
The key to measuring the growth in defense spending is not just this revision, but to see how it plays out in the coming years, the panelists said.
O’Hanlon proposed looking at discretionary spending in a different way. Instead of defense and all other spending, he would create a third category for “security,” covering the Department of Homeland Security, Veterans Affairs, science research and development and the like.