战略与国际研究中心-The-Enduring-Dilemma-of-Overseas-Contingency-Operations-Funding_6页_569kb

The Enduring Dilemma of Overseas Contingency Operations Funding Summary

Core Content

The document discusses the issue of Overseas Contingency Operations (OCO) funding being used to support base budget activities, which has become a significant concern for the incoming Trump administration. OCO funding is intended for war-related activities that are unpredictable, and it is not subject to the Budget Control Act (BCA) budget caps. However, both Congress and the Obama administration have increasingly moved base budget programs into the OCO account to bypass these caps, leading to a growing misalignment between the purpose of OCO and its actual use.

Currently, roughly half of the OCO budget ($30 billion) is used for base budget activities, which include enduring military costs such as forward presence and readiness. These costs are essential for maintaining military operations even after contingency missions conclude, and they are not included in the projected base budget costs for FY 2018 to FY 2021. This creates a budgetary shortfall of $233 billion over four years, or about $60 billion annually, which the Trump administration must address before it can begin to increase defense spending.

Main Points

• OCO funding is intended for unpredictable war-related activities and is not bound by BCA caps.
• The Obama administration significantly expanded the use of OCO for base budget activities, far beyond previous practices.
• The Department of Defense (DoD) estimates that $30 billion of the OCO budget supports enduring base budget requirements.
• These enduring costs are not reflected in the base budget projections, leading to budgetary inaccuracies and deficit overestimations.
• The Trump administration faces a dilemma in addressing this issue, as it may require cuts or increases in the BCA budget caps, both of which are politically sensitive.

Key Information

• Magnitude of OCO Misuse: $30 billion of OCO funds are used for base budget activities.
• Impact on Deficit Projections: Adding $120 billion to the projected deficit spending for FY 2017 to FY 2021.
• Fiscal Challenges: The Trump administration must first address the $233 billion shortfall before it can increase defense spending.
• Political Implications: The issue has become a point of contention between fiscal conservatives (e.g., Rep. Mulvaney) and defense hawks, as well as Democrats who advocate for increased non-defense spending.
• Proposed Solutions:
  • Option 1: Move funding back to the base budget without increasing BCA caps (highly attractive to fiscal conservatives but may face resistance).
  • Option 2: Increase BCA caps to accommodate the transition (requires bipartisan agreement, likely difficult).
  • Option 3: Continue using OCO for base budget activities (creates budget uncertainty and opposition from both sides).
  • Option 4: Gradual transition with some cap increases and offsetting cuts (a balanced but compromise approach).

Conclusion

The misuse of OCO funding for base budget activities has been a long-standing issue that has festered for nearly 15 years. It creates budgetary uncertainty, deficit overestimation, and political challenges for the Trump administration. Resolving this issue is essential for accurate budget planning and for maintaining or increasing defense spending. The administration must carefully consider the risks and trade-offs of each option to ensure a balanced and sustainable approach to defense funding.