Funding caps, border wall set stage for defense budget battle

Lawmakers are buckling up for what they expect will be rocky negotiations this year over spending priorities for the fiscal 2020 defense budget.

In an attempt to skirt budget caps, President Trump is expected to propose more than doubling the amount of money in a war fund that is not subject to those funding limits.

{mosads}But that maneuver is viewed as a non-starter for Democrats and even some Republicans who say it will complicate talks from day one.

“I’m very worried,” House Armed Services Committee Chairman Adam Smith (D-Wash.) said about this year’s budget negotiations. “How do they find their way back to a reasonable point in the discussion?”

Also looming over the defense budget is Trump’s decision to declare a national emergency and dip into Pentagon coffers to build his proposed border wall. The Department of Defense has said it will request funding to replace the money being used for the wall, but Democrats have made clear they consider that a roundabout way to get Congress to approve wall funding.

Trump is slated to release his fiscal 2020 budget request next week. Presidential budgets are often dismissed on Capitol Hill since lawmakers are responsible for deciding how much money to spend and on what.

But the president’s budget requests will put down an important marker for his policy priorities heading into budget negotiations.

{mossecondads}Trump is expected to request $750 billion in defense spending. Of that amount, $174 billion is expected to be categorized under a war fund known as the overseas contingency operations (OCO) account, which was designed for temporary expenses associated with U.S. wars such as the ones in Iraq and Afghanistan.

A $174 billion request would be a $105 billion increase over the current fiscal year’s funding for that account. It’s also the exact amount of money the administration needs in excess of the budget caps to reach its desired $750 billion total.

The Budget Control Act (BCA) caps fiscal 2020 defense spending at $576 billion, but the OCO account is not subject to those spending limits.

In the past, Congress has reached bipartisan agreements to raise the budget caps for both defense and nondefense spending.

Over the years, OCO has increasingly been used to fund programs previously included in the main defense budget, leading to criticism that it essentially operates as a slush fund. Trump’s proposal for $174 billion in OCO spending, however, would far exceed what’s been done before.

The Trump administration has acknowledged it plans to use OCO to avoid reaching a budget deal that would similarly increase nondefense spending.

“In each of these deals, Democrats in Congress held defense spending increases hostage for increases in domestic spending,” acting Office of Management and Budget Director Russell Vought wrote in Real Clear Politics last month, when he confirmed the plans to try to use OCO to increase defense spending without a bipartisan deal.

Rep. Mac Thornberry (R-Texas), ranking member of the House Armed Services Committee, argued that the OCO request won’t affect congressional negotiations since few, if any, are taking the proposal seriously.

“No one seriously thinks that Congress would pass a defense bill with $174 billion of OCO,” he said. “So, OK, you just kind of set that aside, and you get down to the serious discussions of what we can do to keep our readiness from sliding backwards, what we do to keep pressure on the terrorists, to deal with the Russia-China threat. That’s what the conversation will be.”

But discussions could be bogged down by trying to sort through what portions of the OCO request are war funding and what should go in the main Pentagon budget, said Todd Harrison, a defense budget expert at the Center for Strategic and International Studies.

And while it’s clear the Democratic-controlled House won’t pass defense authorization or appropriation bills that are aimed at sidestepping a larger budget deal, that may not be true for the Republican-controlled Senate, he said.

Still, a bipartisan, bicameral budget deal will have to be reached, one that raises caps on both defense and nondefense, Harrison said.

“The only way you get to budget deal that the Democrats will sign off on is if you increase the caps on nondefense and a similar increase in defense,” he said. “This is more of a statement of principle of the Trump administration — just how much they do not want to increase the nondefense side of the budget caps.”

He said he foresees a deal coming in December or January, months after the fiscal year starts on Oct. 1, meaning there will again need to be stopgap measures to keep the government open.

Senate Armed Services Committee Chairman James Inhofe (R-Okla.) has signaled a willingness to expand the OCO budget if it means being able to get to $750 billion overall.

“I think you’re going to have an exaggerated figure there in order to get up to what we have to have to defend America,” Inhofe told reporters last month.

His Democratic counterpart, though, is worried about the course of this year’s negotiations.

“I think they inject a great deal of uncertainty into what is always a complicated process,” ranking member Sen. Jack Reed (D-R.I.) said.

“I hope that everyone recognizes that we have to change BCA; otherwise, we’re not going to be able to function as a government,” he added, arguing there are national security functions that don’t fall within the defense budget.

Meanwhile, Congress is grappling with Trump’s declaration of a national emergency to secure border wall funding, with the Senate poised to pass a resolution that would block the declaration.

As part of the declaration, Trump plans to tap $3.6 billion from military construction funding for his wall. He took separate executive action to use $2.5 billion from the Pentagon’s counter-drug funds.

The Pentagon has not said which projects that money will come from, but officials have sought to assure lawmakers that they will request funding for fiscal 2020 to “replenish” the military construction account.

That assurance, though, has only angered Democrats.

“I’m not sure what kind of chumps you think my colleagues and I are,” Rep. Debbie Wasserman Schultz (D-Fla.), chairwoman of the House Appropriations subcommittee in charge of military construction, told Pentagon officials at a recent hearing on the issue.

“You are taking money from vital projects that the military previously said were essential and spending that money on a wall and then asking for the money to be backfilled later in the next fiscal year when we already had that debate and the proposal was rejected,” she added.

Harrison said including money in the fiscal 2020 budget to backfill accounts because of the wall would be a “real sticking point” in defense spending negotiations.

“I think that money is going to be very much in jeopardy in this budget request,” he said. “There’s going to skepticism, and politically, I think, a lot of Democrats would not want to be seen as voting for money to backfill these accounts.”