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Pentagon could face cash crunch Oct. 1

In a ritual that is not uncommon in the Washington budget cycle, the Defense Department could face problems this fall paying for continued combat operations in Iraq and Afghanistan.

A combination of problems — including the congressional budget process and the Pentagon’s inability to produce a detailed war budget because so much about near-term troop levels and operational cuts is unknown — could lead the war funding to run out on Oct. 1 or shortly thereafter, said Rep. John Murtha, D-Pa., the House defense appropriations subcommittee chairman.

“If they don’t run out of money on Oct. 1, they certainly will within a couple of weeks,” Murtha said Tuesday.

If that happens, what would come next is not at all certain. Murtha said he expects the services to face severe cash flow problems for the first few weeks of the new fiscal year, which begins Oct. 1, until Congress and the Bush administration agree on what to do. Murtha said he will suggest approving a short-term war funding bill, covering two or three months of operations, until a larger agreement can be reached.

The problem, according to Murtha, is that Congress appears extremely unlikely to complete the 2008 defense appropriations bill by Oct. 1, the start of the fiscal year, which will leave the Pentagon operating with temporary spending that leaves no cushion to cover war-related expenses. The Senate Appropriations Committee will not even begin writing its version of the bill until after Labor Day.

Temporary spending bills, known as continuing resolutions, are nothing new for the federal government or the Defense Department. What is new is that for the first time since the U.S. began combat operations in Iraq, there is no emergency war funding bill to cover the military’s costs. Congress demanded that the Defense Department include war-related costs in the regular defense budget, not as a separate item.

Money won’t automatically run out on Oct. 1, as the Pentagon has authority to shift, or reprogram, up to $5 billion from other accounts to cover expenses. However, with the cost of Iraq and Afghanistan operations running at $10 billion to $12 billion a month — depending on who’s counting — $5 billion won’t last long.

Deputy Defense Secretary Gordon England mentioned the Oct. 1 financial problem Tuesday when he appeared before the House Budget Committee to discuss the war budget. “We have no funding past Oct. 1 for the surge,” England said. “We did not know what the level of activity would be past Oct. 1, so we have nothing in the budget.”

When the Defense Department submitted its 2008 budget plan to Congress in February, it asked for $147 billion for Iraq, Afghanistan and contingency operations. Murtha said that based on discussions with military leaders and combatant commanders, he expects the Pentagon to seek another $30 billion to $40 billion.

But Murtha is far from convinced the money is really needed.

“Their spending is out of control,” he said of senior administration and defense officials.

England said a detailed budget for Iraq has not been completed.

“We will delay providing the budget amendment, frankly, as long as we can until we get more clarity in … exactly what the commitment will be in Iraq in terms of those added costs,” he told the budget committee.