The WasteWatcher: The Staff Blog of Citizens Against Government Waste

End the Pentagon Slush Fund

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Created in 2001 to fund the war in Afghanistan and other associated costs of the Global War on Terror, the Overseas Contingency Operations (OCO) account was intended to be a one-time emergency supplemental.  Instead, it has been used as an annual funding measure, including in 2003, when the U.S. invaded Iraq.

Over time, the account transitioned into a slush fund designed to inflate spending at the Department of Defense (DOD) far above the baseline budget and for purposes unrelated to the wars in Afghanistan and Iraq.  For the past several years, members of Congress have begun using the OCO in an even more insidious manner: to bypass the sequestration restraints applied to the Pentagon under the Budget Control Act of 2011 (BCA).

In fiscal year (FY) 2016, OCO spending would far exceed the cost of military involvement abroad.  The House and Senate-approved budget resolutions would fund the OCO at $96 billion, or $45.1 billion above the president’s request of $50.9 billion.  This would be the highest level of funding for the OCO since it received $115 billion in FY 2012, when 99,000 troops were active in Afghanistan and Iraq, and it would exceed the $88 billion in FY 2013 when 63,000 U.S. troops were in Afghanistan.  There are approximately 9,800 U.S. soldiers currently stationed in Afghanistan, and that number may drop to as low as 5,500 by the end of 2016.

The FY 2016 funding level would therefore once again fail to be reduced at the same rate as the decline in U.S. military involvement abroad.  Following the return of troops from Afghanistan between 2014 and 2015, OCO spending per soldier more than doubled, a figure that will increase in FY 2016.

Approximately 50 percent of the money in the OCO in FY 2015 was for nonemergency items that should have been included in the Pentagon’s baseline budget.  For example, $810 million was provided for the European Reassurance Initiative, under which the DOD “…seeks to reassure our [North Atlantic Treaty Organization] allies and bolster the security and capacity of our partners.”

Although President Obama spoke of ending wartime emergency spending in his 2008 presidential campaign, the OCO has become a rare area of consensus between the administration and Congress.  Not only did the FY 2016 House Budget Resolution exceed the president’s budget request, but the final version was passed after the removal of a stipulation calling for $20 billion of the OCO funding to be offset in the regular DOD budget.  Following the House’s lead, Sens. Kelly Ayotte (R-N.H.) and Lindsey Graham (R-S.C.) offered an amendment in the Senate Budget Committee that raised OCO spending by $38 billion to match the funding level in the House, while also declining budget offsets.  The measure passed on March 20, 2015 by a vote of 12-10 and remained as part of the budget resolution that passed the Senate on March 27, 2015 by a vote of 52-46.

The permanent, annual use of the OCO by legislators to funnel money to the DOD, in part to avoid sequestration, represents a remarkably poor example of governance.  Beyond the problems associated with using a loophole to fund the DOD, the ad-hoc nature of the supplemental bill does not allow the Pentagon to factor the funding into its normal budgetary process, which involves planning for multiple years.  For this reason, top DOD officials have expressed their disappointment in the system, and have argued for the incorporation of OCO funding back into the DOD baseline budget (albeit with the removal of sequestration spending caps). 

DOD Secretary Ashton Carter stated in a March 18, 2015 House Armed Services Committee hearing that the OCO “…doesn’t work because to have the defense we need and the strategy that we have laid out, we need the budget that we have laid out not just in one year, but in the years to come … and so, budgeting one year at a time, and this proposal is a one-year-at-a-time thing, doesn't work for national defense.  It’s not going to permit us to carry out the strategy as we’ve planned.”  At the same hearing, Joint Chiefs of Staff Chairman Gen. Martin Dempsey stated, “We submit a one-year budget but in the context of a five-year future defense plan, and we won’t have the certainty we need over that period if the current strategy is followed.” 

The OCO is an ugly bit of budget gimmickry that not only creates a slush fund for the DOD, but also circumvents the restraint in defense spending created by the BCA.  Members of Congress have become so adept at pumping the account full of money that the $96 billion pegged for the OCO in FY 2016 would make it the second largest federal agency (behind the DOD itself), were it considered as such.  Congress could restore some semblance of order and rationality in the Pentagon’s budget and the entire federal budget by eliminating the OCO and folding that money back into the baseline, while maintaining the levels of spending mandated by the BCA.

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