Defense Contingency Budgeting in the Post-Cold-War World

Abstract

One of the major government reform initiatives in the industrialized democracies in the 1990s has been the new public management. In the United States, the initiative gained considerable attention when a report issued by a commission chaired by Vice President Al Gore endorsed the development of performance-based measures in government. As prescribed by the National Performance Review (NPR, 1993), agencies should be freed from the red tape of detailed specifications and by Congress. Instead, agencies should be given goals and performance objectives (Thompson, 1991; Meyer and Khademian, 1996). Among the prescriptions of the National Performance Review are recommendations to implement mechanisms that would provide greater flexibility in budgeting processes, particularly in the area of national security. Ex post contingency budget execution in defense already provides considerable flexibility for defense spenders--as we illustrate by a case study of the financing of United States involvement in Bosnia. Yet, the spending discretion that has sustained U.S peace-keeping in Bosnia is quite different from, and in some respects antithetical to, the flexibility championed by advocates of the new public management. The message that this article conveys, based on our analysis of the Bosnia experience, is that neither the current system for funding defense contingencies nor the proposals of the new public management achieve the goals of providing accountable and effective mechanisms for funding these operations. Thus we offer modest proposals for reform that may make changes akin to those of the new public management compatible with traditional forms of budget execution. If implemented, the new mechanisms could permit the executive and legislative branches to focus on the policy questions inherent in post-cold-war military contingencies. At present the minutiae of the budget process serves as a lightning rod to prompt debate and diverts attention from a priori policy questions. The proposals outlined would reverse this situation. The New Public Management and Budgeting in Defense One of most provocative applications of the new public management to defense is by Thompson and Jones (1994). Instead of micromanagement of the defense budget through line items in appropriations, restrictive appropriations, and endless reporting, advocates of the new public management urge Congress to return to its classic role as the deliberator of important policy issues related to spending, programs, and strategy. Mission budgeting is central to the reforms suggested by Thompson and Jones. As part of the broader decentralization of the Pentagon, where performance measures replace detailed prescriptions and rigid compartmentalization of budgets and spending, mission budgeting would, they concede, require significant changes in the law and practice of national security appropriations. Under mission budgeting, when the Department of Defense appropriations are enacted by Congress, obligation authority would be given to mission centers, or joint operational commands, rather than to the military services. The accounts funded would thus be mission accounts rather than department accounts. To make this change more than merely cosmetic, however, Thompson and Jones advocate implementing the recommendations of the National Performance Review to increase the Pentagon's discretion to transfer funds between accounts and across fiscal years. Thus, congressional budgeting for defense should be, in their words, permissive, continuous, and selective [and] focus on all of the cash that ensue from Congress's programmatic choices ... new obligational authority should be expressed in terms of the discounted present values of those cash flows (Thopmson and Jones, 1994, 233). They would de-emphasize the annual budget resolution, do away with the president's budget, and focus attention on the decision to go ahead with a program or activity. …