Camouflaged Defense Spending

Research Fellow Veronique de Rugy
Resident Fellow Veronique de Rugy

At the same time that President Bush requested more than $700 billion for the Pentagon budget this week, he managed to create the impression that he was asking for the much smaller amount of $481 billion. The trick he used--socking about $235 billion into two "emergency supplemental" funding requests for the wars in Iraq and Afghanistan--didn't fool the public for very long. But the longer the White House and Congress continue to treat "war-related" funding as a separate item from the budget for the Department of Defense, the harder it will be to control a ballooning federal budget.

Here's how the supplemental shell game works. The official defense budget for 2008 comes to $481 billion. That's a 10% increase over last year and a 62% increase over 2001. And it doesn't include a supplemental request of $141.7 billion, which brings the 2008 defense total to $622.7 billion. On top of that, the president requested a 2007 supplemental in the amount of $93.4 billion, bringing this week's entire defense "budget authority request" to $716 billion (the figure of actual outlays is even higher because it includes billions already committed to the Pentagon).

Both of these supplemental items are part of the true cost of defense, and the one piece of good news is that they were mentioned in Monday's $2.9-trillion budget proposal. That's a big improvement over recent practice, in which supplementals were requested throughout the year but never mentioned in official proposed budgets. (That $93.4 billion for 2007 comes on top of a $70-billion "bridge supplemental" appropriated in November.)

However, the underlying problem--the use of supplementals to paper over the real costs of defense and domestic programs and to avoid making tough budget choices--is very much alive.

Supplemental budget requests are supposed to provide funding that cannot wait until the next appropriations cycle. Congress uses them to foot unexpected costs because of natural disaster or war. Thus, supplementals provided the initial funding for conflicts including the Persian Gulf War, Bosnia and Kosovo. However, the continued funding for these conflicts came through regular budget horse-trading. Traditionally, supplemental spending makes up less than 1% of defense spending, and it rarely rises above 3%.

By contrast, in 2007, at least 16.4% of new defense spending will go through supplemental bills. And yet, after four years of engagement, the cost of the war in Iraq is by no means unpredictable or sudden. The largest expenditures in the supplementals are the salaries and benefits of Army National Guard personnel and Reservists called to active duty.

So why abuse supplemental appropriations? Because Congress and the president have discovered that they are an effective way to discreetly increase spending for a long and painful war. As important, supplemental spending does not count against budget caps or automatically trigger offsetting cuts. Thus, the Pentagon can have money for the war while keeping space available in the regular budget for pet projects.

Last year, Army Chief of Staff Gen. Peter Schoomaker testified before a Senate committee and confirmed that the Army preferred to fund 30,000 additional troops through supplementals because including the funds in its annual budget request "would have to displace other things that are too important to us as we transform."

But to allocate defense resources effectively, that trade-off is exactly what should be happening. In the 2008 budget, instead of one defense budget request that has to balance and justify the need for war-fighting funds with items that some military experts say are Cold War-era weapons such as the Air Force's F-22 stealth fighter, the Marine Corps' tilt-wing V-22 Osprey and the Navy's DDG-1000 stealth destroyer and Virginia-class attack submarine, the Pentagon separates the two and gets to have its cake and eat it too.

Nor is the Pentagon the only player in the shell game. By trimming the administration's formal defense spending request (while relying on supplemental spending to make up the difference), Congress can free up the amount "saved" for non-defense appropriations.

That's why, in 2006, then-House Appropriations Committee Chairman Jerry Lewis (R-Redlands) asked that $6 billion be cut from the proposed 2007 defense budget and shifted over to erase almost $4 billion in cuts proposed for the departments of Labor and Health and Human Services. That made Congress look fiscally responsible. In the 2007 fiscal year, this bipartisan practice will make it possible for Congress to spend an extra $170 billion.

The Democratic Congress could use Iraq spending as leverage for some long-overdue cutting of waste at the Pentagon. Or, better yet, Congress could decide that more than $700 billion for defense is worth every penny and make some long-overdue reductions on the domestic side of the budget. But we must stop pretending that war-related costs are somehow separate from the budget of a department whose only mission is to fight and win the nation's wars. That won't happen until Washington stops hiding major defense spending increases--years after this "emergency" practice should have stopped.

Veronique de Rugy is a resident fellow at AEI.

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