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House Appropriators’ Gimmick Would Boost Defense

The House Appropriations Committee is considering today a 2017 defense appropriations bill that would take a big step towards boosting defense spending above the limit in last year’s bipartisan budget agreement.

To do so, the bill shifts almost $16 billion to the core defense budget from overseas contingency operations (OCO) funds, creating an OCO hole that a supplemental appropriations bill will have to fill by early next year.  This two-step process is a backdoor way to increase defense spending, thus violating a key principle of last year’s agreement that provided equal relief from sequestration to defense and non-defense appropriations.

The Committee’s action would implement a modified version of a plan first included in the 2017 defense authorization bill that the House Armed Services Committee approved last month and that the full House will consider this week.  While the authorizing bill sets policy, the appropriations bill will determine actual funding levels.

OCO funding, which is exempt from the 2011 Budget Control Act’s (BCA) annual appropriations caps, was created to cover costs tied to operations in Afghanistan, Iraq, and other trouble spots, but policymakers have expanded its uses in recent years to costs not strictly tied to such operations.  Last year’s budget agreement continued that practice by specifying OCO levels for 2016 and 2017 that lets OCO supplement core funding for defense and international affairs.  The President’s 2017 budget estimates that the agreed-upon OCO level for 2017 can cover about $5.2 billion of core defense needs.

The defense appropriations bill, however, moves an additional $15.7 billion in OCO funds to core defense purposes.  It then cuts the President’s request for actual overseas contingency operations by a corresponding $15.7 billion to stay within the overall OCO total specified in last year’s agreement.

Committee Republicans do not claim that the President’s request for overseas operations isn’t all needed.  On the contrary, the committee’s description of the bill states that its funding for actual OCO activities will cover only the first seven months of the fiscal year — through next April.  Thus, the Republican majority is creating the need for supplemental appropriations next spring to provide the rest of the needed 2017 OCO funding — something the committee report frankly acknowledges.  And in the end, the overall defense budget will be about $15.7 billion higher than agreed to last year.

As noted above, last year’s budget agreement raised the BCA caps on defense and non-defense appropriations by equal amounts, replacing sequestration cuts with other deficit reduction measures.  The principle of defense/non-defense parity was also observed in prior sequestration relief agreements and in the design of the sequestration process itself.  The House, however, is moving to violate that principle by providing further relief to defense only.  If policymakers also demand offsetting cuts for the supplemental defense appropriations that the House strategy will require next spring, we could see not only defense increases but also further non-defense cuts.