Obama to spend $59 billion through Pentagon ‘slush fund’

Seven years ago, President Obama took over the White House with a promise to end what he called the “abuse of supplemental budgets” that were used to to not only fund U.S. military operations in Iraq and Afghanistan, but a variety of other efforts that had little to do with them. But as the president moves into his last year in office, a new reality has set in: those controversial funds still exist, and likely will remain under whoever replaces Obama in the White House next year.

The Pentagon’s proposed budget for fiscal 2017 includes both a $523.9 billion base budget and $58.8 billion in Overseas Contingency Operations (OCO) funding. The use of OCO funding has been derided by critics, including the Project for the Oversight of Government, as a “slush fund” for the Pentagon, but in 2017 it again includes billions of dollars for new equipment.

Among the examples proposed in the OCO budget are $565.1 million to buy 24 MQ-9 Reaper drones for the Air Force, $299.5 million to pay for 1,092 new armored trucks for the Army and $184.9 million to buy two F/A-18 Super Hornet fighter jets for the Navy. Using war funding to buy new equipment — even equipment that could be used in a war — caused a backlash during the Bush administration, but no longer does so, said Mackenzie Eaglen, an analyst with the American Enterprise Institute, a conservative think tank in Washington.

“I would say that all parties — including the White House, the Pentagon and Capitol Hill — have given up any pretense of using emergency money for emergencies,” Eaglen said. “No one even tries to put the veneer of accountability on OCO dollars anymore.”

 

The proposed OCO fund also includes $3.4 billion for what the Pentagon calls the European Reassurance Initiative, an effort to counter Russian aggression in the region in part by keeping an armored brigade of U.S. soldiers deployed there on a continued, rotational basis. The reassurance request for 2017 is $2.6 billion more than what was enacted for 2016, about a 325 percent increase. It also stands as another example of something that would have once been included in a defense base budget, Eaglen said.
The new OCO budget also includes $8.1 billion for classified programs across the Defense Department. That money will go toward the military’s secret programs, and will not be subject to the same level of scrutiny as the rest of the budget.

Michael J. McCord, the Pentagon’s comptroller, defended how the Defense Department handled its budgeting in a news conference Tuesday, saying the current administration has sought to build a “good-faith estimate of what wars were going to cost into the budget.” As a result, he added, there is more predictability and transparency than before.

But McCord acknowledged that efforts by the Obama administration, particularly in the Office of Management and Budget, to reduce OCO funding and get everything the Pentagon needs back into its base budget haven’t gone far. A budget deal reached in November on Capitol Hill provided the Defense Department with relief from devastating federal budget cuts known as sequestration, but also “went exactly the opposite direction” from reining in OCO spending, McCord said.

“We haven’t made a lot of progress on that,” he said. “So I think it leaves … the future of OCO a little uncertain as we get ready to turn over this administration to a new team. And probably they’ll take a fresh look at OCO.”

An Obama administration official, speaking on condition of anonymity in order to speak candidly, said that OCO money has been a “flexible tool” over the years that has enabled the United States to fund wartime costs “principally associated with major combat operations separate from base budget constraints.” Expanding the new reassurance initiative in Europe in the new OCO budget was “based in part on recent events that created an immediate need to expand training with allies and increase other activities.,” the official said.

The administration continues to support developing a plan to transition some enduring costs that are currently in the OCO budget to the Pentagon’s base budget, the official said. The budget deal reached in November offered relief for two years, but sequestration remains on the books after that through federal law. Shifting OCO funding into the base budget will not be possible if those budget caps remain in place, the administration official said.

Todd Harrison, an analyst with the Center for Strategic and International Studies in Washington, said that if anything, Obama’s White House has expanded the parameters of how OCO money is used. But they have been incentivized to do so by gridlock on Capitol Hill and sequestration, he said.
“At this point, the lines between the OCO budget and the base budget have become so blurred that I don’t think there’s any meaningful distinction,” he said.

He hesitated to call OCO funding a slush fund, though.
“I would just say it’s a politically convenient way of getting around the budget cap,” Harrison said. “Ideally, when a new administration comes in office next year, they should try to strike a deal with Congress that addresses all this. I don’t think that’s realistic, though. I think realistically we’re going to stumble along year to year, and that we will continue to use OCO funds to get around the budget caps.”