Vice President for
Federal Fiscal Policy
Congressional Republicans are proceeding to implement a gimmick in their 2016 budget resolution that allows defense programs to evade the 2011 Budget Control Act’s (BCA) tight limits on appropriations, as lowered by sequestration.
The Senate is considering this week its version of the 2016 National Defense Authorization Act (NDAA), which embraces the gimmick, as did the House-passed NDAA. These bills set the stage for the defense appropriations bills, which the Senate Appropriations Committee and full House may consider as early as this week.
Here’s how the gimmick works. The authorization bills provide $38 billion more for Overseas Contingency Operations (OCO) — a category created for Iraq and Afghanistan operations — than the Pentagon says it needs for these activities. OCO funding doesn’t count against the BCA cap on defense funding, and the authorization bills make very clear that the Pentagon can spend these extra OCO funds on non-OCO defense requirements.
That’s exactly what the budget resolution proposed, even though last year House Republicans condemned such a maneuver as “a backdoor loophole.” And while the budget resolution addressed the Pentagon’s funding problems through this gimmick, it offered no relief for non-defense appropriations, which are similarly squeezed by the BCA caps and sequestration.
The President correctly threatened to veto both the House and Senate bills, sticking to his core principle that, as a Statement of Administration Policy asserted, “he will not support a budget that locks in sequestration, and he will not fix defense without fixing non-defense spending.”
Interestingly, the Senate NDAA includes “sense of the Senate” language calling for sequestration relief in 2016 and 2017 for defense and non-defense, in equal amounts. It recommends offsetting that relief with targeted changes in spending and revenues.
That’s the right approach. The President favors it, and the 2013 bipartisan Murray-Ryan budget agreement achieved it for 2014 and 2015 by providing sequestration relief offset by alternate savings. But “sense of the Senate” language is only hortatory.
An amendment from Senator Jack Reed (D-RI) to undo the gimmick lost on a party-line vote in the Senate Armed Services Committee. He plans to offer it again on the Senate floor, and the Senate would be wise to adopt it. By abandoning this gimmick, the Senate could speed up congressional negotiations with the Administration over sequestration relief for both defense and non-defense, offset with alternate savings — a far more constructive endeavor.