How Post-9/11 Spending on Troops Became a Pentagon Slush Fund
Policy + Politics

How Post-9/11 Spending on Troops Became a Pentagon Slush Fund

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John Ams, vice president of the National Society of Accountants, says the games Congress is playing with the defense budget this year wouldn’t pass the sniff test in the private sector.

Ams, a lawyer and former tax accountant, becomes agitated when discussing congressional Republicans latest gimmick for bypassing the legal caps on Department of Defense spending in the coming fiscal year by funneling an extra $38 billion through a special Overseas Contingency Operations (OCO) account originally set up to fund the wars in Afghanistan and Iraq. Although those funds are being treated as a “contingency” for accounting purposes, in fact there is no doubt that they will migrate into the Pentagon’s base budget for readiness and general operations.

Related: 5 Gimmicks in the GOP’s ‘Gimmick-Free’ Budget

And because the additional funding is being funneled through the special OCO account, Congress will not be obliged to find offsetting cuts in other programs. It will simply add it to the budget deficit next year.

“They’re saying this is a contingency, we’re just putting it there on the off chance [we will need it],” Ams said in an interview on Tuesday. “There’s no off chance. It’s close to 100 percent they’re going to use it. Congress just doesn’t want to make the hard decisions. If we put it directly into the defense budget then we have to have some offsets or tax increases, heaven forbid. This way you subvert the definition of a contingency and you create a loophole. And certainly in the private sector this wouldn’t stand scrutiny.”

Ams isn’t the only one displeased with this latest accounting gimmick embedded in the Republican’s fiscal 2016 budget, which cleared the House and Senate earlier this year. Democrats and budget watchdogs have howled over the budgetary sleight of hand that allowed the GOP to circumvent a $523 billion defense cap imposed by the 2011 Budget Control Act, while President Obama has vowed to veto the defense appropriations bill unless the provision is removed.

The Overseas Contingency Operations fund was meant to exclusively cover the cost of personnel, weaponry, supplies and logistical support to the roughly 2.5 million troops sent to war beginning shortly after the 9/11 attacks. But gradually, OCO evolved into an all-purpose slush fund for the military, members of Congress and the Bush and Obama administrations. Policy makers found it convenient to use the account not only for fighting overseas but to fund routine costs of Department of Defense personnel and benefits or to purchase weapons system still in the production stage. 

Related: House GOP’s Creative Accounting Lifts Defense Budget   

In the latest skirmish over OCO, Senate Republicans yesterday beat back a Democratic effort led by Sen. Jack Reed of Rhode Island to freeze the extra $38 billion in the OCO account until the two parties can strike a budget compromise later this year to breach the caps and increase spending for both defense and domestic programs.

Reed offered his plan as an amendment to a new defense authorization bill pending on the Senate floor. Reed argued that the Republicans’ back-door funding of the Pentagon could become a precedent for future attempts to shatter budget discipline.

“If this were a one-year, temporary fix you might justify it,” he said. “But what we’re seeing is a pathway that [Congress is] going to take every year – more OCO, more OCO, more OCO – and more remote use of OCO funds. That’s the way, unfortunately, it tends to be around here. You go where the money is, and right now the money is in OCO.”

Senate Armed Services Chair John McCain (R-AZ) conceded that funding national defense through the OCO account is not ideal, “but it’s far better than the alternative, which is to deny the men and women in uniform $38 billion that they desperately need now.”

Reed’s amendment went down, 51 to 46, on a straight party line vote.

Related: Obama Would Violate Budget Control Act with $34B More for Defense  

Steve Ellis, vice president of Taxpayers for Common Sense, a government watchdog, says that OCO is a “slush fund,” pure and simple.

“It’s an extra place to stuff cash to evade the budget caps…,” Ellis said yesterday.

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