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.

PanelBut 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.