How to Fix the Pentagon’s Misused War Spending Account

How to Fix the Pentagon’s Misused War Spending Account
AP Photo/Charles Dharapak, File
How to Fix the Pentagon’s Misused War Spending Account
AP Photo/Charles Dharapak, File
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Key Points

  • The use of “fake Overseas Contingency Operations (OCO)” funds is a product of the arbitrary Budget Control Act (BCA) spending caps and will not disappear until the caps do. The only honest solution is to eliminate those caps and begin budgeting based on real needs with real money in real accounts.
  • The cynicism generated by the “fake OCO” and the attention given to that gimmick detract from discussions about the problems with enduring conflict costs in the “real OCO” budget.
  • The generational nature of America’s current conflict against violent extremist organizations demands a fresh look at budgeting for these military operations. Congress should reform the “real OCO” budget over the next two years and phase in a new account once the BCA expires.
  • Besides reforming OCO, lawmakers can simultaneously improve Pentagon planning, broaden public understanding of war costs, and strengthen congressional oversight over the use of military force and associated spending.

Introduction

President Donald Trump’s $750 billion fiscal year (FY) 2020 defense budget request includes $165 billion in Overseas Contingency Operations (OCO) money. This fund was originally designed to separately account for the costs of ongoing operations in Afghanistan, Iraq, and elsewhere. Both Congress and successive administrations have misused this funding in two separate ways, particularly over the past decade.

The overall OCO spending should be broken down into separate budgets: “real OCO” and “fake OCO.” Policymakers have too often conflated the two. While both pots of money suffer from problems, devising policy solutions to fix those challenges requires understanding the root cause of the issue in each type of spending.

The 2020 “real OCO” budget contains $67 billion in funding to pay for ongoing US conflicts in Afghanistan, Syria, and elsewhere. However, the changing nature of current hostilities demands a hard look at whether some predictable conflict-related spending should be accounted for in the Pentagon’s normal, everyday “base” budget. The generational nature of America’s current fight against violent extremists means that some types of conflict spending, such as war-zone infrastructure, will endure no matter the annual tempo of operations. Debating the composition of the “real OCO” budget could lead to changes that simultaneously improve Pentagon planning, broaden public understanding of war costs, and strengthen congressional oversight over the use of military force and associated spending.

The 2020 “fake OCO” budget contains $98 billion in funding for the basic, everyday activities of the US military that do not relate to ongoing conflicts, such as overall military readiness and weapons modernization geared toward deterring Russia and China. The “fake OCO” budget exists because OCO spending does not count against the Budget Control Act (BCA) caps, which established an annual ceiling for defense spending. This exemption was originally intended to ensure that “real OCO” funding for current conflicts was shielded from cuts under the BCA. However, lawmakers and administration officials have agreed to abuse this exemption by using the “fake OCO” to circumvent the BCA caps and grease the wheels for spending deals. Because the “fake OCO” budget gimmick was invented in response to the BCA caps, the only honest solution is to eliminate those caps and begin budgeting based on real needs with real money in real accounts.

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Also visit AEI for the original posting of this report and related material.



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