War Funding 'Gimmick' in Defense Budget Request Sets Up Congressional Battle

Pentagon officials said Tuesday that the huge and controversial increase in off-the-books funding for Overseas Contingency Operations -- from $69 billion to $165 billion -- was dictated by the White House.

"From our perspective, we built a budget that is required to carry out the National Defense Strategy" to counter Russia and China, said Pentagon Deputy Comptroller Elaine McCusker.

"The decision on how best to finance that budget was made by [the White House Office of Management and Budget]," she said. The OCO increase was "something that we followed their direction on. We received direction on how that would be financed from OMB."

House and Senate Democrats have labeled the proposed boost in OCO funding a budgetary "gimmick" aimed at getting around the spending caps of the Budget Control Act of 2011, but McCusker said the OCO budget was prepared with the same amount of scrutiny devoted to the Defense Department's baseline budget.

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She said that details sent to Capitol Hill would come with a "significant amount of transparency so that Congress will have everything it needs to understand what we've done with our OCO budget."

During the Obama administration, then-Rep. Mick Mulvaney, R-South Carolina, now director of OMB and acting chief of staff at the White House, called the OCO a "slush fund" used for projects that couldn't be justified in the DoD's base budget.

McCusker spoke at the start of a series of Pentagon briefings to provide details on the $750 billion defense budget proposed by the White House on Monday. Documents backing up the details are not expected to be released until next week.

The budget includes $718 billion for the DoD, and $22 billion for related nuclear weapons programs of the Department of Energy.

Pentagon releases said the budget request was primarily designed to "focus on the great power competition with Russia and China, as called for in the 2018 National Defense Strategy."

The past two budgets set the stage to carry out the NDS, and the latest budget request puts added emphasis on "replenishing depleted munitions stocks and addressing readiness concerns that were the result" of spending caps in previous budgets in the process called "sequestration," the DoD said.

"Wars of the future are going to be radically different from the short conventional wars and protracted counterterrorism operations we fought since the collapse of the Soviet Union," said Pentagon Comptroller David Norquist.

Previous wars tended to be "short and lopsided," he said, but "to assume future conventional wars would be like those wars would be a tragic mistake. To preserve the peace, we must be prepared for the high-end fight. This budget reflects that challenge."

Along those lines, the two newest warfighting domains received major increases in the proposed budget. The budget had $14.1 billion for space, a 10 percent increase over last year's budget, and $9.6 billion for cyber, a 15 percent increase over last year.

The budget also asked for funding for new weapons for a multi-domain fight: $2.6 billion for hypersonics; $3.7 billion for unmanned and autonomous systems; $235 million for directed energy weapons; and $927 million for artificial intelligence and machine learning systems.

Todd Harrison, defense budget analysis director at the Center for Strategic and International Studies, questioned the method the Pentagon is using to prepare for the long-term struggle with near-peer competitor nations China and Russia.

"What's interesting is how they're going about doing that," Harrison said on C-Span's Washington Journal. "Basically, they're circumventing those budget caps using a well-established loophole -- OCO. The reason they're doing that is that it does not count toward the budget caps" under the Budget Control Act.

The budget proposal is already being challenged in Congress, setting the stage for protracted battles in the House and Senate that could jeopardize the effort to approve the National Defense Authorization Act by the deadline of Oct. 1, the start of the new fiscal year.

In a statement, Sen. Patrick Leahy, D-Vermont, the ranking Democrat on the Senate Appropriations Committee, said the defense budget proposal is "divorced from reality. It is not worth the paper it is printed on, and it will be rejected by Congress."

Past delays in approving the NDAA have resulted in a series of continuing resolutions, limiting spending to the previous year's budget, and threatening a government shutdown.

In the coming negotiations with Congress on the defense budget, "we're ruling nothing out other than the fact that we can no longer afford the bills that have been sent to us from Congress," a senior administration official said in a conference call with reporters Monday.

"Congress may have a different view, and we're open to that conversation. We have an open mind. We don't have an empty mind," the official said.

Here are some of the defense issues that could prove to be the most contentious in approving the defense budget:

• Future of the carrier fleet. The Navy's current plan is to forgo the nuclear refueling of the carrier Truman as a first step toward the ship's retirement, reducing the U.S. carrier fleet from 11 to 10. The plan for the Truman inevitably will set off debate on the viability of carriers against long-range missiles being developed by Russia and China.
• New ICBM. The Nuclear Posture Review calling for long-term spending of $1.2 trillion to upgrade the nation's nuclear triad of air, land and sea-based forces also directs a replacement for the aging Minuteman III Intercontinental Ballistic Missile. Rep. Adam Smith, D-Washington, chairman of the House Armed Services Committee, has been adamantly opposed to the Minuteman replacement.
• Border Wall. The defense budget request includes $8.6 billion for the border wall, about $5 billion for the Department of Homeland Security and $3.6 billion likely to come from military construction projects that have yet to be identified.

-- Richard Sisk can be reached at richard.sisk@military.com.