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The Pentagon Cash Crunch
War is a pay-as-you-go business.
by Tom Donnelly
05/07/2007, Volume 012, Issue 32

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The Senate majority leader's "position is irresponsible. . . . We won the war but we are in danger of losing the peace. [Our adversary] is counting on the United States and Europe losing interest--and losing our will--and not staying the course. . . . Funding in the supplemental would support . . . the only [friendly] government that now exists."

George W. Bush criticizing Harry Reid? No--Joe Biden complaining about Trent Lott's slow-walk on the supplemental appropriation for Kosovo in April 2000. Two months earlier, General Wesley Clark, the U.S. commander in that war, told the Senate, "Force readiness could be adversely affected if we do not receive timely passage of the . . . supplemental funding."

Biden and Clark were correct; during the Balkans wars the Army routinely postponed repairs and juggled training schedules while the Clinton administration and the Republican Congress went through a highly choreographed handbag fight over war costs. In those halcyon days, the supplementals averaged about $2 billion per year, less than 1 percent of defense spending. The two 2007 defense supplemental requests will total about $170 billion--not counting the billions of vote-buying pork tacked on by the Democratic congressional leadership--that is, almost 40 percent of the 2007 baseline defense budget request. The Democrats today are sinning on a far larger scale.

At the core of the Democrats' posture over the supplemental appropriations bill is the pretense that a delay won't really affect the soldiers and Marines now

fighting or preparing to deploy. Rep. John Murtha, one of the chief architects of the Democrats' supplemental strategy, claims the Army wouldn't be in "dire straits" until June. Indeed, Murtha complains that the Pentagon's warnings of real consequences "gets under my nerves." Separately, he complains to Time that the "readiness of the Army's ground forces is as bad as it was right after Vietnam." So which is it?

In fact, the supplemental fight is not just a tempest in a Beltway teapot. A delay even of several weeks in resolving the military funding issue for 2007 could have a serious ripple effect, introducing a potentially crippling uncertainty into the Iraq "surge" effort. Uncle Sam may be a rich man, but his Pentagon lacks liquidity.

About two-thirds of the "baseline" defense budget--what it costs simply to have a military establishment--is spent on personnel and weapons; those are the Pentagon's capital and human investments, and they are very inflexible spending requirements. The remaining third is the "operations and maintenance," or "O&M" account, but even this spending is mostly obligated well in advance. Even worse, it gets spent rapidly. As William Lynn, Pentagon comptroller for most of Clinton's second term, put it, "We have very little control over half of it. It's things like utilities. It's contracts for civilian employees. It's day-care center workers. . . . You can't just say we're not going to pay rent . . . so we can pay" for the war.

Hence, when you go to war, you need a supplemental appropriation. And because war is an unpredictable trade, you need the money as soon as you can get it--wars are not fought one fiscal year at a time. Lynn, who kept the Pentagon books during the Balkans wars, explained, "If you wait until the third or fourth quarter [of the fiscal year] to deal with it"--the third quarter of the 2007 budget year began April 1--"it has an enormous impact on readiness."



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