The Senate will shortly consider an amendment by Senator John McCain to the annual defense authorization bill that would authorize adding about $18 billion to defense funding, using the Overseas Contingency Operations (OCO) account as his mechanism. Doing so would exceed the defense level of last year’s Bipartisan Budget Act (BBA) and violate the “parity” principle that the President and Congress have consistently followed by providing equal relief for defense and non-defense appropriations from sequestration budget cuts.
Currently, the Senate Armed Services Committee’s defense authorization bill reflects the BBA’s top line for defense funding. The McCain amendment would add $18 billion to its total, labeled as OCO but designated for basic defense purposes such as more procurement of ships, aircraft, and other items and somewhat higher personnel levels.
OCO funding, which is exempt from the 2011 Budget Control Act’s (BCA) caps on defense and non-defense appropriations, was created to cover additional costs tied to operations in Afghanistan, Iraq, and other trouble spots, but policymakers have expanded its uses in recent years to costs not strictly associated with such operations.
While the President and Congress will make final defense spending decisions in the 2017 defense appropriations bill, the authorization bill sets funding policy and, if adopted, the McCain amendment could set the stage for comparable action on appropriations, as is occurring in the House.
The BBA raised the defense and non-defense appropriations caps by $25 billion each in 2016 and $15 billion each in 2017 by replacing scheduled sequestration cuts with alternate deficit reduction measures. It also provided additional relief by specifying OCO levels for 2016 and 2017 that are sufficient to modestly supplement core funding for both defense and international affairs. Now, the McCain amendment would add an additional $18 billion to the 2017 OCO level specified in the BBA, but only for defense.
The McCain amendment follows efforts in the House this year to use OCO to boost defense. As we described here and here, the House-passed defense authorization bill adds $18 billion through this mechanism, while the House Appropriations Committee’s defense appropriations bill adds about $16 billion. Both House measures use a two-step process, shifting an additional $16-18 billion in OCO funding to supplement the core defense budget and, in the process, creating a serious funding shortfall for actual overseas military operations that policymakers will have to address early next year through supplemental appropriations. The McCain amendment uses a one-step process by just directly increasing OCO.
If, instead of relying on OCO, these various proposals had simply increased core defense funding, they would breach the defense cap and trigger automatic cuts to eliminate the breach. Using OCO avoids that, because it doesn’t trigger automatic cuts under the BCA. But all these proposals would violate the BBA’s specific OCO levels.
If House and Senate members find the current appropriations limits inadequate to meet important national needs, their most straightforward option is to provide equal relief for both defense and non-defense funding, just as the President and Congress have done in all three previous revisions to the BCA.