Well, it was hardly a surprise. President Donald J Trump is asking for a major plus-up in the US defense budget, while threatening to cut nearly all domestic spending. And he is doing it through a devious back door that gets around legal caps on military expenditures.
Trump wants to raise the fiscal year 2020 defense budget by around 5%, to US$750 billion. This comes after increasing it to $716 billion in FY2019 from $700 billion in 2018, which itself was a 10% increase over president Barack Obama’s last defense budget in FY2017.
This new request for defense spending is higher, in real terms (that is, after accounting for inflation), than was ever spent during the Cold War. It is only slightly less than during the 2000s when the US was waging two simultaneous wars in Iraq and Afghanistan.
That fact in and of itself is mind-boggling, but it is important to know how the president is trying to get his hands on all this money. It is technically illegal for the US military is receive more than $576 billion in FY2020. That is the cap placed on the Pentagon by the Budget Control Act (BCA) of 2011, which was passed by a Republican Congress to help pay down the US deficit.
Congress can override the budget caps – and it has done so in the past – but only by raising spending for both defense and non-defense programs.
Getting around budget caps
Trump, however, does not want to go down this road. In fact, he wants to implement serious cuts – around 5%, overall – in domestic spending. In particular, he wants to slash spending for major entitlement programs such as Social Security, Medicare and Medicaid.
So how does he get around the spending caps on the military and cut domestic spending at the same time? The answer, it appears, is to abuse a special, separate budget account for so-called “overseas contingency operations,” or OCO.
The OCO account was originally set up after the terrorist attacks of September 11, 2001, in order to create a special discretionary budget authority for extraordinary situations. Since 2001, OCO monies have been added to the “baseline” defense budget to cover unexpected or emergency military actions, in particular the wars in Iraq and Afghanistan. More recently, they have supported US counterterrorism operations in the Middle East and North Africa.
According to the US Congressional Research Service, Congress has since 9/11 appropriated some $2 trillion in OCO or other emergency spending. In FY2018, OCO funding was $83 billion, plus $4.7 billion in “emergency” funding. By themselves, these funds represent the third-highest defense budget in the world. And Trump wants to continue to have an annual budget of at least $20 billion for OCO.
For a while, OCO spending had actually been going down. In FY2008, it was $187 billion (yes, that was just OCO spending, not the entire US defense budget); by FY2016 this had dropped to “only” $58.9 billion. This makes perfect sense, given the US military’s pullout or drawdowns in Iraq and Afghanistan.
Under Trump, however, OCO spending has exploded. It hit $69 billion in FY2019 but now Trump wants to increase it in 2020 to a whopping $174 billion – the highest it has been in more than a decade.
Abusing the OCO
Why does Trump want to do this? The answer is simple: OCO funds are not subject to normal limits on discretionary spending, and in particular they are excluded from budget control limits, such as the BCA. Trump can ask for as much OCO spending as he wants, and if Congress agrees, he’ll get it. This is how he can get a $750 defense budget when military spending is legally capped at $576 billion.
This is not what the OCO was intended for. The word “contingency” is defined as “an unforeseen event,” a “circumstance that is possible but cannot be predicted with certainty.” But after 15 years most US OCOs are hardly unforeseen, unpredictable, or unusual. And yet the US military goes on, year after year, requesting – and getting – this nice pile of money that it can claim is not part of its “normal” base budget.
If you think all this sounds like a slush fund for the military, you are correct. All kinds of spending are dumped into the OCO that have nothing to do with overseas operations or emergencies. For example, the purchase of F-35 fighter jets has been funded out of OCO accounts. But don’t expect the military or defense hawks to point this out.
Ironically, Trump wants more OCO spending at the same time as he is threatening to reduce US overseas military commitments. He has, for example, badgered Japan and South Korea into increasing their host-nation support of US forces based in those countries.
More ominously, his administration is reportedly toying with a mind-boggling formula, termed “cost plus 50,” to force host nations to pay drastically more for the basing of US forces. Under this plan, host-nations will pay the full cost of basing – however that is determined – plus 50% more.
If fully implemented, the US military could conceivably make money from overseas deployments. This plan is probably a nonstarter, but it raises the question: If Trump hates having US troops overseas, why does he want to raise OCO spending? The answer, of course, is that he wants a bigger defense budget and he will do anything, including bending the law, to get it.