Mulvaney Faces Uphill Battle on Defense Spending
By Sean Kennedy
January 2017 WasteWatcher
Incoming Office of Management and Budget (OMB) Director Rep. Mick Mulvaney (R-S.C.) will be tasked with developing plans to cut trillions of dollars in spending, based on the ideas being floated by the Trump transition team. While there are always challenges to implement such proposals, mostly from members of Congress, any suggestions to cut defense spending will face a particularly tough fight. However, Director Mulvaney should be a good fit for this effort. During his tenure in the House of Representatives, he established a track record of pushing to reduce both domestic and defense spending.
The first of his challenges in defense is the continued use of the Overseas Contingency Operations (OCO) account, which was created in 2001 to fund the war in Afghanistan and then Iraq. Over time, the OCO 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 America’s wars. For the past several years, members of Congress have used the OCO in an even more insidious manner: to bypass the sequestration restraints applied to the Pentagon under the Budget Control Act of 2011.
There is an appetite in Congress to increase funding of the OCO, despite a fiscal year 2016 funding level of $58.6 billion, which would make the OCO the equivalent of the fifth largest federal agency. On February 2, 2016, House Armed Services Chairman Mac Thornberry (R-Texas) called for an additional $23 billion for the OCO.
The permanent, annual use of the OCO represents a remarkably poor example of governance. Beyond the problems associated with using a loophole to fund the DOD and its operations, the ad-hoc nature of the OCO supplemental bill does not allow the Pentagon to factor the funding into its normal budgetary process, which involves planning for multiple years. Moreover, OCO funding has not declined in commensurate fashion with the U.S.’s reduced footprint in Afghanistan and Iraq.
Thankfully, Director Mulvaney has experience in fighting the OCO. On May 18, 2016 then-Reps. Mulvaney and Chris Van Hollen (D-Md.), and Reps. Barbara Lee (D-Calif.) and Mark Sanford (R-S.C.), co-sponsored an amendment that would have clarified when military spending should be designated as contingency operations and properly be part of the OCO. A May 19, 2016 press release from Rep. Mulvaney stated, “I’ve worked for many years to bring attention to the slush fund that is the War Budget. It’s past time to do away with the slush fund entirely. While this amendment doesn’t go that far, yet, I’m proud to work with my colleagues to at least bring some accountability to how the Pentagon spends taxpayer dollars right now.” He offered a similar amendment in 2015.
A second major challenge for Director Mulvaney will be the big-ticket procurement items within the DOD, such as the F-35 Joint Strike Fighter (JSF) program. The JSF is currently $170 billion over budget and six years behind schedule. An April 14, 2015 Government Accountability Office report indicated that lifetime operation and support costs of the platform may total $1 trillion. On November 2, 2016, DOD officials stated the JSF would require a further $530 million just to finish development.
Remarkably, some inside the Pentagon do not appear overly concerned about the F-35. On December 19, Lieutenant General Christopher Bogdan, who heads the F-35 Program Office, claimed “This program is not out of control.” This stark example of institutional bias earned Lt. Gen. Bogdan Citizens Against Government Waste’s January Porker of the Month Award.
Of course, President Donald Trump has publicly disagreed with Lt. Gen. Bogdan’s assessment. In December 2016, he criticized the F-35 on Twitter, citing its cost overruns.
While the F-35 likely cannot be replaced, it was excoriated in April 2016 by Senate Armed Services Committee Chairman John McCain (R-Ariz.) as “a scandal and a tragedy.” The program serves as an important reminder of the dire need for defense procurement reform. This is especially true given the investment the DOD will make in the B-21, the Air Force’s next generation bomber, in the coming years. Director Mulvaney will have a difficult task constraining cost growth in the B-21 program, especially since members of Congress have already agreed to obscure the total cost of the aircraft from the public. In July 2016, the Senate House Armed Services Committee voted 19-7 to withhold this information from taxpayers.
While Director Mulvaney has demonstrated a willingness to tackle budgetary gimmicks and defense cost growth, given the Pentagon’s clout and attitudes in Congress, he faces a difficult task. Whether fairly or not, his success as OMB Director may be judged largely on his ability to reign in the OCO and defense spending.