The Biden Administration handed taxpayers a victory in its fiscal year (FY) 2022 budget request, released on April 9, 2021, which eliminated the Pentagon’s Overseas Contingency Operations (OCO) account nearly 20 years after its inception.  Originally intended for emergency defense spending in response to the attacks of September 11, 2001, 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 foreign wars.

Further justification for ending the OCO was provided on April 14, 2021, when President Biden announced that he would withdraw U.S. forces from Afghanistan prior to September 11, 2021.  Spending on warfighting will again revert to the base DOD budget, which is where it should have resided all along.

The continued justification for the OCO had long since reached the stage of parody, with spending far outpacing the military’s presence in combat zones.  In FY 2008, the U.S. deployed an average of 187,000 troops in Afghanistan and Iraq.  OCO spending topped $187 billion that year, equating to $1 million per service member.  The DOD currently has approximately 5,000 troops stationed in these countries, meaning the $68.7 billion in OCO spending in FY 2021 equates to $13.7 million in funding per service member, more than 13 times the amount in FY 2008. 

In FY 2015, around 50 percent of OCO funding was for nonemergency items.  An August 2019 Congressional Budget Office report noted that approximately 85 percent of funding for the OCO in FYs 2020 and 2021 “is designated for base-budget and ‘enduring’ activities,” funding maintenance in support of foreign operations that will continue regardless of force size.

The last 20 years of OCO spending is also unprecedented when compared to historical levels.  Emergency funding outside of the base budget made up roughly 2 percent of DOD spending between 1970 and 2000.  Between 2001 and 2018, the OCO has constituted on average around 20 percent of the Pentagon’s annual budget.

The DOD has received approximately $2 trillion from the OCO since 2001.  Were it considered to be a federal agency, the FY 2021 OCO funding would have made it the fourth largest, dwarfing spending at all other agencies except the DOD, and the Departments of Health and Human Services and Veterans Affairs.

Beyond the problems associated with using a loophole to fund the DOD, as a supplemental appropriation the OCO does not allow the Pentagon to factor its funding into the 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.  Then-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.” 

The OCO inflated defense spending for far too long.  Its elimination will restore a measure of sorely needed fiscal discipline at the DOD.