On Monday, it seemed there might be some hope for sanity regarding the use of overseas contingency operations (OCO) spending to boost the defense budget. There was a slight possibility that procedural rules, partisanship, or simply pure political ambition might slow the ongoing end-run around the Budget Control Act limits on defense spending. Alas, that no longer seems to be the case. Defense hawks are determined to get the extra money they want, and fiscal conservatives in Congress have not been able to muster enough support to stop them.
Today at Politico, Jeremy Herb and Bryan Bender explain how the use of OCO as a slush fund went from being something of an open secret to an openly acknowledged strategy to increase defense spending. Herb and Bender describe how relatively smaller amounts—$5 or $10 billion, according to a quote from recent retired budget analyst and long time Pentagon critic Winslow Wheeler—were added to war supplemental requests for items that should have been in the base budget for the Department of Defense. According to the story, Senator John McCain was one of the leading critics of this practice and as recently as last week decried inflating the OCO account as a “gimmick.”
The chairman of the Senate Armed Services Committee has come around on the issue though, embracing the use of OCO to increase the Pentagon’s budget while still expressing discomfort with the idea. Senator Jim Inhofe summed up the situation from the defense hawk perspective: “It’s the best of bad solutions.”
But is that really true?
Making OCO into what amounts to a permanent slush fund is a bad idea for a number of reasons. Supplemental war funding measures are meant to be for emergency situations, and therefore are subject to less congressional scrutiny than regular appropriations. Their regular use will eliminate the few incentives defense officials have to address internal problems at the Department of Defense that push spending ever higher. And because the OCO account is off-budget, placeholder figures are used to assess its impact on future deficits—thus presenting a misleading picture of America’s fiscal future.
As bad as those problems are, Benjamin Friedman of the Cato Institute identifies an even more pernicious incentive at play:
If OCO becomes an auxiliary Pentagon fund that exists to escape [budget] caps, war becomes the Pentagon’s budgetary salvation. Historically, elements of the defense establishment benefit from public sense of insecurity, but not necessarily war. This new set-up could change that.
Americans should want a strong military that can deter potential threats and defeat actual ones. But incentivizing permanent war is neither fiscally nor morally responsible. If that becomes the case, then the OCO slush fund is not the “best of bad solutions,” but rather the worst of all worlds.