War Funding and the Budget Control Act:
In Brief
Amy Belasco
Specialist in U.S. Defense Policy and Budget
June 11, 2015
Congressional Research Service
7-5700
www.crs.gov
R44067
War Funding and the Budget Control Act: In Brief
Summary
In the FY2016 debate on the level of defense spending, Congress is considering how to stay
within the spending limits, or caps, set by the Budget Control Act (BCA). Under the BCA, all
defense spending for the defense base budget—excluding amounts designated for “Overseas
Contingency Operations” (OCO) or emergencies—is subject to annual BCA caps.
For funds to be counted as OCO funding that is essentially exempt from BCA caps, Congress
must first designate funds in law on an account-by-account basis, and the President must
subsequently do the same. The OCO designation therefore requires a consensus between the
legislative and executive branches on the designation and is independent of any particular criteria
about the types of expenses that would be covered.
The President, some Members of Congress, and military leaders have voiced concerns that the
FY2016-FY2021 BCA defense spending caps—set at $2 billion above FY2015 spending caps in
FY2016 and increasing by $11 billion annually after that—are insufficient to meet defense needs.
Others have suggested that Department of Defense (DOD) planning has largely accommodated
BCA caps. The President’s budget request plan exceeds BCA caps by $182 billion, or 5%, for
FY2016-FY2021 rather than the trillion dollars in savings originally needed. BCA caps are slated
to rise from $523 billion in FY2016 to $590 billion in FY2021, setting defense spending at a real
freeze (i.e., the same level adjusted for inflation) in later years.
The President’s national defense request of $561 billion for the base budget, including $534
billion for the DOD, exceeds the FY2016 BCA cap by $38 billion. To meet the cap, Congress
would need to cut DOD’s base budget request for defense spending by 6.8% in FY2016.
The FY2016 annual budget resolution (S.Con.Res. 11), the National Defense Authorization Act
(NDAA) as passed by the House (H.R. 1735) and reported by the Senate (S. 1376), and the
appropriations bills funding DOD (H.R. 2685 as reported by the House and H.R. 2029 as passed
by the House) all propose to transfer $38.5 billion from the defense base budget to OCO-
designated funding without providing offsets, as was the case in previous BCA amendments that
raised the caps. If signed by the President, these bills would increase defense spending but stay
within BCA caps. This would bring OCO-designated spending to $89 billion, 75% above the
request at a time U.S. troops deployed to Iraq and Afghanistan are projected to fall from 15,700 in
FY2015 to below 10,000 in FY2016 and to 1,000 in FY2017.
In response to congressional action, the Administration has threatened a veto, characterizing the
transfer as “budget gimmickry,” and calling instead for raising BCA caps for both defense and
non-defense spending, with alternate savings from raising revenues and reducing mandatory
spending. DOD officials have also opposed the transfer, arguing that it would complicate defense
budgeting by setting up a one-year spike in funding that might not necessarily be sustained.
If the President does not designate the transfers as OCO, they would revert to base-budget status,
BCA caps would be breached, and OMB would implement a sequester to ensure that BCA
spending limits are met. This would entail largely across-the-board cuts in total defense resources.
Some policymakers have called for increasing BCA caps, as was done by the Ryan-Murray
compromise in the Bipartisan Budget Act of 2013 (P.L. 113-67). If no agreement is reached, a
continuing resolution (CR) and government shutdown could be possible.
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War Funding and the Budget Control Act: In Brief
Contents
Designating War Funding to Meet Spending Caps .......................................................................... 1
Congressional Action ................................................................................................................. 1
Administration Position ............................................................................................................. 3
Potential Implications ................................................................................................................ 3
Designating Base Budget Funds as OCO ........................................................................................ 4
The Impact of Maintaining BCA Defense Caps .............................................................................. 6
Distinguishing War Funding and “Enduring Presence” Needs ........................................................ 7
Figures
Figure 1. BCA Spending Caps for DOD: FY1950-FY2025 ............................................................ 6
Figure 2. Emergency or OCO-Designated Funding: War and Non-War ......................................... 8
Tables
Table 1. FY2016 President’s Budget (PB) Plan and BCA Caps for National Defense .................... 2
Contacts
Author Contact Information............................................................................................................. 9
Congressional Research Service
War Funding and the Budget Control Act: In Brief
Designating War Funding to Meet Spending Caps
In the current debate on the level of FY2016 defense spending, Congress is considering how to
stay within the spending limits, or caps, set by the Budget Control Act (BCA) as amended (P.L.
112-75, P.L. 112-240, P.L. 113-67). Under the BCA, all defense spending for the defense base
budget—excluding amounts designated for “Overseas Contingency Operations” (OCO) or
emergencies—is subject to annual BCA caps for FY2012-FY2021. If enacted appropriations
exceed these limits, the President is required to levy a sequester or across-the-board spending
reductions to achieve the savings and meet the limits. If appropriations meet the caps, a sequester
is not necessary; for this reason, some refer to BCA caps as “sequester” caps.
For funds to be considered OCO funding and essentially exempt from BCA caps, Congress must
first designate funds on an account-by-account basis in an appropriations bill and the President
must subsequently do the same, typically in a letter to Congress after enactment.1 The OCO
designation therefore requires a consensus between the legislative and executive branches on the
status of the funds. Although the Office of Management and Budget (OMB) and the Department
of Defense (DOD) have issued selection criteria and budget guidance about the types of expenses
that would be considered appropriate war expenses, the dual designation of funds as OCO by
Congress and the President determines whether such funds are exempt from budget caps, not the
nature of the expenses (see below).
The President, some Members of Congress, and military leaders have voiced concerns that the
FY2016 BCA defense spending caps—set at $2 billion above FY2015 spending caps in FY2016
and increasing by about $11 billion annually through FY2021—are insufficient to meet defense
needs. Others argue that complying with current BCA caps is achievable by relying on a variety
of savings.2
As of the FY2016 budget, defense spending plans have largely adjusted to the amended BCA
limits for FY2012-FY2021—meeting over three-quarters of the reductions originally required.
With 4 of the 10 years of the BCA decade completed, defense spending in the current plan now
needs to achieve an additional 5%, or $182 billion, in savings for the FY2016-FY2021 period
compared to the projected 16%, or $1.0 trillion, gap at the time the BCA was enacted (Table 1).3
Congressional Action
The President’s FY2016 national defense request of $561 billion for the base budget exceeds the
BCA cap by $38 billion, providing defense with a 6.8% annual increase. The FY2016 request of
1 Since 2001, DOD war funds have been designated as either “emergency” or “Overseas Contingency Operations.”
Budgetary law provides that BCA caps are to be raised to accommodate funding designated as either for emergencies
or for overseas contingency operations, effectively exempting that funding from caps; see language in Box B in CRS
Report RL33110, The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11, by Amy
Belasco.
2 See “Different Types of Savings” in CRS Report R44039, Defense Spending and the Budget Control Act Limits, by
Amy Belasco.
3 Ibid, p. 7. All references to BCA caps refer to current limits set in P.L. 113-67, the Bipartisan Budget Act by the
Ryan-Murray compromise.
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War Funding and the Budget Control Act: In Brief
$534 billion for DOD (which constitutes 95% of national defense) is also higher than its cap of
$499 billion by about $36 billion, and the same percentage. To meet the BCA cap, Congress
would need to cut the base budget defense request by 6.8% in FY2016. If BCA caps are retained,
defense spending would essentially be frozen at the FY2013 level (without inflation adjustments)
for the four years from FY2013 through FY2016, and frozen in real terms (with inflation
adjustments) for the next five years from FY2017-FY2021 (Table 1).
Table 1. FY2016 President’s Budget (PB) Plan and BCA Caps for National Defense
In billions of dollars of Budget Authority and %
Actuals
Budget Plan
National Defense (050)
Alternate
2012 2013 2014 2015
2016 2017 2018 2019 2020 2021 Total: Total:
Paths/FY
12-21
16-21
FY2016PB and BCA Caps in Nominal Dollars
FY2016PB
555
518
521
522
561
573
584
592
598
610
5,634
3,518
BBA Limits
555
518
520
521
523
536
549
562
576
590
5,451
3,336
FY2016PB Less BCA Caps in Nominal Dollars
In $
0
0
0
0
38
37
35
30
22
20
183
182
In %
0.0%
0.0%
0.2%
0.1%
6.8%
6.4%
6.0%
5.1%
3.7%
3.3%
3.3%
5.4%
FY2016PB and BCA Caps in FY2016 Dollars
FY2016PB
590
542
537
530
561
563
563
559
554
554
5,552
3,354
BBA Limits
590
542
536
530
523
527
529
531
534
536
5,376
3,179
FY2016PB Less BCA Caps in FY2016 Dollars
In $
0
0
0
0
38
36
34
28
20
18
176
175
In %
0.0%
0.0%
0.0%
0.0%
6.8%
6.4%
6.0%
5.1%
3.7%
3.3%
3.2%
5.2%
Sources: OMB, “Policy Budget Authority and Outlays by Function, Category, and Program” Table in FY2013-
FY2016 Analytical Perspectives volumes of the budget, OMB, Table 10.1 in FY2016 Historical Tables for GDP price
index; https://www.whitehouse.gov/omb/budget/Historicals. See Department of Defense, Table 2-1 in FY2016
National Defense Budget Estimates for adjustments to exclude war spending; Department of Defense, Office of the
Under Secretary of Defense (Comptrol er), National Defense Budget Estimates for FY 2016, March 2015;
http://comptrol er.defense.gov/Portals/45/Documents/defbudget/fy2016/FY16_Green_Book.pdf.
Notes: CRS calculations on OMB and DOD documents. Reflects budget authority. CRS used the chained GDP
price index to convert nominal dol ars into FY2016 dol ars. BCA caps refers to spending limits in the Bipartisan
Budget Act (P.L. 113-67), which amended the American Taxpayer Relief Act (P.L. 112-240), which amended the
original Budget Control Act of 2011 (P.L. 112-75).
As part of this year’s debate about defense spending, the FY2016 annual budget resolution
(S.Con.Res. 11), the National Defense Authorization Act as passed by the House (H.R. 1735) and
as reported by the Senate (S. 1376), and the Department of Defense Appropriations Act as
reported by the House (H.R. 2685), and the Military Construction/Veterans’ Affair bills as passed
by the House (H.R. 2029) all propose to transfer and designate funds a total of $38 billion from
the defense base budget spending to the title where OCO funding is specified.4 Since funds
4 See Title XV in the NDAA and Title IX in the Defense Appropriations bills, which list the changes as “transfers.”
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War Funding and the Budget Control Act: In Brief
designated as OCO do not count against BCA caps, some refer to this transfer as a “budget
gimmick” that would allow base budget spending to be increased but still stay within the caps.
Administration Position
In letters to Congress, OMB Director Shaun Donovan has signaled that the President is likely to
veto the NDAA or the DOD appropriations bills if these provisions are included in the conference
version.5 The President believes that both defense and non-defense caps should be raised, and
objects to the transfer, which he characterizes as a “budget gimmick,” which would raise defense
spending but not non-defense spending above the BCA caps.6
Potential Implications
If the President does not designate the transferred funds as OCO, those funds would count as part
of the base budget, which would breach BCA spending levels and trigger a sequester. A defense
sequester would entail largely across-the-board cuts to total defense resources, which include
base budget, OCO-designated funds, and unobligated balances from previous years, and typically
exclude military personnel accounts.7 Cuts could be about 6%, depending on the total amount of
defense resources available.8
If a defense appropriations bill is not enacted before the beginning of the new fiscal year on
October 1, 2015, defense spending could be wrapped into a consolidated or a CR appropriations
act.9 If that act sets defense spending at last year’s level of $520 billion for national defense and
$495 billion for DOD for the full fiscal year, funding would be $1 billion and $2 billion,
respectively, below BCA caps eliminating the need for sequestration.
On the other hand, if a CR included defense spending levels that exceeded BCA caps and non-
defense funding levels were set at BCA caps level—positions opposed by the Administration—
then the President might not sign the CR. Speaker of the House John Boehner and Minority
5 OMB, Director Shaun Donovan, Letter to Chair, House Appropriations Committee, Hal Rogers, “Subcommittee on
Defense Markup of FY2016 Defense App4ropriations bill,” June 1, 2015; OMB, Statement of Administration Policy,”
S. 1376 – National Defense Authorization Act for FY 2016, June 2, 2015; https://www.whitehouse.gov/sites/default/
files/omb/legislative/sap/114/saps1376s_20150602.pdf; OMB, Statement of Administration Policy, “H.R. 1735 –
National Defense Authorization Act for FY 2016;” “https://www.whitehouse.gov/sites/default/files/omb/legislative/
sap/114/saphr1735r_20150512.pdf.
6 OMB, Statement of Administration Policy, “S. 1376 – National Defense Authorization Act for FY 2016, June 2,
2015;” https://www.whitehouse.gov/sites/default/files/omb/legislative/sap/114/saps1376s_20150602.pdf; OMB,
Statement of Administration Policy, “H.R. 1735 – National Defense Authorization Act for FY 2016;”
“https://www.whitehouse.gov/sites/default/files/omb/legislative/sap/114/saphr1735r_20150512.pdfOMB, Director
Shaun Donovan, Letter to Chair, House Appropriations Committee, Hal Rogers, “Subcommittee on Defense Markup of
FY2016 Defense Appropriations bill,” June 1, 2015
7 The President excluded military personnel accounts in the FY2013 sequester; OMB, “Letter to President of the
Senate, Biden exempting military personnel from sequestration, “July 31, 2012; http://www.whitehouse.gov/sites/
default/files/omb/legislative/letters/military-personnel-letter-biden.pdf. The President also announced in sequester
reports to Congress in FY2014 and FY2015 that if a sequester were necessary, military personnel accounts would be
exempted.
8 This very rough estimate reflects FY2013 defense experience where unobligated balances largely offset the exclusion
of military personnel from the defense resources total.
9 Congressional Quarterly, “FY2016 Budget Tracker,” May 8, 2015.
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War Funding and the Budget Control Act: In Brief
Leader Harry Reid have suggested that a government shutdown could occur because of a failure
to agree on either defense and non-defense spending levels or raising BCA caps.10
As an alternative, Congress could adopt a hybrid approach in which defense spending bills
included some, but not all, of the savings necessary to comply with BCA caps and accepted a 1%
to 2% sequester to achieve the last increment of savings. It is not unusual for Congress to include
a general provision that levies such across-the-board cuts to reach budget limits.11 Congress has
also cut DOD requests by 3% to 5% of the request roughly 40% of the time in the past 63 years
between FY1950 and FY2012.12
Designating Base Budget Funds as OCO
DOD and other Administration officials have argued that designating base budget funds as OCO
and transferring them to the OCO title could complicate defense budgeting by setting up a one-
year spike in funding that might not be “sustainable” (i.e., not followed by higher levels in later
years). Without predictable funding levels in the next several years, DOD claims it would face
considerable uncertainty about how to structure its programs and activities to meet its long-term
modernization and readiness goals. Secretary of Defense Ashton Carter testified that it
doesn't provide a stable, multiyear budget horizon, this one-year approach is managerially
unsound and also unfairly dispiriting to our force. Our military personnel and their families
deserve to know their future, more than just one year at a time. And not just them, our
defense industry partners, too, needs stability and longer-term plans, not end-of-year crises
or short-term fixes, if they're to be efficient and cutting edge as we need them to be. Last and
fundamentally, as a nation, we need to base our defense budgeting on our long-term military
strategy and that’s not a one-year project.13
Secretary Carter continued that the Joint Chiefs agreed and that adding funds for defense but not
non-defense
reflects a narrow way of looking at our national security ... [that] ignores vital contributions
made by State Department, Justice Department, Treasury Department, Homeland Security
Department and disregards the enduring long-term connection between our nation’s security
and many other factors ... like scientific R&D to keep our technological edge, education of a
future all-volunteer military force and the general economic strength of our country.14
Senator John S. McCain, Chair of the Senate Armed Services Committee, stated that his desire to
provide more funds for defense was more important than the transfer of base budget funds to
OCO, which he originally opposed.
10 Politico, Harry Reid warns: “‘We're headed for another shutdown’ Both parties are beginning to warn of another
budget crisis in September,” by Burgess Everett, June 10, 2015, http://www.politico.com/story/2015/06/harry-reid-
heading-for-government-shutdown-118819.html.
11 CRS Report R44039, Defense Spending and the Budget Control Act Limits, by Amy Belasco, pp. 2-3.
12 Calculation based on CRS analysis of congressional action on DOD appropriations bills.
13 Senate Appropriations Subcommittee on Defense, transcript, “Hearing on President Obama’s Fiscal 2016 Budget
Request for Defense,” May 6, 2015.
14 Ibid.
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So faced with the choice between OCO money and no money, I choose OCO, and multiple
senior military leaders testified before the Armed Services Committee this year that they
would make the same choice for one simple reason: This is $38 billion of real money that
our military desperately needs, and without which our top military leaders have said they
cannot succeed.15
The President, some policymakers, and Members of Congress have called for raising BCA caps
for both defense and non-defense, as was done in the Ryan-Murray compromise in the Bipartisan
Budget Act of 2013 (P.L. 113-67). That act raised BCA defense caps by $22 billion in FY2014
and $9 billion in FY2015, replacing the previous $20 billion decrease between the FY2013 level
(post-sequester) and FY2014. While fiscal hawks have opposed raising the caps in order to
preserve the discretionary budget savings enacted the Budget Control Act, defense hawks and
others call for raising the caps to provide more defense spending in a “complex and dangerous
world.”16
As part of the ongoing debate on S. 1376, the FY2016 National Defense Authorization Act, the
Senate recently voted on an amendment offered by Senator Jack Reed (S.Amdt. 1521) that would
fence off or delay spending the $38 billion of base budget funds transferred to OCO until BCA
caps were raised for both defense and non-defense. On June 9, 2015, the amendment failed by a
vote of 46 to 51.17 Senator Bernie Sanders has proposed an amendment entitled “Paying for War,”
which would require that all funds designated as OCO be offset with new revenue. Unlike other
U.S. wars, the cost of the Afghanistan and Iraq wars has not been offset by higher revenues or
spending reductions.18
Fiscal hawks and other policymakers are concerned that using the OCO designation to increase
defense spending would undermine the BCA caps. When Congress raised BCA caps in the past,
increases were offset by reductions elsewhere over the 10-year period of the caps. Transferring
funds to OCO has not been seen as requiring any offsetting cuts.
Reaching agreement on raising both defense and non-defense caps could be difficult because
some Members support the limits on non-defense but not defense. Others take the opposite view.
Finding offsets in either mandatory programs or by raising taxes to offset increases above BCA
caps could be problematic.19 If there is an impasse over funding levels, Congress may turn to a
CR or consolidated appropriations act, which, if vetoed, could create the prospect of a
government shutdown.
15 Senate Armed Services Committee Chair Response to Statement of Administration Policy regarding S. 1376, the
National Defense Authorization Act for Fiscal Year 2016 (released June 2, 2015), June 5, 2015;
http://www.mccain.senate.gov/public/index.cfm/2015/6/sasc-chairman-john-mccain-responds-to-white-house-veto-
threat-of-national-defense-authorization-act-for-fiscal-year-2015.
16 See for example, Senate Armed Services Committee, Statement by General Raymond T. Odierno, Chief of Staff,
U.S. Army, “The Impacts of Sequestration on National Defense,” January 28, 2015.
17 Congressional Record, Daily Digest, Senate, June 9, 2015, and pp. S3907-S3910.
18 See Center for Strategic and Budgetary Assessments, Steve Kosiak, Cost of Wars in Iraq and Afghanistan and Other
Military Operations, December 15, 2008;
http://www.csbaonline.org/4Publications/PubLibrary/R.20081215.Cost_of_the_Wars_i/
R.20081215.Cost_of_the_Wars_i.pdf.
19 CQ Roll Call, “Obama’s Call for Boost to Pentagon Spending Could Split GOP,” by Megan Scully and Tamar
Hallerman, February 3, 2015; http://www.cq.com/doc/news-4615871?2.
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The Impact of Maintaining BCA Defense Caps
Underlying the debate about the transfer of defense base budget funds to OCO-designated
accounts is the issue of whether current defense BCA caps reflect an acceptable level of defense
spending. While some policymakers and observers argue that maintaining current BCA caps
would be inadequate in light of ongoing conflicts and threats, others contend that defense
spending levels would remain at historically high levels in real terms and that defense planning
has largely accommodated BCA caps.20
Figure 1. BCA Spending Caps for DOD: FY1950-FY2025
In Billions of FY2016 Dollars
Sources: Historical data from Table 5.1, and 10.1 in OMB, FY2016 Historical Tables; supplemental and
emergency funding for wars from DOD, Financial Summary Tables, Table 2-1 in DOD’s FY2016 National
Defense Budget Estimates, and other sources.
Notes: Converted to FY2016 dol ars using OMB’s chained GDP price index.
In response to a question from SASC Chair John McCain, the Joint Chiefs of Staff testified that
maintaining the current BCA defense caps would jeopardize the ability of DOD to carry out the
national military strategy.21 In a 2014 report to Congress, DOD outlined how it would meet
“sequester” caps for the FY2015-FY2019 period. DOD’s proposal concentrated cuts on weapon
system modernization, primarily by delaying or stretching out procurement plans; shielding early-
20 For more detail, see CRS Report R44039, Defense Spending and the Budget Control Act Limits, by Amy Belasco.
21 For a full discussion of DOD concerns about BCA caps and meeting the national military strategy, see DOD, 2014
Quadrennial Defense Review, March 4, 2014; http://www.defense.gov/pubs/2014_Quadrennial_Defense_Review.pdf;
see also statements by the Service Chiefs of Staff, Senate Armed Services Committee, Hearing, “Impact of the Budget
Control Act of 2011 and Sequestration on National Security;” http://www.armed-services.senate.gov/hearings/15-01-
28-mpact-of-the-budget-control-act-of-2011-and-sequestration-on-national-security.
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stage Research, Development, and Testing and Evaluation; and generally cutting service readiness
programs more heavily than other non-readiness related Operation and Maintenance activities.22
A variety of other approaches have been proposed for meeting BCA limits, ranging from reducing
force structure (the size of military forces) to trimming military compensation to achieving
“efficiencies” in back-office administrative activities. The Administration is concerned that
Congress has been unwilling to adopt some of its proposals for lower pay levels and changes in
military health care benefits, a new round of base closures, and retiring some military systems,
such as A-10 ground attack aircraft.
Such debate about the appropriate level of defense spending, and how a particular level can be
reached, is not unusual. While the proposed transfer of base funds to OCO could avoid that
decision, temporarily, some observers would argue that consensus on levels over the next several
years of the BCA decade would help DOD make balanced decisions about matching resources
with the pace of achieving modernization, readiness, and compensation goals, as well as re-
evaluating the goals themselves.
Distinguishing War Funding and “Enduring
Presence” Needs
Over the past 14 years of war, decisions about what to consider war funding as opposed to normal
day-to-day expenses has shifted. Both Congress and the Administration have adopted different
definitions at different points in time. DOD broadened its definitions in 2006, which were then
constrained by OMB in 2009.23
As part of its tracking of war obligations, DOD excludes funds that have a tangential, if any,
relationship to war expenses, including fuel price increases, higher basic housing allowance
expenses, army reorganization, congressional increases for childcare centers, barracks
improvements, medical programs, C-17 transport aircraft, and additional equipment for national
guard and reserve forces. In recent years, Congress has also transferred funds from Operation and
Maintenance activities in the base budget to OCO-designated accounts, while the Administration
has characterized as OCO its new initiatives in the European Reassurance Initiative and the
Counterterrorism Partnership Fund.24
This year’s proposed action would increase DOD’s war request of $50.1 billion to $88.9 billion, a
75% increase. At the same time, U.S. deployed troop levels in Iraq and Afghanistan, the main
factor in setting OCO funding levels, are slated to fall 15,700 in FY2015 to 10,000 in FY2016,
and to an “embassy presence” of about 1,000 by January 1, 2017.25 The House-passed version of
22 See “DOD’s Plan for Complying with BCA Limits” in CRS Report R44039, Defense Spending and the Budget
Control Act Limits, by Amy Belasco.
23 See CRS Report RL33110, The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11,
by Amy Belasco.
24 Ibid.
25 See Figure 6-2 in DOD, “Overview: Fiscal Year 2016 Budget Request,” February 2015.
http://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2016/
FY2016_Budget_Request_Overview_Book.pdf. The President’s recent decision to decrease U.S. troop levels more
gradually does not change this general plan.
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the FY2016 NDAA also includes language specifically exempting base budget funds transferred
to OCO titles from criteria for war funding set by OMB and DOD regulations.26
Both OMB criteria and DOD regulations require that OCO or war-related expenses reflect the
incremental costs of conducting a war. For example, normal military pay costs are funded in
DOD’s base budget, but imminent danger pay provided to servicemembers deployed to war zones
is funded in military personnel funds designated as OCO.
Conducting operations and setting up and maintaining bases for deployed forces are clearly war
expenses. Paying for depot maintenance for equipment damaged in war operations would be
considered a war expense, while periodic, scheduled maintenance would not. In times of war,
however, routine maintenance may be required sooner because of higher wear and tear as a result
of higher operating tempo and may be funded with OCO funds, thus relieving pressure on DOD’s
base budget.27
Figure 2. Emergency or OCO-Designated Funding: War and Non-War
In Billions of Dollars
Sources: DOD data provided to CRS, including monthly Cost of War execution reports.
Notes: Reflects DOD tables identifying funding not tracked as part of monthly Cost of War reporting; Enacted
through FY2015. FY2016 request includes $.3 billion for the Counterterrorism Partnership Fund (CTPF) and the
European Reassurance Initiative, not classified as war by DOD. House-passed version of the National Defense
Authorization Act (H.R. 1736) includes $89.2 billion designated as OCO, $39.0 billion above the request. Senate-
reported version includes $38.8 billion. Reflects H.R. 2685 as reported with an additional $37.521 in base funds
moved to OCO and H.R. 2029, Military Construction and VA, as passed by the House, which includes $.532
billion transferred from base to OCO.
26 See Title XV, §1501(b), H.R. 1735 as passed by the House.
27 See discussion in CRS Report RL33110, The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations
Since 9/11, by Amy Belasco.
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Over the past 14 years of war, the definition of war and non-war expenses has expanded and
contracted depending on policy guidance. In 2006, DOD broadened its definition of incremental
war expenses to include modernization and upgrades to equipment, including some already
planned as part of its peacetime budget. In recent years, the Obama Administration narrowed war-
related criteria to require that war procurement include only replacement of war losses, rather
than upgrades, as well as calling for stricter criteria for other expenses.28
The purpose of distinguishing war and non-war expenses is to identify those expenses that are
related to conducting and supporting military operations as opposed to long-term, “enduring”
requirements that would persist after U.S. troops are withdrawn. Congress has also provided
DOD with some flexibility for war-related programs where requirements are uncertain, though
some would argue costs could be better predicted after 14 years of war.29
In recent years, DOD has suggested that it will grapple with the problem of which expenses
initiated during wartime—such as the 60,000 military personnel now deployed in bases in Central
Command outside of Iraq and Afghanistan—would fall and which expenses would persist even
after war operations cease. Continued transfers of base budget activities to OCO-designated titles
could reduce the likelihood of a review of this type by relieving the pressure to stay within BCA
limits.
DOD has also conducted reviews of programs and activities in order to comply with the BCA
defense caps set in the law. In testimony before the Senate Appropriations Committee in February
2015, Secretary of Defense Carter testified that DOD has achieved three-quarters of a trillion
dollars in savings since its FY2012 plan, which predates the BCA. Similar efforts to meet the
remaining BCA caps could be less likely if Congress continues to rely on transfers of base budget
funds to OCO to stay within BCA caps.
Author Contact Information
Amy Belasco
Specialist in U.S. Defense Policy and Budget
abelasco@crs.loc.gov, 7-7627
28 See “Changes of DOD Definitions of War Funding” in CRS Report RL33110, The Cost of Iraq, Afghanistan, and
Other Global War on Terror Operations Since 9/11, by Amy Belasco.
29 See “Flexible Funding and the New Counterterrorism Partnership Fund (CTPF)” in CRS Report RL33110, The Cost
of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11, by Amy Belasco.
Congressional Research Service
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