Congress Should Reject Biden’s Emergency Supplemental
The makings of an OCO-like slush fund
Below are highlights from Jordan Cohen’s and my blog post titled “Congress Should Reject the Ukraine Supplemental” which appeared in Cato at Liberty on August 17, 2023.
President Joe Biden has requested $40.1 billion in emergency supplemental spending—$24.1 billion of which would go to Ukraine. For months, Congress has eyed a Ukraine supplemental bill to evade spending limits. Meanwhile, several House members are wary of going beyond the spending limits outlined earlier this year.
Legislators have good reason to worry. Additional emergency spending contributes to future security threats and worsens the U.S. fiscal trajectory.
The United States cannot afford additional emergency spending. The Congressional Budget Office projects that in just six years (2029), federal public debt (the debt borrowed from credit markets) will surpass the all-time high of 106 percent of GDP following the Second World War. The U.S. fiscal situation will continue to deteriorate as rising spending drives unsustainable growth in federal debt.
The president’s $24 billion request for Ukraine funding on top of the $113 billion spent on this conflict already should not be viewed in isolation. They are part of a larger pattern of irresponsible emergency spending. Over the last 10 years, Congress has spent more than $1.3 trillion on supplemental emergency bills. Add in emergency designations from regular appropriations bills and PAYGO emergency designations and the 10-year total rises to an inflation-adjusted $7 trillion—more than last year’s entire federal budget.
Because supplemental funding has no defined spending limits, it can act as a slush fund that grows without controls. Repeated rounds of supplemental defense funding are beginning to look similar to the Overseas Contingency Operations (OCO) fund from the War on Terror. The OCO fund acted as a nearly bottomless supply of cash to support U.S. military operations in Iraq, Afghanistan, and throughout the greater Middle East.
Between 2001 and 2019, Congress appropriated $2 trillion in OCO funding. In fiscal year 2020, the year before the U.S. military withdrew from Afghanistan, Washington spent $70.7 billion via OCO, making the fund larger than all but three federal agencies (exceeding everything but the Department of Defense, Department of Veteran Affairs, and the Department of Health and Human Services).
While Ukraine funding makes up the majority of the president’s emergency supplemental, President Biden also requests $12 billion for disaster relief and $4 billion for border security. Emergency funding should go towards urgent, unexpected, and non-permanent events. A vast majority of the supplemental funding does not meet these criteria.
About $60 million of the disaster relief funding supports pay increases for firefighters in Maui and elsewhere. The other 99.5 percent cover a pre-existing FEMA budget shortfall, something legislators have been aware of for months. FEMA now regularly relies on emergency supplementals to fund the Disaster Relief Fund. Such funding is reoccurring and largely predictable and should be handled through regular appropriations.
The border security funding covers everything from counter-fentanyl activities to biometric technology to migrant assistance. Setting aside the questionable policy rationale behind some of these priorities, little of the funding Biden proposes addresses “sudden” and “unforeseen” emergencies.
Congress should reject the Biden administration’s supplemental funding request and abide by the modest spending limits agreed to by the administration and Congress as part of the debt limit deal. Congress should furthermore resist the temptation to create another OCO-like slush fund to finance what should be considered regular national security interests, not emergency spending.
Unsustainable and myopic fiscal policy has serious consequences for economic growth and national security. High and rising national debt suppresses private investment, reduces incomes, and increases the risk of a sudden fiscal crisis. Excessive federal debt weakens the economy, which undermines the foundation of America’s military strength. If Congress agrees with President Biden that Ukraine, disaster relief, and border security merit additional funding, it should fund them through regular appropriations and by staying within established spending limits.
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