The budget control caps farce: brother, can you spare $1.3 trillion?
Today is a big day for budget nerds: it’s the start of a new fiscal year for the federal government, FY 2022. It’s also the official end of the spending caps put in place by the Budget Control Act of 2011, a law negotiated by then-President Obama and a Republican-controlled Congress that was supposed to introduce some budget discipline and — in the process — deficit reduction.
Both sides accepted some political pain in the BCA process, including 10 years of defense spending caps.
With the BCA era coming to a close, however, we can now definitively say that the BCA failed to control debt, deficits, non-defense spending, and defense spending. According to a new analysis I researched and published with my organization, National Taxpayers Union, rather than reducing deficits, Congress (and three presidents) found a way to add $2.7 trillion in spending during the BCA era. Nearly half of that spending — $1.3 trillion in total — went to the defense budget.
Here’s how Congress, instead of enacting hundreds of billions of dollars in deficit reduction as they were supposed to, found $1.3 trillion to spend on defense instead.
First, let’s zoom back in time to 2011. Barack Obama is president. Democrats control the Senate, but Republicans have relatively new control of the House of Representatives. In summer of 2011, Congress passes and President Obama signs the BCA. This Obama White House infographic sums up nicely what the BCA was supposed to do (with a bit of political messaging, to be expected from any administration).
The bipartisan committee tasked with finding $1.5 trillion in deficit reduction options? You can guess the ending. They failed, and the “enforcement mechanism” mentioned in the White House infographic was supposed to go into effect. These cuts were politically painful: “nearly $500 billion additional defense cuts while also cutting critical programs like infrastructure and education.” The Obama White House noted this outcome “is unacceptable to both Republicans and Democrats.”
The Obama White House was correct, but not in the way they thought at the time.
Congress didn’t accept the automatic cuts. Instead, they ignored them and raised the spending caps — time and time and time again. Had they adhered to the automatic cuts put in place starting in January 2012, defense spending in this past fiscal year would have been $589 billion. Instead, it was $672 billion — an $83 billion, or 14 percent, difference.
Compare the defense caps of the past 10 years to what they should have been under the cuts the Obama White House mentioned and Congress ignored, and the math adds up to a 10-year difference of $439 billion. In other words, lawmakers raised defense caps to the tune of nearly half a trillion dollars over the last 10 years, and often did so on a bipartisan basis with lots of Republican and Democratic votes.
Incredibly, that’s only about one-third of the full picture.
Lawmakers and presidents of both parties found a clever tool to fatten up the defense budget even more, while pretending to adhere to the already-generous “caps” they were putting on defense spending: the Overseas Contingency Operations account.
I’ve written about the OCO account in these pages before. Once a fund meant for genuine contingency needs for the military’s operations in Afghanistan and Iraq, OCO morphed in recent years into a slush fund for defense programs that Congress or the military wanted to fund but couldn’t under the not-so-stringent caps lawmakers passed under BCA.
OCO spending authorization totaled a staggering $879.8 billion over the BCA decade. By my tally for NTU, about $165.5 billion over just the past seven years went to base budget programs and so-called “enduring” requirements that don’t actually fall into direct war or contingency needs. In other words, at least $165.5 billion in the past seven years should have never been in the OCO account. It should have been forced to compete with other priorities within the defense caps, and/or dropped from the budget altogether.
That $165 billion figure could have been even higher, if a laughable gambit from the Trump administration in 2019 had succeeded. In a budgetary farce that put a spotlight on the sham OCO had become, the former president’s budget officials proposed stuffing $165 billion into the OCO account — coincidentally, the same seven-year slush number we tallied above — as “a backdoor way to increase the defense budget while technically staying within the confines of caps.” Officials even had the nerve to call it “fiscally responsible.”
To be clear, the Trump administration is hardly the only stakeholder to blame for a total of $1.3 trillion in defense budget waste over the BCA decade. President Obama, congressional Democrats, and congressional Republicans share the blame.
More than $1.3 trillion was the price of poison parity over the past 10 years. And the same process is paving the way for $1.2 trillion in new defense spending over the next decade. That’s no drop in the bucket, even for a federal government that seems to have grown accustomed to spending trillions of dollars at a time.
As lawmakers take stock of the BCA, a big part of the conversation has to be how lawmakers failed to rein in the defense budget again and again. There’s still time for lawmakers to get it right for the next 10 years.