Bad Idea: Moving OCO Back into the Base Budget (While Negotiating a Budget Deal)
November 30, 2018
Of the numerous and often recurring debates on U.S. defense spending, one that has attracted particular attention over the past several years is the use of the Overseas Contingency Operations (OCO) budget. The OCO budget is designated to fund war-related activities and consequently, is not subject to the budget caps imposed by the Budget Control Act of 2011 (BCA). As a result of this exemption from the spending limits, however, OCO has been taken advantage of to skirt the budget caps on defense spending and to fund base budget activities that do not actually constitute war funding. FY 2016 budget requestThe use of OCO funding for base budget activities was one of the worst-kept national security secrets until the when the Department of Defense (DoD) announced it would “propose a plan to transition all enduring costs currently funded in the OCO budget to the base budget beginning in 2017 and ending by 2020.” At the time, DoD “tacitly acknowledged” that $30 billion of the $50.9 billion OCO budget covered enduring costs; an October 2019 report from the Congressional Budget Office approximated that nearly 70 percent of the FY 2019 OCO request for $69 billion is used to fund base budget activities.
The use of OCO to fund base budget priorities poses significant transparency concerns over the cost of wars in Afghanistan, Iraq, and Syria. This practice earned the ire of members of Congress on both sides of the aisle, particularly then-representative Mick Mulvaney who referred to the war funding account as a “slush fund.” It should come as little surprise then that the Pentagon, under a Trump administration with Mulvaney at the helm of the Office of Management and Budget, included plans to pull enduring costs in OCO back into the base budget in its FY 2019 budget request. Returning OCO to the base budget is a positive move that increases transparency and accountability within the Pentagon and is a policy endorsed in the report of the National Defense Strategy Commission. However, returning enduring OCO costs to the base budget, particularly a vast majority of those enduring costs over a short period as DoD has outlined, could significantly complicate an agreement between congressional Democrats and Republicans to increase both the defense and nondefense BCA budget caps for FY 2020 and FY 2021.
This piece was published as part of the Defense360
Seamus P. Daniels is a research associate for Defense Budget Analysis in the International Security Program at the Center for Strategic and International Studies in Washington, D.C.