Administration decision to include war funding in automatic cuts riles GOP

Republicans in Congress are up in arms over the Obama administration’s decision to include funding for the war in Afghanistan in the automatic cuts to defense spending that are set to begin in 2013.

Administration officials say the war funding has to account for part of the cuts under the law, but the top Republican on the Armed Services Committee says the money dedicated to Overseas Contingency Operations (OCO) was never intended to fall under the budget axe. 

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"I am disappointed the president has made this choice, since there is no clear mandate for it in the law,” House Armed Services Chairman Buck McKeon (R-Calif.) said in a statement.

“Of course now, more than ever it is the troops on the front lines in Afghanistan who will bear the brunt of sequestration,” McKeon said. “If our forces on the front line are truly going to have to do with less body armor, fewer medevacs, and less ammunition he owes it to them to offer a credible way out of the pending disaster.”

Funding for the war has become the latest battleground in the increasingly acrimonious fight over the $500 billion across-the-board cut to defense that was set in motion by last summer’s debt-ceiling deal, known as the Budget Control Act (BCA).

Officials at the Office of Management and Budget (OMB) said Friday the decision was not up to them because there was no exemption for preserving the war funding in the law. 

“The question really is, was there anything in the statute that provides an exemption for the OCO funding, and we couldn’t find anything,” an OMB official said.

The Budget Control Act established punitive cuts to both defense and non-defense spending if a supercommittee tasked with finding more than $1 trillion in deficit reduction failed.

The sequestration cuts were designed to be harmful enough to force a deficit deal, but the supercommittee still failed to reach one, setting in motion the $500 billion in defense cuts over 10 years.

The issue has become a political football, with Republicans blaming Obama and Democrats for not trying to undo the cuts that both parties say would be terrible for the military.

McKeon has increasingly amped up his rhetoric this year, urging the issue to be addressed immediately, even though most people don’t expect sequestration to be altered by Congress until after the November elections due to deep disagreements between the parties about how to reduce the deficit.

While Defense Secretary Leon Panetta has said sequestration would be “devastating,” he’s also indicated that the Pentagon is not doing any planning for the cuts yet — a tactic that Republicans have lambasted.

The news that the war funds would fall under sequestration was a surprise. Last November, Panetta sent a letter to Senate Armed Services ranking member John McCain (R-Ariz.) assuring him that the war funding would not be affected.

But OMB acting Director Jeffrey Zients wrote House Budget Chairman Paul Ryan (R-Wis.) last week informing him that OCO was, in fact, included under sequestration, contradicting the Pentagon’s previous statement.

A Pentagon spokeswoman said this week that the department’s initial reading of the BCA was incorrect, and the Pentagon had changed its position “upon further review of the law and after consulting with OMB.”

Mackenzie Eaglen, a defense analyst at the conservative-leaning American Enterprise Institute, said that Panetta’s letter left the impression on Capitol Hill and in the defense industry that OCO funds were not part of sequestration.

“The accepted understanding around Washington has been that OCO funding is exempt, and for a good reason,” Eaglen said.

The Budget Control Act mandated that the cuts had to be across-the-board and the same percentage to every budget account, which many experts say is the worst part of the law.

The debate over whether war funding is part of that stems from a line in the BCA that says the spending caps would be adjusted so OCO funding does not affect them.

To GOP congressional aides, that language was ambiguous and could be interpreted as saying OCO would not be affected by the spending cuts. They received budget briefings that offered different answers about war funding and sequestration, the aides said.

But OMB officials say they don’t have that discretion because the law makes no mention of exempting the war funding from sequestration.

Todd Harrison, an analyst at the Center for Strategic and Budgetary Assessments, said that he believed there was no ambiguity in the law. He said the confusion has stemmed from the “loophole” that OCO funding did not change the Budget Control Act spending caps — which Congress used last year to get around the spending caps by moving money from the base budget to the war budget.

The war budget is just one of a number of unresolved issues surrounding sequestration exemptions. OMB ruled in April that Veterans Affairs was exempt from sequestration, and the president was given explicit discretion in the law to exempt military personnel accounts from the automatic cuts.

The Pentagon says it will likely have to start planning for sequestration later this summer, at which point the administration will have to start explaining in more detail how the across-the-board cuts will work.

“OMB is the boss here, even though Congress wrote the law,” Eaglen said. “It’s vague in some parts, and purposely ambiguous in some pieces.”