A better idea for the defense budget

A better idea for the defense budget
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While the administration and Congress work toward a budget deal that will set spending limits for federal government agencies, it is critical to see how the funding over such limits is used and overseen. The Defense Department overseas contingency operations budget is a relevant case. Because it provides funding that is not counted against budget caps on the regular defense budget, it has been described as a “slush fund,” the term defined as “a reserve of money used for illicit purposes.”

Such a reference is misleading and damaging, even if those who refer to the overseas contingency budget as a slush fund are more likely to voice displeasure with its size or what it includes, rather than to indicate actual illicit purposes. For recent budget deals, Congress placed separate caps on this contingency budget that is also subject to the very same reviews and oversight with the White House and Congress as the regular defense budget. It is subject to even more oversight in certain cases.

Supplemental funding proposals used to be submitted as needed. But the 2010 budget marked the first time an administration sent its supplemental funding proposals for overseas contingency operations at the exact same time as the defense base budget. This meant that those budget estimates for wartime costs had to be developed for more than a year in advance of actual needs. So to achieve that goal, the best available force projections and historical data were used for the supplemental estimates.


While this allowed for reviews of the defense budget as a whole, it tended to give a false notion that wartime costs were stable when they often were not. During preparation of the 2012 budget, the administration had issued guidelines to use when seeking overseas contingency operations funding. The directions included criteria for seeking funding by geographic region and for munitions, equipment, military construction, ground replacement, aircraft replacement, and critical research and development.

While efforts were made to adhere to and enforce these criteria, once the Budget Control Act took effect with several immediate defense spending cuts, both the administration and Congress lost interest in following such restrictions. Instead, attention turned to tracking such contingency costs. Since this budget could be used in the wide range of items, the Pentagon focused on more clarity to discuss what costs must be in the base budget and what costs support the overseas contingency operations.

Consistent with the Bipartisan Budget Act, which limits the contingency costs to less than $70 billion for this fiscal year, the Defense Department sent its proposal for the operations in three categories. The first includes wartime needs in combat or support activities not likely to continue after contingency operations are over. The second includes support activities likely to continue after combat operations. The third includes base needs that are financed by contingency funding in the budget deal.

This contingency budget has been used for both the administration and Congress as a way to finance needs in the defense base budget, but the political decisions should not translate into lenient budget development and justification or lack of critical transparency and oversight.

In addition to notifying Congress when base funding gets moved between accounts, the Pentagon must also submit a proposal before spending any money meant for some of those larger special sections in the contingency budget. The proposal must be coordinated with the State Department and White House before a legislative review. There is nothing illicit around this. Overseas contingency operations costs that are not for wartime activities are in the base budget, and the Pentagon provides visibility into spending within all three current categories of the contingency budget.

So rather than using inaccurate terms such as “slush fund” to describe the way the administration and Congress have decided to finance our defense needs, both branches need to reach a deal that increases the base budget to provide sufficient funding for these needs, and uses these contingency dollars only for the wartime costs that are not likely to remain.

Elaine McCusker is a resident fellow at the American Enterprise Institute who served as an acting under secretary for the Department of Defense.