Monday, September 10, 2007

Budgeting for War

While attention focuses on General Petraeus’s long-awaited report on Iraq, Congress continues to deal with thorny defense spending issues.

With the attention of the media and most of the country focused on the report on Iraq being delivered to Congress this week by Gen. David Petraeus and Amb. Ryan Crocker, the Senate will also be taking up the Pentagon’s annual funding legislation. It does so with a number of competing forces at work – the Democrats’ desire to continue using Iraq to make political points; the unwillingness of members of Congress to appear not to be supporting U.S. troops; and inability of the opponents of the Iraq war on Capitol Hill to round up enough bi-partisan support to force the issue with the Bush Administration.

On Wednesday the Senate appropriations committee will consider the 2008 defense appropriations bill, which funds the Pentagon’s annual basic operations. The House has already passed its version of this legislation (H.R. 3222), which includes $460 billion for the Department of Defense, $3.5 billion below the Bush Administration’s request and nearly $40 billion above current levels. Like the House, the Senate is NOT planning to include any additional funding to support combat operations in Iraq and Afghanistan in this legislation.

Traditionally, wars are funded outside the normal annual appropriations process. This is because the federal budget process, which can take well over two years to enact funding for a single year, is simply too cumbersome to respond to unanticipated emergency spending needs, such as disaster assistance and wars. But last year Congress required the Administration to include the costs of military operations in Iraq and Afghanistan as part of their annual budget request, arguing that after five years in Afghanistan and three years in Iraq the Pentagon should have at least some idea of the costs of these operations. The request for war-related costs for fiscal year 2008, which begins on October 1, was estimated by the White House back in February at roughly $142 billion.

The decision by Senate Defense Appropriations subcommittee chairman Daniel Inouye (D-HI) to follow the example set by his House counterpart Rep. John Murtha (D-PA) and separate out Iraq funding from the DoD base budget spending bill means the appropriations bill should be able to move smoothly through Congress, possibly before the end of the fiscal year on September 30. Meanwhile, the Iraq debate will be focused on the additional supplemental funding bill, which Sen. Inouye and Rep. Murtha believe will begin moving in mid-October – AFTER current funding legislation expires.

But this scenario means that Congress will confront a similar situation to the one in May – with the military complaining it is running short of war-fighting funds, and the White House accusing the Democratic leadership of playing politics with American lives. Congress will certainly include in the annual defense bill a limited amount of transfer authority for the Defense Department, which permits the Pentagon, with Congressional approval, to transfer funds from its annual base budget to pay for actual combat operations. The House bill includes $3.2 billion in General Transfer Authority, and the Senate version will undoubtedly include similar authority, although the final amount that will actually be available to the Pentagon remains to be seen.

It is unlikely, however, that whatever amount of transfer authority approved by Congress will be sufficient. A July report by the independent Congressional Research Service put the current monthly costs for the wars in Iraq and Afghanistan, known as the “burn rate,” at $12 billion – roughly $10 billion per month for Iraq and $2 billion for Afghanistan. At this rate, the military will soon find themselves short of money. This is especially true given recent press accounts that indicate that the White House will be seeking even more money for war-related costs – as much as $50 billion above the $142 billion already identified.

What is more likely is that Congress will enact one or more short-term funding packages for Iraq. This option could be very attractive to the Democratic leadership. First, it will help inoculate Congress from criticism for abandoning American troops. Second, it will continue to keep Iraq on the front burner of national politics well into the 2008 campaign season. And third, any spending approved by congress will certainly be linked to continued reporting on the military and political situation in Iraq, which the war’s opponents hope will help increase Congressional opposition to the war.

The “wild card” in the deck? President Bush has already indicated he will veto a number of the annual appropriations bills before Congress which fund other federal agencies because they exceed the budget limits laid out in the White House’s 2008 budget request. Democrats may gamble that tying one or more of these domestic spending packages to the annual Defense bill may force the President to withhold his veto – a gamble that could certainly backfire.


J. Chatham said...

Is it really true that wars are traditionally funded through emergency supplementals? I can see this being true for short combat operations (e.g. 1st Gulf War, Granada, etc). Also, the first year of extended wars is funded via emergency supplementals. But in the follow on years (e.g. WWII), military spending requirements were included in the annual DoD budget requests. That's what is so remarkable about this war - it continues to be funded through emergency supplementals and this practice is becoming business as usual.

Nyx said...

Good words.