Pentagon jockeys with Dems for control of billions in war savings

There’s a tug of war under way between Democrats and the Pentagon over the savings from the end of the conflicts in Iraq and Afghanistan. 

While Democrats want the savings from the wars to be used to fund new stimulus for the economy, the Defense Department and hawks on Capitol Hill are looking to keep the savings in the defense coffers to help offset the “sequestration” cuts that are scheduled to begin in 2013.

The Congressional Budget Office estimates the current plans for ending the wars would create between $600 billion and $1.3 trillion in budget savings.

Democrats pushed during the supercommittee negotiations to use the war savings to pay for Obama’s $447 billion jobs bill, which includes tax cuts and new spending on infrastructure projects. They have also floated the notion of using the war savings for other programs, including an extended payroll tax cut and unemployment benefits.

Senior Republicans like House Speaker John BoehnerJohn Andrew BoehnerFreedom Caucus bruised but unbowed in GOP primary fights GOP revolts multiply against retiring Ryan Can Jim Jordan become top House Republican? MORE (R-Ohio), however, have balked at using the war savings for stimulus projects, and supercommittee Republicans flatly rejected such proposals from Democrats during their deliberations.

The failure of the supercommittee this week set in motion budget cuts for the Pentagon beginning in 2013 that could total $600 billion over a decade. Some lawmakers, including House Armed Services Committee Chairman Buck McKeon (R-Calif.), have raised the possibility of rolling back those cuts through legislation, but President Obama has promised a veto.

The sequestered cuts would be on top of a $489 billion cut over the same span that was mandated by the August debt-ceiling deal. Taken together, that would set the Pentagon on a path toward a $1 trillion reduction in planned funding, a scenario Defense Secretary Leon Panetta says would cripple the military.

The Pentagon and some pro-defense lawmakers are angling to move Pentagon budget items into the war bill as “shelter” against the deep cuts, according to a defense analyst.

“It looks like the Pentagon and the committees are going to try and shift as much into” overseas contingency operations (OCOs) bills “as they can to offset the sequester cuts,” said Matthew Leatherman of the Stimson Center.

A Nov. 14 letter from Panetta to senior senators noted that “funds for overseas contingency operations ... are fully exempt from the sequester, so added costs for wartime operations would not be affected.”

In a revised 2012 Pentagon policy bill approved last week, the Senate Armed Services Committee proposed doing just that, shifting billions from the base military budget to the war-funding measure.

“The bill would transfer to OCO accounts $4.9 billion of operation and maintenance funding for activities closely associated with military operations in Iraq and Afghanistan, including [Mine Resistant Ambush Protected (MRAP)] vehicle sustainment, body armor sustainment, overseas security guards, theater security packages, [and] depot maintenance and readiness funding in support of combat operations,” according to a committee budget document. 

“Most of these activities have previously been funded from OCO accounts,” the committee noted.

The Senate Appropriations Defense subcommittee is also proposing a shift of nearly $3 billion from the base DOD budget to the 2012 war-funding measure.

Moving the dollars from the shrinking base budget to the must-pass war bill keeps those monies in DOD coffers, thwarting moves by Democrats to use them for other legislation.

Lawmakers and budget analysts have engaged in a rolling debate about just what should be funded by OCOs, and how large they should be, and it appears the issue could soon become fodder for 2012’s budget war.