This year’s round of Defense budget hearings have been characterized mostly by military officials’ unanimous insistence that Congress find a way around the budget caps set to take effect next year. Many of the same officials testified this week that they have grave concerns about the House’s plan to do just that.
The House Budget Committee’s spending resolution, approved on a party-line vote Thursday afternoon, would leave the Budget Control Act’s spending caps technically intact, but would skirt the limits for Defense by funneling an additional $36 billion into the Pentagon’s overseas contingency operations (OCO) account, which is exempt from the caps Congress first enacted in 2011.
Military leaders testified that as much as they’d like relief from sequestration, using the accounts Congress set up for the Afghanistan and Iraq wars is far from ideal.
From the military’s perspective, a bigger 2016 OCO budget is an extremely poor substitute for raising DoD’s base budget, since similar gimmicks would have to be repeated year-after-year in order to maintain Defense spending at the level officials believe is required. They’d also face numerous legal restrictions designed to prevent the money from being used for expenses not tied in some way to battle zones.
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“OCO has limits and has very strict rules that have to be followed,” said Gen. Ray Odierno, the Army’s chief of staff. “This might not help us. What might happen at the end of the year is we’ll have a bunch of money we have to hand back because we’re not able to spend it in the right places.”
Revisions coming to the resolution
Gen. Mark Welsh, the Air Force chief of staff, expressed similar concerns — but, like other military officials, conceded that the House funding plan, despite its shortcomings, would be preferable to living under the caps in current law.
“With modernization as one of our major concerns, this presents some problems because it’s hard to start a new program with OCO,” he said. “When you’re looking at a one-year budget cycle, it’s not guaranteed over time. There are limits to what you can spend it on, so that is the big issue with us. Modernization is a huge deal for the Air Force at this point in time. But at some point, if it’s green and it smells pretty and it’s not your St. Patrick’s Day tie, it’s OK.”
The non-binding House resolution, as passed Thursday, carries additional restrictions on DoD’s use of the extra OCO funds, insisted upon by fiscal conservative members of the budget committee. Speaker John Boehner (R-Ohio) said later in the day that the resolution would be amended on the House floor next week to remove the Budget Committee’s constraints and also expand the OCO account by an additional $2 billion — a total figure that would match the Defense funding boost the White House has asked for in DoD’s base budget.
Next week’s planned revisions to the House budget were brokered, in part, by Rep. Mac Thornberry (R-Texas), the chairman of the Armed Services Committee.
“This is not the best way to run a railroad, and I hope that we can have a different method of funding the department as we move down the many steps ahead in the budget process,” Thornberry said. “If, however, we end up with a substantial amount of OCO funding to make up for gaps in the base, I want to understand what all of those restrictions — administrative or legislative — might be.”
Thornberry asked DoD to provide a detailed accounting of all the complications that could arise from telling the department to use war funding to pay for its day- to-day operations. But several already were apparent from discussions surrounding the House resolution this week.
For instance, a 2010 agreement between DoD and the Office of Management and Budget restricts OCO funding to specific functions and also defines certain geographic areas that could reasonably be construed as “overseas contingencies” locales. And ordinarily, both the Congress and the White House would need to reach specific line- item agreements if any OCO money were to be used for large procurement programs — something not contemplated when the war accounts were first established.
OCO rules need to be updated
Congress, in theory, could overrule all of those constraints with a majority vote and a presidential signature. And on smaller scales, both branches of government have previously used OCO to fund programs that had questionable connections to Iraq and Afghanistan.
But many of the changes implicated by the House budget could require specific and detailed amendments to federal law, not just a movement of money between accounts, if OCO funding is to be used for DoD’s regular expenses.
The most likely vehicle for such a large package of legal changes would be the annual Defense authorization bill, which in recent years has not been passed until mid-to-late December. So, if past is prologue, most of the additional OCO money, even if appropriated by the start of the fiscal year on Oct. 1, would remain inaccessible for the first few months of the fiscal year.
“If this is done without an authorization that’s in line with it, we would have a problem,” said Mike McCord, DoD’s comptroller and chief financial officer. “We’re going to have questions about whether this approach would be acceptable to the Senate and to the President, and the uncertainty about whether this would even work for this year is another one of the problems with this approach.”
Several of the military’s combatant commanders echoed the uncertainty complaint, saying that even if legal quandaries about how OCO money could be used during 2016 were successfully resolved, questions about how the military will be funded during the next several years would still be up in the air.
“When we talk about having the military operate more efficiently, we have to be able to deal with this more than just one year at a time,” said Adm. Cecil Haney, the commander of U.S. Strategic Command. “Without the ability to have long-term planning and the flexibility to make strategic decisions about where we take our cuts, it will raise havoc in terms of our joint military force capability at large. It’s also a signal to our adversaries about how serious we are about deterrence, assurance and ensuring we have a military capability.”
Band-Aid approach better than nothing
Gen. Paul Selva, the commander of U.S. Transportation Command, said a one-year workaround to the DoD budget also is unlikely to help his organization, whose budget is mostly reliant on the funds the Army, Navy and Air Force commit to move their forces to battle zones and to training environments in any given year.
“When we see a decrease in our demand signal as a result of bringing forces out of Afghanistan, that’s a reason to celebrate,” he said. “But when we see a decrease in the exercise and readiness programs that also place a demand signal on the transportation enterprise, that puts us in a place where we are likely to be less ready than we ever have been in our prior history. That’s a consequence of the services not knowing where the next marginal dollar is going to come from.”
Adm. Michael Rogers, the commander of U.S. Cyber Command, said working through budget crises one year at a time is a particular problem for his force.
“We are a relatively young and immature organization. We are just starting to build out our capabilities and I don’t have decades of investment that I can fall back on,” he said. “As we’re trying to build a long-term sustainment plan in a high- threat and ever-growing environment, this up-and-down, annual, incremental approach to doing business makes it very difficult for us to build a long-term sustainable plan in the face of this ever-increasing threat.”
President Barack Obama already has promised to veto a funding bill that keeps sequestration in effect, either for Defense or domestic agencies. Ashton Carter, the Defense secretary, deflected when asked whether the President also would veto a bill that uses the war budget as a one-year safety valve.
But all told, if forced to make the choice between more money via OCO or full sequestration, military officials said they’d prefer the former.
“It’s a choice between the devil and the deep blue sea,” Selva said. “But to balance the checkbook, I’d take the OCO.”