Press Release

Misuse of OCO Poses Risk to U.S. National Security Interests

in Program

For Immediate Release: May 24, 2016
Contact: Jim Baird [email protected]; (202) 478.3413

The use of emergency war funds as a loophole to pay for programs that are non-essential to ongoing combat operations abroad poses a risk to U.S. national security interests, finds a new report released today by the nonpartisan Stimson Center. The report examines Oversees Contingency Operations (OCO) — a component of the U.S. defense budget originally intended to house “emergency” war funding. Despite the drawdown of U.S. forces in combat zones in Iraq and Afghanistan, funding for the OCO account has remained high. Congress and the Obama administration have increasingly utilized the OCO account to circumvent current federal budget spending limits and provide additional funding to programs in the base Defense budget. The report’s findings come as the U.S. House of Representatives passed a defense funding bill last week that shifted $18 billion from the Oversees Contingency Operations account toward other base budget items, a budgetary maneuver that U.S. Secretary of Defense Ash Carter said, “raids war funds in a time of war,” in order to fund items the Pentagon “didn’t request.” The U.S. Senate will consider its version of the defense funding bill this week.       

“This budgetary game-playing is fiscally irresponsible at best, and harmful to our national security at worst,” said report author and Stimson Budgeting for Foreign Affairs and Defense Fellow Laicie Heeley. “The misuse of war funds impacts the Pentagon’s ability to plan for the future and remain competitive in an environment that is constantly changing. It’s a dangerous game Congress has chosen to play with our defense.”

The new report, Defense Divided: Overcoming the Challenges of Overseas Contingency Operations, finds that that the uncertainty created by the current reliance on Oversees Contingency Operations — especially to fund other base Defense budget items non-essential to ongoing combat operations — could be detrimental to national security on three levels:

1) Undermining budget controls and thereby contributing to larger deficits;
2) Generating insecurity in the defense workforce and in defense suppliers;
3) Creating long-term uncertainty in defense planning.

The report recommends that the alternative — transitioning longer-term Overseas Contingency Operations expenses to the base Defense budget — could be achieved through a combination of increased budget caps, targeted cuts in inefficient defense programs, and increased revenues. President Obama and his successor can develop and commit to a credible plan to wind down excess Overseas Contingency Operations funding beginning with the expiration of the existing budget arrangement in FY2018.

“It will certainly be difficult to end our current budgetary dependence on OCO,” said Heeley. “But leadership from the Obama administration can set the tone for a new president and new Congress to reach a budget agreement in 2017.”

Founded in 1989, the Stimson Center is a nonprofit, nonpartisan think tank devoted to addressing transnational challenges in order to enhance global peace and economic prosperity.

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