Separate Accounts


Separate Accounts

Feb 28th, 2005 3 min read
Jack Spencer

Vice President, the Institute for Economic Freedom

Jack Spencer oversees research as Vice President for the Institute for Economic Freedom and Opportunity.

The Bush administration has asked Congress for $75 billion to fund the wars in Afghanistan and Iraq. That comes on top of the $419 billion in defense spending included in the regular budget.

Some congressional leaders oppose such separation. "It's another example of where there is a requirement - something we all know we need, something we all know is going to be supported - which is not funded in this budget," announced Democratic Sen. Carl Levin of Michigan.

But the president is right to keep regular defense spending separate from funding for the war on terrorism.

For one reason, combining the funds could put the lives of service members in greater jeopardy. No one can guarantee that the regular budget process and the war will be on the same schedule.

Indeed, it takes 2 1/2 to three years to develop and pass a defense budget. And major spending bills are often held up in Congress for political reasons. Given these long development cycles, it is just not prudent to depend on the regular budget process. If critical war costs were part of the normal budget process, then the next time a lawmaker decided to hold up the budget, lives would be put at risk.

Also, it's important to understand that the constitutional mandate of Congress to "raise and support" and "provide and maintain" a force is wholly separate from the commander in chief's role in using that force. The defense budget provides what it takes to build and maintain a military force - to actually use it costs extra.
Critics contend that not including war costs in the defense budget is an attempt to hide the true costs of the war. On the contrary: By keeping the costs separate, they're made crystal clear.

At any point, one could simply add the war supplementals to get a running tally of war costs. This is in stark contrast to the ways intervention costs were accounted for during the Clinton years. Some of those costs came from the defense budget, some came from supplementals and some came from defense procurement and readiness accounts. Intervention costs were thus hidden in several places.

Including war costs in the regular defense budget also would allow operational costs to eat away at critical program funds. This happened during the 1990s, when the United States decreased defense spending while committing itself to a number of armed interventions. To pay for these interventions, the Pentagon took money from other accounts, which it attempted to repay later through the supplemental process.

There were two problems with this. First, many of these accounts funded ongoing personnel training and force maintenance, which, once missed, can never be replaced. Second, budget increases never matched intervention costs, so the difference came at the expense of regular defense planning. That led to decreases in military readiness, inadequate funds for modernizing the force and insufficient research and development money to prepare tomorrow's military.

Moreover, combining war costs with regular defense spending would skew the perception of how much the nation actually spends on defense. Altogether, the U.S. defense budget would be roughly $500 billion if war costs and regular defense spending were combined. This would be a very large defense budget by most standards and might seem to be more than was needed. This would likely lead to calls to decrease defense spending that, if successful, could kill spending for critical programs.

One final reason to keep defense budgets and war costs separate: War costs are simply unpredictable at this point, so it would be difficult to include them in long-term estimates of defense spending.

While these future costs can and should be included in the federal budget with a best-guess placeholder, for the sake of fiscal honesty their unpredictability cannot be allowed to creep into the regular defense budget. Eventually, the operations in Iraq and Afghanistan may become more predictable and stable. Then, operational costs could be included in the regular defense budget, just as the operating costs of America's presence in Europe or our enforcement of the no-fly zones in Iraq before the war were part of the regular budget.

But as long as the war on terrorism is being fought, keeping the war budget and the regular defense budget separate makes better sense - even if that causes some grumbling on Capitol Hill.

Jack Spencer is a senior policy analyst for defense and national security at The Heritage Foundation.

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