The Pentagon Won’t Release Plan to Get Rid of Slush Fund
The work is done, but it might mean smaller budgets in the future
by MANDY SMITHBERGER
The U.S. government created its special war spending budget to fund unexpected costs of fighting overseas. As such, the Overseas Contingency Operations account, or OCO, is not part of the Pentagon’s base budget and isn’t subject to the spending caps in the Budget Control Act of 2011.
Congress passed that law to rein in out-of-control spending. Predictably, the OCO has become a slush fund that allows a variety of Pentagon and Congressional pet projects to circumvent those rules.
At a confirmation hearing in January 2017, Republican senator for Tennessee Bob Corker called the fund “dishonest.” The subject of the gathering, Republican representative from South Carolina Mick Mulvaney — Pres. Donald Trump’s nominee to head the Office of Management and Budget, or OMB — agreed with that assessment.
OCO is so off track that the Senate Appropriations Committee, which is responsible for funding the government, directed the secretary of defense to show how to migrate “enduring requirements” — ongoing and predictable activities that belong in the regular defense budget — out of the account. “It’s not a contingency if it’s forever,” then Democratic representative from Maryland Chris Van Hollen, now a senator for the state, pointed out.
But a recent Government Accountability Office report revealed that even though the Pentagon developed the required plan, it refused to turn over the information to Congress — and to the public — when it became clear lawmakers would not increase the Pentagon’s funding.
“The plan envisioned by the administration would transition all enduring costs currently funded in the OCO budget to the base budget beginning in 2017 and ending by 2020,” the GAO wrote. “However, it was also asserted that the transition would not be possible if the sequester-level discretionary spending caps were to remain in place.”
While the plan likely would have been another effort to advocate for more funds, it may also have included opportunities to improve cost controls and discipline. At the very least, the Pentagon should provide it to legislators as they requested.
Last year, the U.S. military acknowledged that about half of the $60 billion OCO account actually went to ongoing and predictable requirements that should be in the base budget. The GAO’s review verified that the reality of how U.S. military officials use the fund no longer adheres to its defined purpose and that it now pays for activities such as regular headquarter operations in the United States.
The Pentagon estimates it has spent $1.6 trillion in OCO funds since 2001. But that number may not be accurate, the GAO found.
The U.S. military’s financial systems were such a mess that “many … currently cannot distinguish between base and OCO obligations easily,” the federal watchdog reported. The Pentagon’s inability to distinguish between major funding accounts does not bode well for it achieving auditability any time soon.
The GAO report makes clear yet again that the Pentagon’s and Congress’ budget discipline over this account has totally broken down. Unfortunately, the investigators focused their recommendation on updating the definition of OCO to reflect reality instead of challenging the propriety of that reality, which is the abuse of the fund.
As a member of the House, OMB Director nominee Mulvaney repeatedly challenged the abuse of OCO, including co-sponsoring amendments to restrict these funds to overseas operations as lawmakers created this account to do in the first place. He reiterated his commitment in the confirmation process.
“If confirmed, I hope to work with the secretary of defense to ensure that the OCO budget is strictly limited to the funding our military needs to conduct combat operations overseas, consistent with the troop levels needed to carry out the mission,” he said.
OMB can decide what the Pentagon can and cannot include in OCO. One of the first key tests for the budgetary discipline Mulvaney has promised will be whether he allows the definition of OCO to continue to expand or restrains it to true overseas contingencies.
If Mulvaney is really serious, maybe he’ll finally phase out OCO once and for all.