Obama’s first budget test

During his campaign, President Barack Obama promised to end funding national security programs, including the conflicts in Iraq and Afghanistan, through emergency budget requests. He was especially critical of supplemental requests for programs and activities unrelated to Iraq or Afghanistan or that clearly belonged in the regular defense and foreign affairs budgets.

With Obama’s first emergency supplemental budget request coming later this week, now is the time to see whether he’ll keep his promise. We clearly need such discipline. For the past eight years, both the Defense Department and the State Department have abused the emergency supplemental budget process to add to their base budgets. Supplementals, you see, don’t receive the same scrutiny the appropriators in Congress normally give the basic agency budgets. As a result, by fiscal year 2009, roughly one-quarter of Defense’s total budget and one-fifth of State’s total budget came through emergency supplemental funds.

All budgets are finite, and programs and activities that are part of the core activity of Defense, State, and USAID, should be scrutinized as part of the regular budget planning process.”

Over the last eight budgets, Defense in particular has taken advantage of the availability of extra funding to pay for a long-planned expansion of the army and marines and to buy weapons programs–i.e., aircraft and helicopters–that added to the inventory but weren’t required for combat operations in Iraq. For its part, State used the supplementals to provide full-funding levels for humanitarian assistance and food aid programs it had underfunded in its basic budget.

This budgetary shell game has severely undermined the once-celebrated budget planning system at Defense and eliminated any incentive for State and USAID to institutionalize a rigorous budget planning process, something it never has had. The reform Obama promised is intended to clean up and discipline the process in both departments.

But will he undermine his planned reform if he transmits a new supplemental budget request this month? Not necessarily. Unanticipated needs do crop up. Tsunamis, sudden unplanned military deployments, and international crises all create a need for additional funds–exactly why the emergency supplemental budget window exists.

We might expect this week, for example, an Obama request for humanitarian assistance to the people of Gaza, the consequence of an Israeli invasion nobody anticipated when the budget was put together. In terms of Iraq and Afghanistan, Obama’s policy is just now being defined, but troop operations will run out of funding sometime this summer, having been only partially funded by the Bush administration.

Because Obama cannot walk away from genuine unexpected emergencies, some kind of supplemental is inevitable this year–and probably for fiscal year 2010 as well. The real test will be whether or not these supplementals have been constrained to real unanticipated needs and war costs and not used as a backdoor way of funding things that should be included in the normal budget. In the current economic and fiscal environment, priorities need to be set and choices need to be made.

How will we know that discipline has begun to return to defense and foreign policy budgeting when the supplemental request arrives? Here are a few benchmarks for the Defense request (likely to be around $75 billion):

• Is Defense asking for funds to replace equipment lost in combat, or is it asking for more equipment than it lost and/or a new generation of equipment? Research by Stephen Abott at the Stimson Center shows that supplementals have been used to replace older helicopters and fighters with new, more expensive V-22s and F-35s. If the equipment is next generation, this need should be debated as part of the regular procurement budget.
• Is the Pentagon asking for funds to replace equipment “stressed” by operations in Iraq and Afghanistan, but not lost in combat? Repairing and replacing worn-out equipment should be included in the planning for the basic budgets for the military depots that do this work.
• Is the department asking to replace weapons with systems they already have in the long-range defense budget plan? Again, these should be considered in the regular budget debate.
• Is Defense asking for training equipment or simulators? All of these should be part of the regular budget debate where training is funded.
• Is the Pentagon seeking funds for health-care infrastructure? Only short-term, combat-related health care should be funded through the supplementals. Long-term health infrastructure investments belong in the basic budget discussion.
• Is the department asking for funds to increase the size of the ground forces or for reconfiguring those forces into brigade units? These are long-term plans that belong in the basic budget discussion.
• Is Defense asking for funds to improve services or repair facilities at U.S. bases from which forces have been deployed in combat? Only the operational costs of forces being deployed to the theater should be in the supplemental request.
• Is the Pentagon asking for funds for the activities of special operations forces anywhere in the world, or just in the Central Command (CENTCOM) area? If used outside CENTCOM, these funds should be part of the regular budget debate.

Similarly, here are some benchmarks for the State and USAID budget requests:

• Are they asking for funding for humanitarian-assistance programs and food aid that are part of predictable State or USAID activity? Or are they asking only for humanitarian funds that are directed at emergencies that weren’t known when the fiscal year 2009 budget was put together–a la Gaza? Only the latter belongs in the supplemental request.
• Are they asking for funds to support the budgets of other countries or the Palestinian Authority? If so, these funds should be part of the regular budget discussions at State. Research by Molly Lewis at the Stimson Center suggests that Secretary of State Hillary Clinton’s commitment of $900 million in budget support to the Palestinians should be considered as part of State’s base budget.
• Are they asking for embassy construction and security funds for Iraq? These are now predictable and should be part of the basic budget preparation. As the United States expands its presence in Afghanistan, there may be reason to seek emergency construction and security funds there, but only for the first year.
• Are they asking for additional counternarcotics funding for Mexico or current South American programs? If so, these funds belong in the base budget planning process, as they are anticipated requirements.
• Are they asking for additional security assistance for Pakistan? If so, these probably belong in the base budget discussion, as they may not be executable in fiscal year 2009.
• Are they asking for funds to expand State and USAID staff or to increase the size of the planned post-conflict reconstruction corps? If so, these are expected costs and need to be part of regular budget planning.

The point of such an analysis isn’t to prevent either Defense or State from planning budgets that include some of these items. They may be important priorities. But all budgets are finite, and programs and activities that are part of the core activity of Defense, State, and USAID should be scrutinized as part of the regular budget planning process in these agencies. That is what long-term strategic and budgetary planning is all about–making choices and setting priorities, given realistic limits on resources. If families have to do this, so should federal departments.