A Shell Game on Military Spending

Blog Post
Monday, October 29, 2018

Since 2001 the Defense Department has received $2.2 trillion in special funding that has been on top of the basic defense budgets that Congress has approved through regular annual appropriations. That amounts to 20 percent of total defense appropriations over that period.

These figures come from the Congressional Budget Office (CBO) in a new report on the use of this additional money, almost all of which is theoretically designated on a temporary basis for use in military conflicts in Iraq, Afghanistan and elsewhere.

This is known as overseas contingency operations (OCO) funding. The Concord Coalition and other budget watchdogs, however, have long complained that OCO funding is often used to cover routine Defense Department spending that should be included in its basic (“base”) budget.

This use of OCO funding amounts to an end run on the regular appropriations process, including budget caps imposed in the Budget Control Act of 2011.

The new report says the budget office “estimates that in each year since 2006, more than $50 billion, on average, of the total funding designated for OCO has been used to support enduring activities rather than the temporary costs of overseas operations.”

The report provides some helpful background: “In the latter half of the 20th century, (the Department of Defense) generally requested nonbase funding in supplemental appropriations at the beginning of military conflicts and then incorporated that funding into the base budget if the operations lasted for multiple years.”

That seems like the logical -- and honest -- way to do it. And between 1970 and 2000, the budget office estimates, this “nonbase” funding only averaged about 2 percent of the Defense Department’s total spending.

Since 2001, however, CBO says such funding “has accounted for a much larger and persistent share” of annual defense appropriations.

“Because nonbase funding is generally assumed to be temporary, OCO funding is omitted from (the Defense Department’s) estimates of future defense costs,” the budget office says. “However, OCO funding has increasingly been used to support enduring activities, including activities that would normally be funded in the base budget.”

This is a recipe for confusion, miscalculation and fiscal surprises. As the budget office puts it, the system has “created uncertainty about the current and future costs” of the national defense strategy.

Perhaps most significantly, the true costs of base-budget activities -- the routine running expenses of the Defense Department -- are understated. The costs of foreign military engagements, meanwhile, may be overstated.

The budget office report says that the Defense Department has indicated that it plans to start budgeting for more of its basic expenses in the right place: its regular annual appropriations.

The department should follow through on this, which would make understanding military needs and spending less of a shell game for lawmakers and the American public.

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