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Congress Added $10 Billion Plus Since 9/11 for Secretive National Guard Fund

The equipment for America’s National Guard and Reserve is increasingly funded through an account that contains money not requested by the president, not capped by the budget law and not subject to much open oversight, according to assessments by CQ and the government spending monitors at Taxpayers for Common Sense.

The National Guard and Reserve Component Equipment Account has been around since 1981. But it has grown significantly in recent years—ever since it was moved to the war budget, the size of which is not restricted by the budget control law. Since the Sept. 11 terrorist attacks, the Guard and Reserve equipment fund has reaped more than $10 billion that was not part of any budget request.

Just a few years ago, Congress generally added a couple of hundred million dollars annually to the account. But each year since fiscal 2012, when caps on the Pentagon’s non-war budgets were instituted, the off-budget fund for the Guard has swelled to $1 billion or more in annual appropriations, part of a larger expansion of the war account for items not always related to Iraq, Afghanistan or any other conflict.

This week, the House Appropriations Committee approved a fiscal 2016 Defense spending bill that would allocate $1.5 billion for the fund in the coming fiscal year alone, which would be a high water mark.

The U.S. military vigorously defends the fund. But the White House Office of Management and Budget director, Shaun Donovan, wrote to House appropriators this week that adding the funding for the special Guard account is “unnecessary.”

To Stephen Ellis, vice president for Taxpayers for Common Sense, a group that monitors federal spending and that has closely tracked the Guard fund, it is a “backdoor” and “unregulated” way to secure funds from Congress.

“I’m sure the Guard can use some of this equipment,” he says. “But in reality it has become little more than a place for lawmakers to stuff cash for a laundry list of parochial projects that don’t make the budget grade.”

De Facto Earmarks?

The fund was created to slightly supplement the Guard and Reserve budget because the regular services were not funding it adequately. Now it provides more than one third of the procurement budget for U.S. citizen-soldiers, even as the special account has received little public scrutiny.

Not only are requests to Congress for this money not a part of the president’s budget, the fund is rarely if ever mentioned in annual hearings on that request. Instead, suggestions for how the money might be spent are only contained in an obscure Defense Department report to Congress each year.

“The process is much more concealed” than that set for the regular budget, says Gordon Adams, a former top official in the Office of Management and Budget during the Clinton administration.

Each year, the Defense Appropriations panels write into the reports that accompany their spending bills lists of what they call “high priority items” that they “expect” to be bought with the added hundreds of millions of dollars. The items on the lists range from the identifiable (such as “internal and external fuel tanks” or “Humvee modernization”) to the arcane but specific (“In-Flight Propeller Balancing System,” “Semi-permanent Humidity Controlled Shelters”).

According to Taxpayers for Common Sense, these suggestions, though phrased as generic descriptions of capabilities, often seem to refer to particular products that happen to be made in the districts and states of panel members.

In other words, the group says, the congressional guidance is often akin to earmarks, the kind of directed spending that Congress officially banned several years ago.

In reality, the Guard and Reserve often do not heed the congressional direction on how to spend the money, according to reports to Congress on obligations under the fund.

Another input that seems to be only occasionally heeded is the the Army and Air Force National Guard annual lists of “unfunded priorities”—items that top officers say are needed but that didn’t make the budget requests each year. What gets funded by the Guard equipment account often bears little resemblance to what is on those lists, the obligations documents show.

In other words, the Guard and Reserve spend the funds after taking into account a variety of inputs and sending their plan through the Pentagon’s assistant secretary for reserve affairs.

But Taxpayers for Common Sense and other observers are concerned that unworthy projects can potentially be funded in this way—whether at lawmakers’ behest or at the insistence of senior officers and civilians in the Guard and Reserve who are under pressure from lobbyists.

“It’s sort of an unregulated account that the Guard can just spend on what they want—some of which may be a real requirement but some not,” Ellis says.

Closed Process

The National Guard Association of the United States, the advocacy arm of the Guard and Reserves, plays a big role in that process. The group fields from state units—and indirectly from industry executives and lobbyists, insiders say—lists of requests for equipment that could be funded through the account. These suggestions are taken into consideration by the Guard and Reserve.

The White House Office and Management and Budget, which gets final say on aspects of the regular Pentagon budget request and which acts as a check on potential excess under both Republicans and Democrats, is not involved in the formulation of spending plans for the Guard account, Pentagon officials say.

Once the money is appropriated, lawmakers don’t have to approve the items that the Guard wants to buy. The defense committees are notified of the purchasing plan and can disapprove of something. But if they don’t, the Guard and Reserves moves forward with the buys after 30 days.

The billions of dollars funneled to the special account come in addition to other increases the Guard and Reserves have received in the defense bills.

The ability of the Guard and Reserves to secure such funding from Congress is a testament to the fact that they—and their contractors—have a presence in every state and numerous congressional districts, experts say.

“All politics of the National Guard is local,” Adams says.

The Pentagon says that the oversight process is more than adequate. It is “not identical” to that for the regular budget “but is still very robust,” said Matthew Allen, a Defense Department spokesman.

The National Guard Association of the United States says on its web site that the decisions on how to use the fund are “fully transparent, with detailed spending plans provided to Congress.” John Goheen, director of communications for the National Guard Association of the United States, said that the congressional account is essential, because the Defense Department does not adequately fund the Guard and Reserves.

Without lawmakers support for the account, Goheen said, “the Guard could not have accomplished what it has done over the last 14 plus years. And we are talking about unfunded Army and Air Force requirements.”

War Budget Debate

Critics of the program also worry that the funds for such projects have swelled considerably since they became part of the war account. And this spending is in many instances unrelated to military requirements for actual conflicts, even if the equipment could potentially be used in both a conflict zone or a domestic crisis.

As such, the fund may soon become part of a broader and increasingly robust debate about the expanding and malleable account for Overseas Contingency Operations at the Pentagon, which Congress is poised to fund at $88 billion, 76 percent above the request. The debate is about whether the OCO budget has become the place to store Pentagon programs that don’t make the budget and that wouldn’t receive appropriations if they had to vie within a finite pool of funds.  Democrats, in particular, are increasingly complaining that the war budgets are stealing from domestic priorities.

“OCO is the mother of all sins,” says Adams, who is now a distinguished fellow at the Henry L. Stimson Center, a security policy think tank, and a professor emeritus at American University. “It’s about anything you need that you can’t squeeze under the caps” on defense spending in the law.

Sparring Over the Need

Appropriators and others in Congress vigorously defend the fund.

“Given the uncertainty of the current and projected fiscal environment, the availability of equipment needed to sustain and modernize the National Guard and Reserve Components as an operational reserve and for their domestic support missions remains a concern,” the House Appropriations Committee’s fiscal 2016 report says. “The committee recognizes the National Guard and Reserve Components continue to report significant equipment shortages in modernized equipment.”

The Guard and Reserves, the National Guard Association of the United States and Defense Department officials view the fund as a vital fiscal lifeline.

Maj. Gen. Judd Lyons, former acting director of the National Guard Bureau, told the House Appropriations Defense Subcommittee in March that the fund’s impact on the Army National Guard “cannot be overstated.”

The White House’s Donovan takes a different view. Last year, too, a Statement of Administration Policy on the House’s fiscal 2015 defense spending measure said the White House “objects to the billions of dollars provided for items DOD did not request and does not need,” which it said includes ”a significantly larger amount of funding for the National Guard and Reserve Equipment Account than provided in recent years.”


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