As anticipated, the Trump Administration’s budget released today includes an enormous boost in Overseas Contingency Operations (OCO) account spending, from $69 billion in FY 2019 to $165 billion for FY 2020. The $96 billion plus-up is being sold as a Hail Mary to avoid increasing discretionary spending elsewhere, but abusing this gimmick increases the likelihood that taxpayers will see spending explode across all areas of the federal budget.
OCO spending is an accounting trick originally used for unanticipated activities abroad and later as a more consistent way to fund the wars in Afghanistan and Iraq. Over time this account has become less and less about “overseas contingencies” and more and more about avoiding fiscal discipline. Widely regarded as a slush fund, even by former OMB Director and current White House Chief of Staff Mick Mulvaney, OCO has become a favorite way to avoid the fiscal discipline the 2011 Budget Control Act (BCA) intended to impose. It lacks the kind of oversight and accountability afforded other “on-budget” accounts, making OCO a good way for enduring costs or wasteful spending to avoid close scrutiny.
OMB Acting Director Russ Vought, writing at RealClearPolitics.com, tried to sell this plan as fiscally conservative, suggesting that resorting to budget gimmicks to spend more actually would mean spending less. Vought states that “as long as Congressional Democrats insist on demanding more social spending in exchange for continuing to fund defense spending, expanding the use of OCO funds remains the administration’s only fiscally responsible option… .”
Of course, OCO isn’t the only option the Administration has at its disposal to rein in spending and sustain national security needs. The Congressional Budget Office documented 112 ways to cut at least $10 billion over ten years. In 2017, NTU Foundation and the U.S. Public Interest Research Group identified $263 billion in savings over ten years - all of which have broad support across the ideological spectrum. But even worse than ignoring these options, by resorting to OCO to avoid making tough choices, the Administration could make it even easier to keep increasing spending in the future with little consequence.
OMB’s OCO gamble is unlikely to pay off. Using OCO to increase defense spending hasn’t forestalled attempts by Members of Congress to gain the same increases in non-defense discretionary spending or to exempt more spending from the budget caps. A $165 billion OCO—almost as much as during the height of the Iraq war in 2008—obliterates any credibility on fiscal responsibility the White House may have been trying to accrue and gives significant leverage to legislators who want to increase non-defense spending.
Not only does the Administration’s budget make it more likely non-defense spending will rise, potentially through a non-defense OCO or similarly unaccountable mechanism, this move flies in the face of consistent conservative opposition to OCO misuse. Only last year, the Republican Study Committee’s FY2019 budget would have eliminated non-defense OCO expenditures and moved the rest back into the Department of Defense’s base budget, where this spending belongs.
Today, Vought wrote for Fox News that Washington has a spending addiction. He’s right, but gimmicks like OCO are like an alcoholic promising to stop after just one more drink. To get the spending addiction under control, all of it needs to be on the table - even the entitlement programs hiding in the back of the allegorical cupboard. Maintaining the OCO farce only enables more of the out-of-control spending that erodes both our national prosperity and security.