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The Pentagon’s Slush Fund Continues to Raise Eyebrows

By Angela Canterbury and Sarah Tully

It was a strong start earlier this year, when President Obama made a budget request for the Pentagon that was finally in line with the law of the land—the Budget Control Act (BCA). But that’s ancient history.

The President’s original request came in just under the BCA budget caps for Pentagon spending at $496 billion for Fiscal Year 2015. But that didn’t include the other Pentagon spending request that was to follow. There was an additional $59 billion requested for the Overseas Contingency Operations (known as OCO). Taken together, this $555 billion would appear to bust the budget caps set by the BCA, but not really. That’s because OCO doesn’t count against the caps.

Now the administration has announced it would will submit a request to add another $5.6 billion dollars to their OCO request to Congress for “activities to degrade and ultimately defeat ISIL.” This adds up to $65.6 billion dollars in extra spending for the Pentagon. Many experts say there is plenty of funding in the base budget to cover the current military engagement in Iraq and Syria, and we agree.

As you can see below, while the Pentagon budget has decreased and leveled out over the course of Obama’s term, OCO spending has remained relatively high. In fact, when adjusted for inflation, the amount is higher than what President Bush spent in each of his first five years in office, from FY 2002 to FY 2006. If you take OCO out of the equation, Obama’s Pentagon is still spending more than all but the final year of the Bush administration.

Panel

But put aside how much we are spending on overseas contingencies, the Overseas Contingency Operations account isn’t used for that alone.

OCO was established under President Obama in 2009 to replace the emergency supplemental appropriations that had previously been used to fund the wars. OCO was intended to institutionalize this funding and force the Pentagon to be more transparent about what was actually being funded by the war request.

In recent years, however, OCO has been treated more as a slush fund for projects sometimes only tangentially related to overseas operations. Todd Harrison of the Center for Strategic and Budgetary Assessments estimates that the projected FY 2015 OCO budget includes over $30 billion in DoD base budget funds that have been shifted to the OCO budget.

To give a recent example, as part of the DoD portion of the FY 2014 omnibus, $9.3 billion dollars for operations and maintenance was transferred directly from the base budget to OCO. OCO is not subject to budget caps or sequestration, thus the Pentagon, thanks to Congress, is able to use OCO to soften the blow of the budget caps, effectively defeating the purpose of the Budget Control Act.

Even advocates of higher defense spending have a problem with this abuse of the system. Incoming Senate Armed Services Committee Chair John McCain, speaking on the Senate floor about the FY 2011 Defense Appropriations bill said, “…billions in the war-funding accounts – my staff has estimated close to $8 billion – have been allocated by the Appropriations Committees for new spending not requested by the Administration, or transferred to pay items that were originally requested in the base budget for non-war related expenses.”

In September, House Defense Appropriations rejected part of a reprogramming request from the Pentagon that would have funded, among other things, 8 additional F-35s and 21 Apache helicopters using money from the OCO. This was a request to move $1.3 billion from OCO account back to the base budget.

In USA Today, Ryan Alexander, President of Taxpayers for Common Sense, noted with interest some fuzzy math. The new OCO request includes an additional “$464 million in Defense-wide operations and maintenance and an additional $779.6 million in those accounts for the Army.” Alexander quips:

Now, I don’t have access to any of the fancy calculators they have at the Pentagon, but the one on my smart phone tells me if you add those two numbers together you come up with $1.243 billion, which is pretty close to the $1.3 billion the Pentagon said it didn’t need and could transfer to the F-35.

So is the OCO request for ISIL or the F-35?

In any case, the OCO account itself has become a budget gimmick. Further, it is simply irresponsible budgeting: All military spending should be subject to the oversight of the actual military budget. Meanwhile, we hope Congress will continue to question OCO being used as a slush fund.

The Unaffordable Arsenal

 Top government officials are in agreement that current plans to rebuild our nuclear arsenal (to the price tag of at least $355 billion over the next decade and up to $1 trillion over the next 30 years) are overly ambitious and likely unaffordable. Add in a defense budget that’s already stretched thin, always-looming budget caps and sequestration, new international security challenges like Russian expansion in Ukraine, terrorist expansion in Iraq and Syria, and the Ebola virus in Africa, and it’s safe to say the US budget is burning its ‘defense candle’ at both ends.  

The Arms Control Association (ACA) has released a report on just this issue, urging the “executive branch, Congress, and the American public to rethink current plans to rebuild U.S. nuclear forces in the years ahead.”  The nuclear shopping list is a long one: new ballistic submarines, new nuclear-capable bombers, land-based intercontinental ballistic missiles, a new air-launched cruise missile, and an upgrade to five nuclear warhead types. By paring down that list, ACA has highlighted some commonsense solutions to save roughly $70 billion dollars in the next decade. A summary of ACA’s recommendations follows.

Strategic Submarines – SSBN(X): Save $16 billion/10 years
A 2013 report by the CBO analyzed the option of reducing the SSBN(X) force to 8 boats. Under this scenario, the Navy would still have a robust deterrent and be able to deploy the maximum number of warheads at sea, consistent with the New START treaty.

Long-Range Bombers – LRSB: Save $32 billion/10 years
Because the current US bomber fleet will operate into the 2040s-50s, there is no urgency for a renovation. By delaying the LRSB until the mid-2020s, the USAF can free up $32 billion dollars for other projects that have more urgent funding needs.

Air-Launched Cruise Missile – ALCM: Save $3 billion/10 years  
The recently rebuilt gravity bomb (B61-12) gives our current bombing fleet the capability to drop nuclear weapons, drawing the need for a new air-launched cruise missile into question. Not only is this weapon unnecessary, as our submarines are capable of launching a nuclear ballistic missile, but it would serve as an effective bargaining chip on the international stage. Discontinuing our ALCMs as part of a global ban on nuclear-armed cruise missiles would eliminate the growing threat of a Chinese or Pakistani cruise missile while simultaneously saving at least $3 billion dollars in development and procurement costs.  

B61 Life Extension Program – LEP: Save $4 billion/10 years
The B61 Life Extension Program is designed to extend the lives of 400 gravity bombs for tactical (front lines) and strategic (reserves) purposes. The two most costly portions of the program are a consolidation plan of four versions of the bomb into one and the refurbishment of some of the nuclear components. This program has faced budget pressures in Congress and would be better served by scaling back the program to update our strategic reserve bombs while allowing our tactical bombs in Europe to age out gracefully.  This or other reductions to the program, such as discontinuing the 4-in-1 modification plans for the bomb, will allow for cost savings up to 4 billion dollars over the next decade.  

Intercontinental Ballistic Missiles – ICBMS: $16 billion/10 years
The Air Force’s 450 ICBMs are scheduled for maintenance to ensure their reliability through 2030. The Air Force is expected to decide by 2016 whether they will employ incremental modernization of the missiles, or scrap the current design and create new ones. A 2014 RAND study sponsored by the Air Force to analyze options for the ICBM determined that incremental modernization would both meet the US’s nuclear deterrent needs and be the most cost-effective. The USAF would save at least $16 billion dollars by forgoing a new missile and an additional $84-$219 billion (not included in above projections) by forgoing potential mobile-basing options which have been considered ineffective since the 1980’s.

These options illustrate ways to safely trim the bloated nuclear budget while maintaining our nuclear deterrent. This creates a win-win scenario for the Department of Defense, which will preserve the nuclear arsenal from uncontrolled cuts as a result of an overly ambitious budget and secure funding for its conventional forces. In a world where nuclear exchanges are most commonly associated with global destruction, these nuclear exchanges to the budget are both sensible and necessary.

Greg Terryn is a Scoville Fellow at the Center for Arms Control and Nonproliferation.

Front and Center

FRONT & CENTER

An update on arms control, national security & politics from the Center for Arms Control and Non-Proliferation.

October 11-October 26 WHAT’S NEW:

An Evening in Boston
Save the date: On the evening of November 6th, we’ll be in Boston for a night of expert analysis, substantive discussion, and fun! We’ve invited Massachusetts Senator Ed Markey, among other notable speakers, to lead our Election Forum and Reception on the Future of National Security. Best part? It’s free! We hope you can join us. Space is limited, so RSVP today.

READ:

Growth in Pentagon Spending Since 2001
We’ll start with the good news: the overall trend for the U.S. defense budget is on a downward slope. That said, the U.S. is spending $7-10 million per day on its new war in the Middle East against the Islamic State, meaning Congress may decide to up the ante in Fiscal Year 2015. Check out our reporton the center site to learn more. [10/20]

2001-2015 budget

Window of Opportunity to Change US Nuclear Spending:
“Folks are understandably confused by the juxtaposition of the exorbitant price tag attached to current plans to upgrade all three legs of the triad at once, and the waning U.S. budget,” writes Katie McCarthy on the Nukes of Hazard blog. That’s why, rather than modernize the triad, the time is now to reassess exactly what we need and what we can afford. [10/24]

But What About Grandma?
It’s a well-known fact that Western sanctions against the Islamic Republic of Iran were key in bringing the Iranians to the negotiating table. What’s less well-known is exactly how these sanctions have impacted your everyday Iranian citizen. Sarah Tully provides a few personal accounts of the effects of these sanctions and the domestic pressure that has arisen. Rouhani may have no choice but to stay at the table until a deal is reached. [10/21]

BE SOCIAL:

Infographic: Not Getting a Deal Won’t Make Us Any Safer
Remember BiBi’s infamous “red line?” Well, this week, one former US official put the kibosh on Israel’s “no deal is better than a bad deal” rhetoric. The highly respected former Under Secretary of State, Ambassador Stuart Eizenstat told the Jerusalem Post that failing to get an Iran deal should not be considered a success. We loved Eizenstat’s argument so much, we made an infographic. Don’t forget to share it on Facebook, Twitter, or by email! [10/24]

No Iran Deal Is Not a Success

Panel says thanks but no thanks to extra F-35s, Apaches

Last week House Defense Appropriations rejected part of a reprogramming request from the Pentagon that would have funded, among other things, 8 additional F-35s and 21 Apache helicopters using money from the Overseas Contingency Operations (OCO) account.

In a letter to Pentagon Comptroller Mike McCord, Panel chairman Rep. Rodney Frelinghuysen cites policy guidance from the Office of Management and Budget (OMB) that expressly excludes non-war-related funding from the acceptable uses of OCO funds.

The Committee is concerned that OCO appropriations, which are provided by Congress specifically for ongoing combat operations and related efforts,” says Frelinghuysen, “are being utilized in this reprogramming to backfill budgetary shortfalls in acquisition programs that have only tenuous links to the fight in Afghanistan and other current operations.”

The letter specifically cites reprogramming requests for the F-35 and Apache helicopter, which amount to ~$1.5 billion, 80 percent of the Pentagon’s requested increase, as problematic.

Of course, budget watchdogs have lamented the unrelated use of OCO funds for years, but this is the first time a congressional committee has rejected such a high profile proposal. And the rejection is significant, since reprogramming requests must be approved by all 4 congressional defense authorizing and appropriating panels.

And hey, since the Pentagon is essentially recognizing that it has some extra money lying around by requesting the funding shift at all, one would think that the rejection would result in some savings, right? Not so much.

Barring congressional action to the contrary, the funds will return to their original allocations awaiting what is likely to be a new request.

A Pentagon spokesperson said Monday that officials will continue “to work with Congress to finalize our reprogramming request.”

Because surely the Pentagon can find something to spend all that money on.