10.04.14

Op-Ed: The Pentagon's No Limit Credit Card

Washington - The Pentagon has issued warnings that with recent cuts it is facing a money crunch made much worse by the new missions in Iraq and Syria.

As a way of saving money the Pentagon does not suggest scaling back on overseas intervention. Instead the military has suggested that military wages should be limited to raises of one per cent and health care coverage should be overhauled. The cost of living adjustments for military retirees will be cut below the level of inflation.

The Center for Strategic and Budgetary Assessments(CSBA) in Washington DC estimates that the defense budget could face as much as $300 billion in mandatory budget cuts soon. However, the Pentagon has a way around that problem. The Overseas Contingency Operations(OCO) account serves as a credit card with no limits as apply on consumer credit cards.Todd Harrison, a senior fellow at the CSBA notes: “There is currently no limit on OCO, so there is as much room as they need."

The operations are mostly part of the war on terror. However, "the war on terror" has been branded as politically incorrect some time ago so now there are just overseas contingency operations. The change was initiated in March of 2009:

 In a memo e-mailed this week to Pentagon staff members, the Defense Department's office of security review noted that "this administration prefers to avoid using the term 'Long War' or 'Global War on Terror' [GWOT.] Please use 'Overseas Contingency Operation.' "

The OCO account is separate from the base defense budget and is exempt from spending reductions under Budget Sequestration set to remain in place until 2021 under the sequestration laws. Even with sequestration cuts the 2014 military budget that was originally to be capped at $498.1 billion is now at over $520 billion. This does not include $80 billion additional spent in Afghanistan. Military spending will increase by $22 billion in 2014 and $31.7 over the next years. Of course none of this includes that OCO credit card debt.

Even some Democrats have described the OCO as simply a slush fund. For example, Representative Barbara Lee a Democrat of California said:

"The Overseas Contingency Operations is slush fund. It's a gimmick to avoid the budget cuts that are punishing other critical areas of the budget like education and health. Fundamentally, it is a black box of unchecked federal spending that needs to be eliminated. All DOD programs should be funded from the base-budget which is more than sufficient."

Recently, Congress passed a bill that will fund the government through December 11th this year. As part of the legislation the lawmakers put $85 billion in the OCO for the 2015 year. This was $26 billion more than Obama had asked for. The slush fund obviously requires a lot of slush. Fighting the Islamic State is costing up to $10 million a day according to the Pentagon. A recent estimate puts the cost at as much as $8.6 billion a year. The CSBA estimates the yearly cost at a lower $2.4 to $3.8 a year but only at the current level of air strikes. Although Obama continues to claim that there will be no boots on the ground in Iraq, there are already 1600 advisers in Iraq. Gordon Adams an analyst with the Stimson Center claims that the Congress will "almost certainly" fund the fight against the Islamic State using money in the OCO.

While the US taxpayer will ultimately be forced to pay the bill for all these extra expenditures, US arms manufacturers stand to make windfall profits as shown by the recent increase in their stock prices as reported in this article. The recent bombing in Iraq provides a good example of creative destruction that will provide a great stimulus for the military-industrial complex:

Ironically, dozens of the U.S. airstrikes have targeted American-made Humvees, mine-resistant ambush-protected vehicles and other armored vehicles that Islamic State fighters captured as they overran Iraqi military bases and airfields during their blitz across northern Iraq this year. The new government in Baghdad is scrambling to rebuild its battered army and will need to buy replacement vehicles.

To read this article in its original format, go here