Congress has done nothing to solve the Pentagon's slush fund problem
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Democrats delivered a win on the budget this week. The $1.1 trillion spending bill Congress unveiled provided an additional $15 billion in war spending, less than the $30 billion the Trump administration had requested. In exchange for the smaller increase, Democrats secured concessions on a number of priorities including Trump’s border wall.

House Armed Services Committee Chairman Mac Thornberry (R-Texas) and Speaker Paul Ryan (R-Wisc.), however, have praised the deal for delivering an increase at all, breaking what they say were “Obama rules” that required parity between domestic and defense spending. Their analysis couldn’t be further from the truth.

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Thornberry and Ryan’s so-called “parity” is a sham, for certain, but it’s nothing new. Since the outset, the existence of the war funding designation — known as Overseas Contingency Operations, or OCO for short — has provided a loophole in current law that requires equal caps on defense and domestic spending.

 

This loophole has allowed Congress and the administration to go on funding the Pentagon at rates much higher than allowed, under the auspices of “emergency” war funding. This practice would make a lot of sense were the funds to remain dedicated to the current wars, but as the years have gone on the abuse of this designation has increased.

Reports indicate that the Pentagon now uses $30 billion in OCO per year to supplement its base budget, and the Government Accountability Office has reported that the Pentagon’s accounting systems don’t know the difference between wartime accounts and routine operations.

Over time, the OCO designation has come to serve as the Pentagon’s “slush fund,” allowing for increases in the budget as needed without the added transparency or accountability of the regular budget process. This practice continues in Congress’ most recent budget deal.

Speaker Ryan stated Tuesday that “under the Obama rules, if you wanted to help the military, if you wanted a pay raise for the soldiers, if you wanted to buy new airplanes and new ships and more munitions, a dollar for that, you had to have a dollar domestic spending. We just broke that parity.” It is under the Obama administration, however, that this loophole in parity’s original premise was created.

And while the fiscal 2017 bill does provide an increase for the military, this is not unusual. Spending under the Obama administration was already slated to rise to pay for increased military activity in Iraq and Syria. These funds, like those passed this week, might have been spun as “breaking parity,” except that the spin is just that.

Senate Foreign Relations Committee Chairman Bob CorkerRobert (Bob) Phillips CorkerGrassley: No reason to delay Kavanaugh hearing The Memo: Kavanaugh firestorm consumes political world Murkowski echoes calls for Kavanaugh, accuser to testify MORE (R-Tenn.) wasn’t playing along. Stating his belief that the war fund has been abused, Corker told reporters he’s not planning to vote for the bill. “[OCO] has become nothing but a fancy slush fund,” Corker said. “That type of spending doesn’t give the military a view into the future.” Corker’s comments reflect the concern that war spending is appropriated on a short-term basis, essentially robbing the Pentagon of its ability to plan.

Apart from the spin, though, the move seems to imply that Democrats hold the reins on fiscal 2018 funding. The Trump administration has proposed a $639 billion budget for the year. Since budget caps are likely to remain — they are currently set at $549 billion for defense — lawmakers will be forced to haggle once again over the size of OCO.

Bringing OCO back up to $90 billion would represent a flashback to at least fiscal 2013 to 2014 levels. Such an increase should, at the least, be supported by a coherent strategy and explanation for such a precipitous rise. But so far, the Trump administration has offered nothing of the sort.

Corker’s comments make clear that lawmakers are growing weary of OCO’s detrimental effects, but its slushy nature won’t be easy to shake. Democrats continue to hold the line on parity between defense and domestic spending using OCO as a loophole, and Republicans continue to use the same loophole to indiscriminately fund the Pentagon.

As long as OCO remains the gimmick everyone loves to hate, it’s not going anywhere. The only loser is the American taxpayer, who will continue to see spending rise free from the accountability of the regular budget process.

Laicie Heeley is a fellow in the Budgeting for Foreign Affairs and Defense Program at the Stimson Center, a nonpartisan policy research institute.


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