Pentagon to use war budget to ease pain of defense cuts: analysts

Reuters News
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Posted: Jan 30, 2015 6:24 PM

By David Alexander

WASHINGTON (Reuters) - The 2016 U.S. defense budget being released on Monday will continue a recent trend of shifting funds from the Pentagon base budget to its supplemental war-funding request, fuelling criticism of the account's use to offset spending caps, defense analysts say.

The Obama administration is expected to seek $51 billion for so-called Overseas Contingency Operations (OCO), primarily the wars in Afghanistan and the Middle East, when it submits the president's budget request for the 2016 fiscal year.

The large war-funding request, which is on top of a proposed Pentagon base budget of $534 billion, comes despite a drop in U.S. troop levels in Afghanistan from about 38,500 last January to 10,600.

Analysts say the war-funding request remains high because both Congress and the Pentagon use the account to ease the impact of the 2011 budget cuts known as sequestration, which aim to reduce projected defense spending nearly $1 trillion over a decade.

"OCO is a politically expedient way ... for all parties to ensure that there's some funding, particularly for readiness and other near-term requirements, while you are not able to resolve the sequestration problem," said Kathleen Hicks, a senior vice president at the Center for Strategic and International Studies.

"The reality that we're facing for the next few years is that you'll have OCO used as a relief valve," said Hicks, the former principal deputy undersecretary of defense for policy.

Todd Harrison, an analyst at the Center for Strategic and Budgetary Assessments, said on Friday the war-funding account did not count toward defense spending caps under the law. As a result it represents a loophole that is being used to offset the impact of spending cuts.

"The incentive ... is to reclassify anything you can as being OCO funding," Harrison told reporters. "Both DoD (the Defense Department) and Congress have been doing this."

Harrison said between 2005 and 2013, the average cost per U.S. troop in Afghanistan was about $1.2 million a year. Since the 2014 fiscal year, the average cost per troop has ranged far higher. This year it is more than $4.5 million per service member and next year it is expected to be about $3.8 million.

"How much base budget funding is DoD actually getting through the OCO appropriations? If it's to the tune of $30 billion or so per year, as this data would suggest, then that largely offsets the reductions they've had," he said.

(Reporting by David Alexander; Editing by Diane Craft)