Want to rein in defense spending? Good luck Mick Mulvaney
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The defense budget is too big and Mick Mulvaney, the new Office of Management and Budget Director, knows that.

Since he came to Congress in 2011 as an avowed fiscal conservative, Mulvaney has railed against the absence of budget discipline, including the amount we spend on defense.

He has fought a lonely battle in Congress to constrain the uses of the Overseas Contingency Operations (OCO) budget to the costs of combat operations despite the willingness of his colleagues, the Pentagon, and the White House to use OCO as a way to get around the budget caps on defense.

He is that rare honest guy who shows consistency across the board with respect to discretionary spending. Welcome to the big leagues, Mr. Mulvaney.  As budget director, you are about to learn some hard lessons about defense budgeting. 

First, you will get no respect, especially from the Department of Defense. David Stockman came into the job in 1981 determined to discipline the DOD. Secretary of Defense Cap Weinberger rolled right over him on his way to one of the largest single-year increases in the defense budget the nation has ever seen. 

Like all budget directors, you are not a specialist in defense, and the DOD will let you know that you and your staff have no business meddling in things you don’t know about.

Don’t bother looking at the costs of flight operations, or the wisdom of buying the F-35; it's not your business. You will learn that the DOD, with roughly 55 percent of discretionary dollars, is the 800-pound  gorilla in the executive branch budget game. 

Second, it’s pretty important to have the president and vice president watching your back. Both President-elect Trump and Vice President-elect Pence have made it clear throughout the campaign that they want to get rid of the budget cap on defense, though that will be very difficult given the 48 votes the Democrats have in the Senate.

In addition, the duo wants to add more than 60 ships to the Navy and increase the size of the Army and the Marines. That will require more money than in the current defense plan. When you decide you want to arm wrestle with Secretary of Defense-designate Jim Mattis about it, be prepared for your bosses to give him what he wants. 

Third, you may find out that the Budget Control Act (BCA), which caps growth in defense through 2021, is your best budget tool as OMB director. You may decide you want to keep it.  

Caps really helped in the 1990s as a way of limiting the DOD appetite. Unfortunately, the big guys are already on board, saying they want the BCA to go, so be prepared to lose that one. 

Fourth, you will learn that disciplining the OCO budget by limiting it to war costs is impossible when all those around you want to use it to get around the caps, which are likely to stay anyway.

It’s hard for a budget director. The stars really have to align in order to discipline defense. They did in 1993 when I was at OMB.

Clinton had to send up his own budget because Bush had left little behind. Clinton asked Robert Rubin, the head of his new National Economic Council, to run a very rapid budget process.

When the NEC got to defense, then-Secretary Les Aspin demanded to attend the meeting, but he was not a member, so he was not allowed to weigh in as the aforementioned 800-pound gorilla.  

He and his staff sat to the side, DoD briefings at the ready, while OMB led the presentation for the president and vice president. 

They had not campaigned to increase DOD’s budget. With the Cold War over, the Bush administration had already taken the budget down 25 percent in constant dollars.  

From that meeting, the defense budget projected by the Bush administration was reduced around $125 billion, as part of an overall effort to reduce the deficit by 50 percent by 1997 (Clinton achieved that goal in 1998).

Those were very unique circumstances, however.  Peter Orzag, Obama’s budget director, had a harder time, as most directors do.  

Defense is not like the rest of discretionary spending.  Unless wars are ending, defense generally goes up.  Budget discipline is especially hard when the president, vice president, and secretary of defense are aligned in wanting more.

The lessons are likely to be tough for someone dedicated to budget discipline. It will be interesting to see how far you get. 

 

Gordon Adams is Professor Emeritus at American University and Distinguished Fellow at the Stimson Center.  From 1993-97 he was the senior national security budget official in the Clinton White House.


 

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