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House Budget Uses Gimmick for More Defense Funding

The House Republican budget calls for considerably more defense funding than last year’s budget agreement allows, funneling extra funds through “overseas contingency operations” (OCO) in a classic gimmick.  This move, however, threatens more painful cuts in non-defense appropriations for 2017. 

First, some background.  Last year’s agreement included $74 billion in 2017 for OCO, which is exempt from the Budget Control Act appropriations caps and originally designed to cover the extra costs tied to operations in Afghanistan, Iraq, and other trouble spots.  Of that total, $59 billion was for the Defense Department, and $15 billion was for the State Department and other non-defense agencies. 

Policymakers have expanded OCO’s uses in recent years, using some of its funds to supplement funding for other needs — that is, costs not strictly associated with overseas contingency operations. 

While the Republican budget adheres to last year’s agreement for OCO’s total, it doesn’t specify how the funds would be split between defense and non-defense uses.  Further, it calls for devoting considerably more OCO funds to supplementing the core defense budget than the $74 billion total can accommodate without shifting funds from non-defense to defense or cutting funding for actual overseas contingency operations needs.

In particular, the material accompanying the budget states that $23 billion of OCO funds would go for core defense needs.  By contrast, the President’s budget allocates most of OCO’s defense dollars to address overseas needs and provides about $5 billion to supplement the core defense budget — or $18 billion less than the House Republican budget.

Where would the House find that $18 billion?  Maybe it would later waive or override the OCO limit set by its budget.  If not, we’re left with two possibilities:  either it would substantially underfund what the Defense Department says it needs for overseas operations or, more likely, it would virtually wipe out non-defense OCO funding and use all OCO funds for defense.

The latter course would shift, to defense, up to $15 billion in OCO funds now used for activities like embassy security, international peacekeeping, and economic and military assistance.  That, in turn, means that to continue funding these State Department and foreign affairs activities in 2017, other non-defense appropriations would have to fall by $15 billion (to free up these funds while remaining within the 2017 cap on non-defense appropriations).  That would mean more painful cuts in non-defense discretionary programs, in a year when the cap on overall non-defense appropriations is flat and after these programs were cut substantially in recent years.

Moreover, either shifting OCO funds from non-defense to defense or raising OCO’s total to accommodate more core defense funding would violate last year’s budget agreement, which (like its predecessor) provided equal relief from sequestration cuts for both defense and non-defense appropriations.