WASHINGTON: The Trump administration and House Democrats just drew their battle lines for the upcoming 2020 defense budget debate, with the White House proposing a $174 billion end-run around budget rules that Democrats immediately promised to oppose.
Monday morning, the White House announced an extraordinary decision to move an unspecified sum, later reported as $174 billion, into a controversial wartime account — Overseas Contingency Operations or OCO — that bypasses constraints on the regular “base budget,” such as sequestration. Monday afternoon, two top Democrats blasted the proposal, calling it a “blatant attempt to make a mockery of the federal budget process” in which “the President is choosing to deceive the American public yet again,” over how much the ongoing wars in Iraq, Afghanistan, Syria, and elsewhere actually costs.
The joint statement from House Armed Services Committee Chairman Adam Smith and House Budget Committee Chairman John Yarmuth promised that “Democrats will reject this cynical proposal to flout the basic principles of open and honest governance and will instead—with full transparency—pursue a course that invests in our national priorities and makes us stronger both at home and abroad.”
The Dems were responding to a piece published in Real Clear Politics on Monday, in which acting director of the White House’s Office of Management and Budget, Russ Vought, wrote that the White House is taking the step thanks to Congressional Democrats, who “insist on demanding more social spending in exchange for continuing to fund defense spending.”
The move to shift approximately $174 billion from the base budget into the Overseas Contingency Operations fund (OCO) would create an end-run around Budget Control Act spending caps. That would seem to cross red lines, not only for Democrats, but for fiscally conservative Republican lawmakers who have sought to do away with OCO altogether.
One of OCO’s former chief critics on the Hill is now Trump’s Chief of Staff, Mick Mulvaney. As a congressman from South Carolina, Mulvaney was a strict deficit hawk who sought to rein in federal spending and scuttle the OCO account. But from his new perch at the White House, Mulvaney has undergone a stunning transformation, shrugging recently said that “nobody cares” about the deficit as he prepares to send a spending-cap busting $750 billion defense spending package to Capitol Hill.
In his piece Monday, Vought admitted that “fiscal conservatives may feel uncomfortable using OCO in this way,” but blamed the Democrats — newly in control of the House — for demanding more social spending as a condition for voting to lift BCA caps on defense. “Expanding the use of OCO funds remains the administration’s only fiscally responsible option in meeting national security needs while avoiding yet another increase to the spending caps,” he wrote.
The looming impasse comes after a two-year hiatus from the Budget Control Act, which slapped spending caps on federal outlays that Congress has repeatedly lifted — each time, after exhausting fiscal brinksmanship. Fiscal 2018 and 2019 were granted a reprieve from the caps on the defense budget, and as a result, spending on the military ramped up. But the caps return in 2020, limiting defense spending to $576 billion, and non-defense to $542 billion.
Vought called on Congress to “join the president in his commitment to cutting spending, reducing bloated deficits, and getting our national debt under control,” he said. “America’s future generations are depending on them.”
It’s not clear how moving more money into the OCO account in order to spend more on defense will help the deficit, however.
Earlier this month, Alan Shaffer, deputy under secretary of defense for acquisition and sustainment, told a Navy conference in San Diego that he wasn’t “terribly optimistic” about defense budgets growing by much in the coming years as Washington grapples with the $22 trillion national deficit. “We’re going to have enormous pressure on reducing the debt which means that defense spending — I’d like to tell you it’s going to keep going up — [but] I’m not terribly optimistic,” he said.
The Congressional Budget Office estimated in January that federal debt payments are expected to be larger than the entire defense budget by 2025, and as a result, the Pentagon will have to make a “stronger effort” to identify which programs it simply cannot cut or scale back, while making hard choices elsewhere.
Deficits were always going to be part of the debate over the 2020 defense budget. But now the fight will be joined by a deeper debate — within a sharply divided Congress — over war funding, and defense spending overall.