Acting Defense Secretary Patrick ShanahanPatrick Michael ShanahanSenators introducing bill to penalize Pentagon for failed audits Overnight Defense: National Guard boosts DC presence ahead of inauguration | Lawmakers demand probes into troops' role in Capitol riot | Financial disclosures released for Biden Pentagon nominee Biden Pentagon pick could make up to .7M from leaving Raytheon MORE denied Thursday that a Pentagon war fund has become a slush fund under sharp questioning from Sen. Elizabeth WarrenElizabeth WarrenFederal Reserve officials' stock trading sparks ethics review Manchin keeps Washington guessing on what he wants Warren, Daines introduce bill honoring 13 killed in Kabul attack MORE (D-Mass.).
Warren, who is running for the 2020 Democratic nomination for president, was pressing Shanahan on the Pentagon’s request for $164 billion for the Overseas Contingency Operation (OCO) account in fiscal year 2020.
Of that total, the Pentagon has said $66 billion are actually war funds and $98 billion are for what would otherwise be considered base budget items.
OCO is theoretically a war fund only to be used for temporary expenses, though over the years it has increasingly been used for base budget items since it is not subject to budget caps.
But the Trump administration’s budget plan relies on OCO even more than has become normal, using the account to skirt budget caps and avoid having to make a deal with Democrats to also raise nondefense spending.
“What we're really talking about here is the establishment of a slush fund to hide what's happening with defense spending and get it out from underneath the statutory caps,” Warren said at a Senate Armed Services Committee hearing.
“There is no slush fund,” Shanahan replied.
Shanahan’s argument was that regardless of what account the money is being putting into, the entire $750 billion defense budget would support the National Defense Strategy.
“We have provided in our justification books 100 percent transparency,” he said. “We can take the money and tie it back to the National Defense Strategy and what we need to defend America.”
Warren highlighted that the OCO request for fiscal 2020 is 140 percent higher than fiscal 2019’s $69 billion for OCO.
“So tell me, did the cost of supporting our overseas operations suddenly increase by 140 percent last year?” she asked Shanahan.
“Senator, they did not,” he replied.
Other Democratic senators also expressed opposition to the OCO proposal. In his opening statement, ranking member Sen. Jack ReedJack ReedTop Republican: General told senators he opposed Afghanistan withdrawal We have a plan that prioritizes Afghanistan's women — we're just not using it This week: Democrats kick off chaotic fall with Biden's agenda at stake MORE (D-R.I.) called it a “particularly egregious misuse” of the account, adding it “far exceeds any precedent and cannot be justified.”
Shanahan was testifying at his first committee hearing since becoming acting secretary, and his testimony was being viewed as a make-or-break moment in his audition to be nominated for the job permanently.