Defense spending

Trump’s end run on defense spending

The budget gimmick is especially striking given that Trump budget chief Mick Mulvaney once fought to limit the very same war account.

By CONNOR O’BRIEN

President Donald Trump is preparing to ask Congress for yet another increase in defense spending in the coming weeks. But his plan would evade federal budget limits by stashing nearly a quarter of that money in an off-the-books account — and both Democrats and Republicans say it won’t fly in Congress.

The White House is expected to stuff as much as $174 billion of its $750 billion request for national defense for the coming fiscal year into a special war fund, allowing the administration to maintain its long-sought military buildup without violating a 2011 law aimed at reining in the deficit.

The gimmick is especially striking given that Trump budget chief Mick Mulvaney once fought to limit the very same war account, known as the Overseas Contingency Operations fund.

Lawmakers in both parties object to relying so heavily on what budget hawks have long derided as a Pentagon slush fund. Unless both parties can negotiate a deal to lift the spending caps, it could mean a quick demise for the military's ambitious investment plans, which got a two-year boost last year under a bipartisan deal that raised spending for the military as well as other government agencies.

"It's definitely a non-starter,” House Budget Chairman John Yarmuth (D-Ky.) told POLITICO. “It would be an insult to the process to do that."

"It's ridiculous if that's what they do,” added Rep. Mac Thornberry of Texas, the top Republican on the House Armed Services Committee.

Mulvaney, now the acting White House chief of staff, spent years as a leading proponent of reining in the deficit through steep spending cuts after being elected to the House in the tea party wave of 2010. Those efforts to slash the budget ultimately resulted in the 2011 Budget Control Act that mandated the spending caps.

His brand of non-negotiable fiscal conservatism earned him the enmity of many fellow Republicans who were pushing for much bigger defense budgets. And he disdained the Pentagon's separate war budget, which isn't subject to the caps, as a threat to budget accountability.

Even in testimony last year before the House and Senate Budget Committees, Mulvaney stressed the need "to begin the transition away from using OCO as a gimmick to avoid the sequestration caps."

Inside Defense first reported the contours of Trump’s fiscal 2020 defense budget proposal earlier this month. Under the plan, the Pentagon would request $576 billion for its main budget, equal to the spending cap, along with up to $174 billion in spending for the Overseas Contingency Operations fund — for a total of $750 billion.

A senior administration official confirmed the plans to boost the war fund and said the intent is to avoid having to reach another budget deal like last year that would also require boosting domestic programs, something Democrats have insisted in return for beefing up Pentagon coffers.

“We want to move away from … the muscle memory of Capitol Hill right now, which is to do two-year, big caps deals that have a dollar-for-dollar increase for non-defense for every dollar of defense increases," the official explained. "We don't think that we can afford that."

"We're not going to say that this is the best way to budget," the official added, "but that this is the best way in the current moment to budget."

The proposal stands out even in comparison to the Pentagon's and Congress' previous reliance on the war budget to fund unrelated weapons programs and services.

Since the war account is exempt from limits set by the 2011 budget law, it has been a battleground in annual fights over defense spending. Though meant to fund wartime needs and unforeseen national security contingencies — like the wars in Afghanistan, Iraq and Syria — the account has been used to skirt spending caps and fund enduring programs with little connection to U.S. war efforts.

While the vast majority is dedicated to the Defense Department, a portion of the contingency funds have also been allocated over time to the State and Homeland Security Departments.

Should the administration push ahead this year with a super-sized war request, it would expand the special fund to a level not seen in more than a decade. Emergency and contingency spending in the post-9/11 era topped out at $195 billion in fiscal 2008 — near the height of the Iraq War and with a much larger U.S. troop presence in Afghanistan — according to the nonpartisan Congressional Research Service.

The reported $174 billion proposal for fiscal 2020 would more than double the current $69 billion war spending level.

The Pentagon and the White House Office of Management and Budget declined to comment on the specifics of the forthcoming budget proposal, which is expected to be released in mid-March.

Under the budget caps, the base defense budget would face a mandatory cut of more than $70 billion from this year's level.

Lawmakers must either strike another deal to ease the caps, which last through fiscal 2021, find ways to circumvent them, or slash the budget.

But stashing tens of billions of extra defense dollars in the war budget appears to have little chance of getting through Congress. In particular, House Democrats are unlikely to approve a backdoor boost to defense spending without similar increases in funding for domestic programs.

"You don't go off budget to the tune of $174 billion. ... It's playing games with the money,” said Rep. Adam Smith (D-Wash.), the chairman of the House Armed Services Committee, calling a super-sized war account “dead on arrival.”

“We are not going to have a Department of Defense slush fund," Smith added in an interview.

Under the plan, the Pentagon would request $576 billion for its main budget, equal to the spending cap, along with up to $174 billion in spending for the Overseas Contingency Operations fund.

Even without an inflated war account, the anticipated Trump request of $750 billion for national defense — which also includes billions to fund nuclear weapons programs under the Energy Department — will face tough scrutiny from Democrats who have pledged to step up oversight of the Pentagon and root out waste.

Smith will be able to turn Mulvaney's own arguments — and possibly even the president's — against the White House.

The sky-high Pentagon request would be a reversal for Trump, who initially indicated in October that he would seek to trim defense spending to blunt the rising budget deficit. The president later reversed course and endorsed an even higher defense budget after an outcry from defense hawks in Congress.

Trump further complicated the budget outlook last week by declaring a national emergency to tap into $3.6 billion in military construction funds to finance construction of barriers on the U.S.-Mexico border. While Democrats have staunchly opposed Trump’s signature border wall, GOP hawks also worry that siphoning off the money will hobble military readiness just as it’s on a path to recovery.

Some of those Republicans say they, too, aren't eager to finance long-term defense programs with a fund intended for fighting wars.

"If you're going to sustain rebuilding readiness, this is more than a one-year process,” said Rep. Rob Wittman (R-Va.), a senior House Armed Services member. “OCO is designed specifically for unexpected elements of spending that you need now.”

But some lawmakers see little choice if the Pentagon is going to get the money it says it needs.

One staunch Trump ally, Senate Armed Services Committee Chairman Jim Inhofe (R-Okla.), says he’s open to some extra war funding to help ensure the military budget continues to grow.

“We’ve got to have adequate funding,” Inhofe told reporters last week. “Now, how do you get there? Are you going to be using some OCO to get there? Yeah you are.

“I don’t know how much it’s going to be," he added, "but I think you’re going to have an exaggerated figure there in order to get up to what we have to have to defend America."

But if Democrats and Republicans can't agree to lift budget caps for both defense and domestic programs, the Pentagon and other federal agencies face the kind of steep automatic spending cuts in October that military brass and many lawmakers want to avoid at all costs.

Yarmuth, the House Budget Committee chairman, said the two-year, $300 billion budget deal reached in 2018 offers “a good template” for another pact that could readjust spending through 2021, when the Budget Control Act expires.

“In a rational world, it wouldn’t be that hard to come up with a deal,” he said. “But we're not in a rational world."