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Defense Funding Gimmick: One Part of a Larger Problem

The House is scheduled today to consider the 2014 defense appropriations bill, which is at the heart of the House’s misguided approach to addressing the inadequate funding for discretionary programs when the “sequestration” cuts are added to the 2011 Budget Control Act’s (BCA) already austere funding caps.

By itself, the bill exceeds the $498 billion defense cap (after sequestration) that applies to this bill and to defense funding in other bills for military construction, nuclear weapons, and other defense-related items.  To offset the higher defense level, the House Appropriations Committee’s spending plan imposes deeper cuts in non-defense discretionary programs than sequestration calls for — even though sequestration is already disrupting public services and shortchanging public investments.

In addition, the House defense appropriations bill seeks to boost defense funding further by evading the stringent BCA caps altogether.  The bill includes $5 billion more than the President requested for war-related costs, known as Overseas Contingency Operations (OCO).  These funds, which are designed to finance operations mainly in Afghanistan, are not subject to the BCA caps.

The Pentagon, however, could be tempted to use unneeded OCO money as a backdoor way to ease pressures on the base defense budget.  That is, it could become, as the House Budget Committee’s Ranking Member, Chris Van Hollen (D-MD), aptly noted, a “slush fund” for the Defense Department.

Defense Secretary Chuck Hagel has made clear to the House Budget Committee that the President’s request for OCO reflects “the sufficient budget to carry out our strategic interests.”  General Dempsey, Chairman of the Joint Chiefs of Staff, concurred.  Indeed, Stimson Center defense expert Gordon Adams believes the President’s OCO request is already quite generous.

Last month, separate from the appropriations bill, the House passed a bill that “authorizes” a similar amount of additional OCO funds beyond the President’s request.  When the House considered that bill, it voted 232-191 against a bipartisan amendment to eliminate those additional funds.

Reps. Mick Mulvaney (R-SC), Van Hollen, Mike Coffman (R-CO), and Patrick Murphy (D-FL) plan to offer a similar amendment to the defense appropriations bill.

While a step forward, the amendment doesn’t address the larger problem.  Allowable annual funding for discretionary programs under sequestration is simply too low.

Indeed, the mechanical budget cuts that sequestration imposes were not supposed to take effect.  Policymakers designed sequestration as an incentive to force the President and Congress to come together on a deficit-reduction agreement that would replace sequestration.  The threat of sequestration on defense programs was intended to pressure Republicans to find other ways to reduce the deficit — not to protect defense through gimmicks and draconian cuts in non-defense programs, as the House approach would do.

A far better approach — which the President and the Senate have proposed — would be to replace sequestration with a balanced deficit-reduction package that includes higher revenues and other spending cuts.