Pentagon planning a mammoth FY-20 war budget to avoid spending cap

February 7, 2019

By Tony Bertuca

The Defense Department is preparing to ask Congress for an increase of more than $100 billion in its controversial warfighting account to skirt a mandatory budget cap, but some government officials are worried it will only further the account's appearance as a slush fund.

The Pentagon's fiscal year 2020 Overseas Contingency Operations request could be as much as $174 billion, though the department requested $69 billion for FY-19, government officials told Inside Defense.

Since the creation of the OCO account, a $174 billion OCO request for FY-20 would be second only to the $189.3 billion DOD requested for FY-08, when the nation's military was actively involved in wars in Iraq and Afghanistan.

"Everyone has known for a while that OCO is a bit of a slush fund, but this is just insane," one government official said.

The massive increase, the officials said, is because the 2011 Budget Control Act caps FY-20 base defense spending at $576 billion and the Trump administration wants $750 billion. The OCO fund, however, is exempt from the statutory spending caps set by the BCA making it, according to the officials, an ideal account for the administration to request an additional $174 billion.

The Pentagon is not expected to release the toplines for the FY-20 budget request until the week of March 11, with additional details expected the following week. The budget is always subject to change, but the government officials said deliberations between DOD and the White House have progressed to the point where the $174 billion OCO request is being treated as certain.

The request is likely dead-on-arrival in Congress, where Democrats have said they will not increase defense spending above the BCA cap unless it is matched by a similar boost in non-defense priorities, which are also capped by the BCA.

The Pentagon and Congress have had a complicated relationship with the OCO fund for years because of its BCA cap exemption. Though the account is intended for contingency spending abroad, the Congressional Budget Office says about 70 percent of the Pentagon's existing $69 billion OCO account would actually pay for "enduring" priorities that would likely continue in the absence of U.S. military operations in the Middle East.

Pentagon officials, meanwhile, demonstrated last year they were willing to put non-contingency spending in the OCO account to circumvent the BCA when they released budget materials showing a $90 billion OCO request for FY-19. The department later changed its request to $69 billion to reflect a congressional deal to lift the BCA caps for defense and non-defense spending.

Still, the department has said it wants to begin phasing out OCO spending and even released long-term plans showing its intention to shift about $53 billion of OCO spending into the base budget in FY-20. The massive OCO request slated for FY-20, however, stands in conflict with those plans.

Congressional staffers, meanwhile, have been hearing the "big OCO" rumor for weeks.

"This is shocking," one Capitol Hill staffer said. "There is no justification for it being this big other than they are trying to get around the cap and don't want to negotiate to lift non-defense by the same amount."

Additionally, staffers said, the president's plans to withdrawal U.S. troops from Syria and "accelerate" peace negotiations with the Taliban to facilitate another U.S. exit raises questions about the need for such a large OCO account.

"They aren't even pretending anymore," the congressional staffer said.

The planned OCO increase is also seen as out of character for Mick Mulvaney, the acting White House chief of staff and director of the Office of Management and Budget, who was a harsh critic of OCO spending when he was a member of Congress, calling the account a "slush fund."

During his January 2017 confirmation hearing to become OMB director, Mulvaney also pledged he would "advocate for an end to OCO, and to moving true war-related costs in the base defense numbers," but acknowledged the Trump administration may "settle on a different policy."