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Punishment for border wall money transfer could pinch Pentagon

Lawmakers want to remind the White House who holds the power of the purse

When domestic events strain Defense Department accounts, the Pentagon is used to moving money around. But now that the president is testing that time-honored flexibility, Congress is considering a change. (Bill Clark/CQ Roll Call file photo)
When domestic events strain Defense Department accounts, the Pentagon is used to moving money around. But now that the president is testing that time-honored flexibility, Congress is considering a change. (Bill Clark/CQ Roll Call file photo)

President Donald Trump’s controversial border wall could propel lawmakers to end a time-honored “gentleman’s agreement” that has allowed the Pentagon to shift billions of dollars around in its budget — a move that could hamstring the military’s ability to respond quickly to unforeseen events.

House Democrats are poised to retaliate against Trump’s decision to repurpose Defense Department funds to help pay for the wall along the southern border, and the Pentagon’s budget flexibility seems to be the target.

Lawmakers want to remind the White House who holds the power of the purse.

“To have no reaction is almost inconceivable to me,” said Mike McCord, who served as the Pentagon’s comptroller during the Obama administration. “If the Congress doesn’t react, what message to the White House does that send?”

But they could ultimately give Pentagon officials less room to maneuver unanticipated funding crunches, former Pentagon officials say.

At stake is the Defense Department’s ability to transfer up to $4 billion of its base budget, and $2 billion of its warfighting funds provided outside of statutory spending limits, between accounts during a fiscal year. Ultimately, these funds make up less than 1 percent of the defense budget, but they provide a much-needed safety valve for Pentagon numbers crunchers, McCord said.

The flexibility to move money is necessary in part because of the Pentagon’s protracted budgeting process. Transfer authority, or moving money between accounts, and reprogramming, or moving money within an appropriations title, allows the Pentagon to redirect money without an act of Congress.

The kinds of events that could strain Pentagon accounts are small but significant domestic developments, McCord said. Major domestic and international emergencies — a massive hurricane that devastates a large area, or a new conflict requiring a troop surge — are likely to require more than $6 billion and necessitate Congress enacting separate emergency funding bills.

But regional flooding, like the kind that recently submerged major portions of Offutt Air Force Base in Nebraska, or wildfires that lead to activating National Guard and Reserve units, can create short-term strains on certain accounts.

For example, in February the Pentagon asked for permission to reprogram $600 million — $400 million for the Navy and $200 million for the Air Force — after storms caused damage to Camp Lejeune in North Carolina and Tyndall Air Force Base in Florida.

In another request from February, the Defense Department wanted to shift $7 million from department-wide operations and maintenance accounts to pay for training for reserve units.

“You don’t have a lot of flexibility if your math is wrong,” McCord notes. “This is really a management tool that helps the committees and department to do the normal stuff that’s not going to be in the newspapers every day.”

To tap into that $6 billion, the Defense Department ordinarily asks for permission from the top Democrats and Republicans on the four congressional defense committees: the Armed Services panels and the Defense Appropriations subcommittees.

But this arrangement cannot be codified into law because a 1983 Supreme Court ruling in INS v. Chadha determined that a single chamber of Congress could not have veto power over an executive branch action. To do so is to exercise the power of the legislative branch, which must be bicameral in order to be constitutional, the court ruled.

The workaround, McCord said, was the “gentleman’s agreement” in which the Pentagon requested permission it was not legally required to obtain. So the White House’s decision to shift $1 billion from Army accounts to help fund the border wall was legal but amounted to the Pentagon sticking a finger in the eye of Congress.

“All of this is built on this understanding of comity,” McCord said. “Trust is really the foundation of flexibility between the committees and the department.”

Request or notify?

In March, the Pentagon shifted $1 billion from the account that funds the military payroll to wall funding, despite written denials of permission from the top Democrats on the House Armed Services Committee and the House Defense Appropriations Subcommittee. In response, Rep. Peter J. Visclosky of Indiana, who chairs the subcommittee, signaled that lawmakers might revoke the ability to do so.

“This unprecedented action will clearly be a consideration as the committee disposes the entirety of the department’s budget request, including its current transfer authority,” Visclosky said in a statement.

At a recent hearing, House Armed Services Chairman Adam Smith asked acting Defense Secretary Patrick Shanahan about the decision to move forward with the transfer, knowing that Congress wouldn’t like it.

“It was a very difficult discussion, and we understand the significant downsides of losing what amounts to a privilege,” Shanahan replied. “Given a legal order from the commander in chief, we are executing on that order.”

Acting Pentagon spokesman Charles Summers said last week he didn’t want to speculate about how the Pentagon would respond if Congress did take away its ability to transfer big chunks of money.

“We continue to work with the Congress to ensure that American taxpayer dollars are used in the most efficient and wise manner,” he said.

Repairing damaged relationships

The breach of trust could take a long time to mend, said Tom Spoehr, a retired Army general who is now the director of the Heritage Foundation’s Center for National Defense.

“It won’t get fixed overnight. People have memories,” he said. “There’s going to be some hurt feelings that are not going to be soothed in just one year.”

McCord said he believes the House will impose harsh conditions on the Pentagon, and the GOP-controlled Senate will try to mitigate the restrictions placed on the Defense Department. Spoehr doesn’t see it as a distinctly partisan issue.

“I have talked to Republican members who are not happy about” tapping defense accounts to pay for the wall, Spoehr said. “I cannot imagine that folks in the Senate are not similarly upset about this.”

Dov Zakheim, Pentagon comptroller under President George W. Bush, also thinks the issue will be a major sticking point between the House and the Senate as they draft legislation authorizing and appropriating funds for the Pentagon for the next fiscal year.

“Here’s the dilemma: Clearly the Congress, at least as I see, is well within its rights to be furious about a reprogram that was never really asked for,” he said. “But further restrictions are going to make it more difficult for the Defense Department. Any attempt to restrict reprogramming is just going to make it hard to manage the DoD budget more efficiently.”

Zakheim said he hopes Congress won’t further limit the Pentagon’s ability to shift money between accounts. In fact, he said, the Pentagon would benefit from the ability to move more money around.

“Frankly, Congress has to find other ways for dealing with the high-handed approach the president took,” Zakheim said. “Clearly the president found a loophole and exploited it to the hilt. The answer is, plug the loophole.”

But that shouldn’t equate to additional restrictions on the Pentagon’s ability to move money around, in his opinion.

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