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The Pentagon Dodged a Bullet Thanks to the US Budget Deal

A surprise budget deal between the president and the House of Representatives means the Pentagon narrowly missed a host of looming political and budget problems.

by Matt Yurus
Oct 29 2015, 8:55pm

Photo via Flickr

President Barack Obama's veto of the $612 billion National Defense Authorization Act (NDAA) last week paved the way for a bipartisan budget deal passed by the House of Representatives yesterday that will raise the federal borrowing limit, cut some social programs, and increase spending over the next two years.

The accord, which passed in the House with support from both Republicans and Democrats, is expected to be taken up in the Senate before November 3, the day the government would not be able to afford to pay its bills without an increase in the debt ceiling, according to the Treasury Department. The budget deal would increase spending by $80 billion over the next two years, not including a $32 billion increase in the Pentagon's Overseas Contingency Operations (OCO) fund.

Related: Obama Has 38 Billion Reasons to Veto the Senate's Defense Spending Bill

Cuts in spending on Medicare and Social Security disability benefits would help offset the increase in spending, as would additional savings and revenue from various programs, including the selling of oil from the nation's strategic petroleum reserves. Medicare would also pay doctors and health providers less for their services, according to a report in the New York Times. In addition, the compromise eliminated a provision in the Affordable Care Act that would have required businesses employing 200 or more people to automatically enroll employees for health insurance.

"Sometimes, the clock works against you, sometimes the clock works in your favor," Boehner told reporters Tuesday. "In a town that isn't known for a lot of bipartisanship, you're going to see bricks flying from those that don't like the fact that there's a bipartisan agreement."

Boehner's replacement, Wisconsin Representative Paul Ryan, expressed frustration over Republican congressional leadership and the president conducting the "people's business" in private.

"This process stinks," he said during an interview on CNN. Even so, he said he would support the deal that many conservatives rejected.

Obama, who endorsed the deal, recently vetoed what would have been next year's $612 billion defense budget despite widespread pre-veto bipartisan support. With the House falling 12 votes short of a veto-proof majority and some of the 20 Democrats in the upper chamber who originally supported the measure expected to flip-flop, the president's move was viewed as a way to prevent Congress from gaining the upper hand in what was considered nascent budget talks as recently as Monday.

Watch VICE founder Shane Smith Interview Secretary of Defense Ashton Carter.

The administration wanted to see the proposed increase in military spending made under the Pentagon's base budget rather than the OCO fund, a war-fighting account that is exempt from sequestration and technically reserved to pay for unanticipated incremental increases in the costs of fighting the two wars in Iraq and Afghanistan. Obama also wanted the increase to be met with an equal increase in spending on domestic programs. This deal appears to have accomplished just that.

At issue was Congress's decision to skirt self-imposed budget caps by increasing the Pentagon's OCO fund, described by Representative Barbara Lee, (D, California) as a "slush fund." Under the recently vetoed NDAA, the war-fighting account would have been used for the procurement of various bits of kit like tactical vehicles, ammunition, and night-vision goggles as well as other expected expenses such as research and development.

The White House wasn't necessarily objecting to Congress's use of the OCO. But if Obama had signed the bill, he would have held far less leverage in his bid to convince the Republican-controlled Congress to lift budget caps on domestic spending.

"Never before has an American president used the bill that provides pay and support to our troops and their families as political leverage for his domestic agenda," House and Senate Armed Services Chairs Mac Thornberry and John McCain said in a joint statement. Obama is actually the fifth president to veto an NDAA since 1961, when Congress first enacted the annual defense authorization bill, but his predecessors' objections were largely related to the terms of the bill itself, rather than policy concerns outside of the bill.

Related: There's a Fight Brewing Over the Pentagon's 'Slush Fund'

Now, under an updated NDAA, $25 billion will be rolled back into the Pentagon's base budget, as originally planned, and $5 billion will be cut, leaving the war-fighting OCO account with $8 billion, according to Harrison. Although the annual spending caps will be lifted for another two years, the 10-year spending caps created under the Budget Control Act of 2011 remain in place.

That law initiated a special bipartisan Congressional committee assigned to find $1.2 trillion to $1.5 trillion in savings or, alternatively, to leave Americans with $984 billion in automatic, draconian cuts beginning in 2013. With the Pentagon's budget slated to account for roughly half of the savings and the majority of the remaining cuts coming from Medicare and non-defense discretionary spending, these cuts were seemingly unpalatable for both parties.

Congress, according to multiple defense budget experts, misused the OCO account in the FY 2016 NDAA. This would spare it, but not domestic programs, of the consequences of these budget cuts and thus prompted Obama's veto.

The NDAA has been signed into law for each of the last 53 years and is considered one of the few "must-pass" laws in Congress. It is therefore one of the few things that both parties still feel compelled to get done. This year has proven no different. 

Follow Matt Yurus on Twitter: @Matt_Yurus

Photo via Flickr