Top 10 Reasons It’s Time to Re-Think OCO

“Overseas Contingency Operations” (OCO) was originally intended to be a relatively small line item in the Pentagon budget to fund emerging requirements. In an effort to stop using unbudgeted emergency supplemental spending bills to pay for the wars in Iraq and Afghanistan, the OCO account was expanded. While our involvement in Iraq has ended and military operations in Afghanistan are winding down, OCO has actually increased over the past year.  Meanwhile, recent statements from Defense Department officials indicate a desire to see sustained OCO funding at least through the next three years.

Here are 10 reasons why it’s time to reexamine OCO spending:

1. OCO is becoming an offset “slush fund”: Mindful of Congressional Budget Office scoring rules, some lawmakers are attempting to tap future OCO spending as the funding source when other offsets fall short or in order to avoid tough decisions. Since January alone, OCO has been floated as a spending offset for a range of bills that would expand veterans programs, extend federal unemployment insurance benefits, and even continue the “Doc Fix.” Recent actions in the House Armed Services Committee would even use OCO money to fund Congressional pet projects.

2. OCO allows circumvention of budget caps:  Rather than eliminating wasteful spending, the Pentagon has shifted base budget funding into OCO, which is not subject to spending caps, in a sleight-of-hand to comply with the modest limits imposed by the Budget Control Act and more recently, the Ryan-Murray Budget.

3. OCO hides bad accounting: Taxpayer funds provided annually to the Pentagon are supposed to fund national security. If additional money is essential to achieving that, the Administration can request supplemental funding on a one time basis.  After that, it should be on-budget and accounted for in a transparent manner. Keeping OCO off-budget misrepresents the true cost of our defense.

4. OCO funds are being misspent: A surprisingly large amount of money isn’t being spent on the war in Afghanistan. As much as $30 billion in non-war related funding is included in the OCO account for FY14. The Pentagon has even used OCO funds to replace a V-22 Osprey destroyed in a domestic training operation.

5. Overseas commitments are winding down:  Despite the fact that from FY13 to FY14, personnel deployed in Afghanistan dropped by 39% , OCO increased during the same time period. As our engagement in Afghanistan comes to a close and troops are withdrawn, taxpayers expect to see a commensurate reduction in OCO spending.

6. There is bipartisan support for reining in OCO spending:  Last year an amendment to the Defense Authorization bill to cut OCO spending by $3.5 billion sponsored by Reps. Mulvaney (R-SC), Van Hollen (D-MD), Coffman (R-CO), and Murphy (D-FL) passed the House with bipartisan support. Likewise, the Senate Appropriations Committee passed S. 1429, the DOD Appropriations legislation that included less spending for OCO, with bipartisan support.

7. Taxpayers can’t afford a bloated OCO: Out-of-control spending, large deficits, and a growing national debt are dragging down our already sluggish economy. OCO spending needs to be brought back in line with our national priorities to ensure the proper allocation of limited funds.

8. OCO kicks the can down the road:  Using a temporary account to pay for ongoing costs makes it harder to enact real reforms later when the funds aren’t available. Using OCO to keep the A-10 out of retirement, for instance, fails to confront one of the main issues driving the debate over whether and how to keep the aircraft flying: the F-35 program, which has suffered from higher costs and lower-than-anticipated performance. Cannibalizing a placeholder account like OCO may, on paper, “save” the A-10, but it can’t serve as a substitute for tough funding decisions over other out-of-control weapons systems.

9. OCO was intended to deal with short-term, unexpected “contingencies”: There is no longer anything that is short-term or unexpected in our involvement in Afghanistan. It’s important to have emergency funds on hand, but it’s equally important to plan and budget for identifiable threats over the long-term. When funding has been in place for over a decade of conflicts, it can hardly be considered an emergency.

10. OCO sets a poor example for other genuine emergency funds: Such accounts, with carefully defined expenditure rules, can at least help to spare taxpayers from some of Congress’s worst impulses to enact “emergency” spending bills that are loaded with pork. When schemes like OCO are allowed to become bloated , the notion of prudent planning across all budget accounts is tainted, and policymakers are incentivized at all levels of government to play similar games with programs such as crop assistance or humanitarian aid.

The Disaster Relief Fund (DRF) in the discretionary budget has recently been strengthened with several oversight mechanisms. Neither DRF nor Congress’s policymaking toward natural disasters is perfect, but OCO is far less transparent. The longer OCO continues, the greater the risk it poses to progress for real contingency planning throughout government.