Magic Money and Budgetary Malpractice

There's something fishy about the U.S. Navy wanting to create a new fund to pay for nuclear submarines -- so it can also pay for other ships.

Everybody fiddles with their budget from time to time. How will we pay for the new car? Or that summer spike in the gas bill? What about that unanticipated bail expense, from before Colorado legalized pot? Even federal agencies do the same thing. What about that extra expense for the unplanned long stay in Iraq? Or how to help citizens deal with an unexpected tsunami when no one planned for it in the budget?

But the 2011 Budget Control Act has elevated the art of federal fiddling to new heights. Tight budget caps and the 2013 sequester have led the Defense Department and, increasingly, the State Department, to get creative with budgeting -- so creative, in fact, that they are verging on malpractice.

Imagine, if you will, that your operating expenses must be covered by your income. But you want to spend more, so you create a second budget to pay for the things you do every day or month, like buying groceries or paying the gas bill. But here, instead of relying on your paycheck income, you also set up a second payer -- a neighbor, perhaps -- who agrees to front you the money, at no interest, fully knowing that he or she will never be repaid. Or what about just putting operating expenses on a home-equity line -- one that seems to go on forever, at no interest cost to you. And the neighbor or the generous bank agrees never to look over your shoulder. Pretty sweet, right?

Unfortunately, that never happens in the real world -- only in Washington, D.C.

This is essentially what Defense Department has done with the overseas contingency operations (OCO) budget request, which comes in at a whopping $58.5 billion for fiscal year 2015. According to the Budget Control Act, it's not counted against the budget caps, so it is essentially "free" additional funding -- about 10 percent of the defense budget -- for a Pentagon that regularly complains about the restraints imposed by the Budget Control Act.

Of course, you may say, that's all money for the additional costs of being at war in Afghanistan. But Todd Harrison of the Center for Strategic and Budgetary Assessments told Defense News that the costs of supporting the 9,800 troops that will remain in Afghanistan through 2015 might come to $20 billion. So what's the other $38.5 billion for?

Turns out that's for the operations and procurement needs of the military services, which, despite protestations to the contrary, are unrelated to the war. It will go to fund the same stuff they spend budget-capped money on: buying fuel, operating bases, purchasing and repairing equipment, procuring services, paying civil servants, and providing education and training. Many of these things are part of the Pentagon's large "back office," which represents about 42 percent of the defense budget. As for the equipment, much of it is unrelated to the dwindling war effort, as the Stimson Center pointed out recently.

The State Department has also discovered how to tap this magic money. For several years now, it has added an overseas contingency budget request to its own base operating and program budget. These days, that extra above-the-cap funding has come to nearly 15 percent of the international affairs budget of the U.S. government. Not only did the State Department ask for nearly $6 billion in OCO for fiscal 2015, but when it learned that the president was going to ask for more money for counterterrorism programs, it jumped on that bandwagon and piled another $2 billion on top of the first ask.

And all for unexpected war costs, you say? Not in this case, though there is a lot for Afghanistan development and relief in Syria. But it's also going to fund international broadcasting, State Department and USAID salaries, and conflict resolution and humanitarian efforts in other countries, like Somalia. These activities should just as easily have been part of the basic State/USAID budget request, but that OCO money just looks so tempting -- free, flexible, and unconstrained.

For both the Pentagon and the State Department, the OCO budgets generally have not gone through the same intense internal scrub as the base budgets. Moreover, when they hit Congress, the authorizing committees -- Armed Services and Foreign Relations/Affairs -- generally do not hold hearings on them, and the appropriators process these contingency budgets more quickly and with less scrutiny than the base budget requests, especially for the Defense Department.

This budgetary malpractice in the national security and foreign-policy agencies continues apace. Longtime defense watchers know that the roughly $9 billion to $11 billion a year the United States has been spending for more than a decade on national missile defense is not actually part of the Navy, Army, or Air Force budget.

Way back in the mid-1980s, when Ronald Reagan proposed "Star Wars," the services got nervous because the president was asking them to shoulder costs for a mission that didn't fit clearly with their sense of self. The Army fought on the ground with heavy equipment; the Navy ruled the seas with submarines, ships, and aircraft; the Air Force patrolled the skies, especially with fighter aircraft.

None of them really wanted to take on the budgetary requirements of the interception of Soviet missiles, not at the cost they could see coming. Missile defense would compete with the hardware they really wanted. The answer was to create a separate Pentagon agency (now the Missile Defense Agency) reporting directly to the secretary of defense, shovel the budget over there, and let the president protect it (or the secretary, on his behalf). Sure, they said, add it to the total defense budget -- but for God's sake, don't take anything out of the services' budgets to pay for it. And so it was done.

The missile defense precedent has stayed around for more than 30 years. Now, with the new budget caps in place, the Navy seems to have rediscovered that budgetary precedent and has encouraged Congress to act on it. The problem, of course, is the cost of the next-generation ballistic missile submarine, son of the Ohio-class submarine. This next-generation nuclear missile submarine could cost as much as $12.4 billion each, according to a report filed by the Pentagon to Congress, and the Navy wants to buy 12 of them.

The Navy, however, has decided it cannot afford that and all the regular ships it plans to buy. What's the answer? Create a separate fund for it, outside the Navy's budget, as a "strategic-level requirement," as one Navy official put it last year.

Congress looks willing to acquiesce; the House and Senate defense authorization bills each include a "national sea-based deterrence fund." Presumably, all the money appropriated in a given year for the new submarine would be put in this fund and the program would no longer compete with other Navy ships for funding. (But of course, the actual management of the purchase and the operation of the program would continue to be done by the Navy, keeping its back office alive.)

It is all creative accounting. And nobody has yet fessed up as to how this asset would actually be paid for. Nobody is going to trade off missile defense funds to buy subs, so that won't work. But the Navy will argue that its current shipbuilding account should not decline by the amount of funds that go into the new submarine account -- that should be the responsibility of the secretary of defense to make space for. Now, everybody seems to be betting that the White House and Congress can be convinced to raise the whole defense budget by the amount needed to buy the "boomers," as the Navy calls its nuclear missile submarines.

It doesn't make sense. Unlike missile defense, this is a service program with a long history. The Navy has bought boomers through its own shipbuilding budget ever since Adm. Hyman Rickover shoved them down the service's throat in the 1950s. But Rickover is dead and the Navy wants out, hoping to protect the funding for the programs that are at the core of the Navy's mission -- carriers, destroyers, and cruisers.

However you slice it, it's budgetary malpractice. Instead of setting priorities and making hard choices -- at the Pentagon, trimming the back office and fixing a broken and increasingly expensive pay and benefits system, or, at the State Department, making a better case for the base budget -- they're going after the magic money. At some point the budgetary magic wand is going to run out of power.

As budgets continue to decline, both the Pentagon and the State Department are going to have to learn how to fit real needs into real resources. And decline seems likely, as the White House and Congress remain deadlocked over a long-term budget deal. Year-by-year defense and foreign-policy budgets are slipping, and the OCO funds are starting to disappear as the Iraq/Afghanistan rationale goes away. In the long term, as the Center for Strategic and International Studies suggests, the fall in defense resources is likely to resemble the past -- a decline of about one-third -- until budgets settle. We are not there yet, but are clearly headed there.

But this year, like the last, the Pentagon, the State Department, the White House, and Congress are still willfully suspending disbelief, while being drawn to the magic show.

Photo by Win McNamee/Getty Images


@ISIS Is #Winning

Why is a barbaric medieval caliphate so much better at social media than Washington?

The Islamic State of Iraq and al-Sham is running a brilliantly effective social media campaign. With the group rebranded as the Islamic State (IS), its grisly messaging gets attention and discourages resistance to its military operations, both where it is fighting and among countries that might be inclined to intervene against it. After it took Mosul, IS streamed video of its men executing dozens of captured Iraqi soldiers -- which very likely helped encourage the choice of Iraqi security forces to quietly desert their posts. IS live-tweeted its military advance through Iraq, showcasing the bravery of its fighters and what little resistance Iraqi security forces offered. It threatened decapitations in London's Trafalgar Square. And as the United States was busy playing its World Cup round-of-sixteen game, IS tweeted a picture of a decapitated head with the caption that it was the Islamic State's ball.

The Islamic State is not making the same mistake that its al Qaeda predecessor did: choosing the "far enemy" instead of the "near enemy" of Middle Eastern governments. The radical Islamists now rampaging through Iraq are fighting on both fronts, taunting us for our indecision and unwillingness to fight them while gaining ground where conditions favor them in Syria and Iraq. They surely overestimate their strength should we choose to engage the battle, but their shrewd use of modern communications is helping prevent that from happening. The Islamist radical group's ability to craft sensational messages that support the objectives of its military campaign is superb: The Islamists' barbarity discourages enemies from being willing to fight them and reinforces the hesitance of Western publics to get involved in another Middle Eastern war. Sun Tzu would give them a standing ovation.

By contrast, the U.S. government's efforts at hashtag diplomacy are pathetic. Just take first lady Michelle Obama's maudlin-looking picture of her holding a handwritten sign reading "#BringBackOurGirls" -- a public appeal for someone, anyone, to do something to effect the release of the Nigerian students kidnapped by Boko Haram. As if she didn't sleep at night with the person who has the greatest ability of anyone in the world to free these captive girls. But once the picture fluttered out into the world, the first lady returned to other pursuits.

Offerings by State Department spokeswoman Jen Psaki have been particularly cringe-inducing, the worst being a smiling picture of her giving a thumbs-up with a sign reading, "#UnitedForUkraine," part of a tweet encouraging Russia to "live by the promise of hashtag." The effort was widely ridiculed, both by the Russian government and by Americans, and surely was dispiriting to the Ukrainians whom U.S. diplomacy is supposed to be supporting.

The Duffel Blog satirized the Obama administration's ineffectualness with an article highlighting "7 Hashtags The White House Used To Solve Major World Problems." It concludes with a picture of Secretary of State John Kerry looking forlorn with the hashtag #BringBackOurForeignPolicy (which includes a funny, gratuitous slap at Foreign Policy's paywall).

That the American government is seemingly incapable of using modern communications to real advantage is embarrassing. How is it that a society that has Madison Avenue salesmanship, Hollywood celebrity self-promotion, blockbuster movie special effects, Silicon Valley tech innovation, and a permanent political campaign is so abysmal at the fine art of visual telegraphic summation in support of its objectives?

I think the answer is twofold. First, the form itself advantages offense. Second, U.S. efforts are not supporting a broader strategy.

Hashtag diplomacy as a medium favors both the quick hit and the use of ridicule. Sensational pictures and statements are what gets noticed. Status quo institutions, like the U.S. government, are at a disadvantage competing against the producers of spectacle. Even using the Islamic State's depredations against them (such as showing evidence of the group's violence against civilians) reinforces IS's message not to mess with them. The benefits of law and order, the satisfaction of representative government, and the blessings of liberty make for boring footage by comparison -- as any TV news outlet could attest.

I don't have a Twitter account myself [Ed. -- we're working on that], but even I know that it's an art form best suited to asymmetrical warfare. Just as insurgency and terrorist attacks are means by which the weak can dent the strong, social media is a means by which the powerless can dent the powerful. And nowhere is this more effective than in highlighting hypocrisy of public figures and government policies.

But messaging campaigns generally get traction when they reinforce an existing, even if unformed, belief. Take U.S. Men's National Team goalie Tim Howard's amazing performance in the World Cup loss to Belgium, which inspired #ThingsTimHowardCouldSave -- a spoof on the many calamities he might have prevented (like the meteor that killed the dinosaurs). Likewise, some 22 years before, the viral picture of President George H.W. Bush looking incredulous at a checkout scanner reinforced the sense of his elitism, even if his White House spokesman later assured the assembled press that the president had indeed been to a grocery store before.

The Islamic State's messaging reinforces the existing belief of the group's murderous ruthlessness, but it is also linked to a broader strategy: keeping the United States from intervening. The group's messaging reminds Americans of the complexity and violence of regional, state, and religious relationships in the Middle East and reinforces the sentiment of not wanting to get involved. That's why it's effective.

But Washington's political messaging is a substitute for strategy, not a line of operations within one. The first lady appealing for attention to Boko Haram's kidnappings actually helps Nigeria's Islamist radicals, giving the group notoriety -- while reinforcing America's powerlessness to do anything about it. Moreover, it's adding insult to injury for the suffering people who've been terrorized by Boko Haram, conveying spectacularly that we are only pretending to do something, not actually doing anything.

America's diplomatic messaging is much better than the politicians' adolescent solipsism. The State Department's Think AgainTurn Away campaign responds with specific rebuttals of terrorist tweets. Think Again has identified the weaknesses of the Islamic State's ideology -- its indiscriminate slaughter of innocents -- and patiently turns those back on IS's supporters. It is the latest iteration of the State Department's effort to win the war of ideas, and it's a reasonably good one; but it'll never be as interesting as the message it's designed to counter. America's argument is strong in the long run, but social media is optimized to the short term.

The U.S. government will never be good at social media campaigns unless it thinks about messaging as an integral part of a larger strategy. So first of all, we need a strategy. And then we need people who can clarify and condense its purposes and creatively take opportunities to reinforce them with social media. Those are not signature strengths of the American government. As a political culture, America seems incapable of strategic messaging. All the wistful longing of government officials for everyone to get on board their program is never going to succeed in a society as diverse and communicative as America's. It's just not who we are -- so it's a terrible basis on which to build a strategy.

Instead of trying to control the message, the government should stop struggling against who we are as a political culture and embrace it. The nature of soft power is that it is diffuse and difficult to direct. It will be hard to accept, but perhaps the best messenger for our message is not our government. Washington would be more successful in social media by removing itself from the center of it -- shifting the focus to the cacophony of voices from across America's vibrant civil society rather than trying to control the space itself. The CIA is unlikely to be competitive in this arena, and is that really what the agency responsible for collection and assessment of vital intelligence should be spending its effort on? Simply put, the U.S. government affords too much import to social media presence.

The government may one day become brilliant at hashtag diplomacy, capable of beating IS to the punch. But that would seem unlikely given the structural advantages the medium gives to sensationalism and attack on established positions. The strategic clarity demonstrated by IS will likely be elusive for a society and a government that take time to unite and have many different policy debates occurring simultaneously. Our best bet is to rely less on government messaging and instead bombard our adversaries with the spectrum of American activism, letting organizations like Mercy Corps or Spirit of America that are forces for good in the world be the emissaries of our policies. After all, it was alert citizens who noticed and publicized the Islamic State "caliph" Abu Bakr al-Baghdadi wearing an expensive watch.

If only Tim Howard could save Washington from itself.

Image by Ed Johnson/ForeignPolicy