The Sword and the Purse: the why and how of congressional delegation of budget authority to DoD.

Commander Philip J. Candreva

SC, USN, Lecturer for the Graduate School of Business & Public Policy

Naval Postgraduate School, Monterey, California 

"For decades, Presidential administrations have sought to wrap their finger around the purse strings, push away the Congress, and ignore the Constitution ... it does not matter what administration it is. It does not matter the political party of the president. What matters in nothing more than raw power. Congress has it. The executive branch wants it."

--U.S. Congress. Senate. Protecting the Constitutional Authorities of Congress, 108th Congress, 1st Session, 149 Cong Rec S5397, April 11, 2003

With these words from Senator Robert Byrd (D-WV), Commander Philip J. Candreva opened his story about the delegation of budget authority as a tool for the legislative branch to preserve civilian control of the military. CDR Candreva is a lecturer in financial management at the Naval Postgraduate School. His presentation was based on an article he co-authored with L. R. Jones that will appear in the Spring 2006 issue of the Armed Forces & Society journal.

CDR Candreva suggests that the Defense Emergency Response Fund (DERF) may serve as a case in examining civil-military relations, the budgetary relationship between the Congress and the Department of Defense (DoD), and, ultimately, the dynamics of constitutional power.

Immediately following the attacks on the World Trade Center and the Pentagon in September 2001--and lasting until October 2003--Congress delegated budget authority to DoD with unprecedented flexibility. The DERF was used by Congress "to delegate relatively unfettered spending authority" in order to rebuild New York City and to prosecute the immediate response to the terrorist attacks. (1) This was a significant departure from business as usual.

Rather, Congress generally follows familiar patterns of robust oversight and micromanagement of funding for military action. (2) As the initial shock of the attacks subsided, Congress became more concerned about the direction of the Bush administration's anti-terrorism initiatives (especially the war in Iraq). In addition, Congress was receiving Government Accountability Office and media reports of accounting mismanagement for contingency operations. Finally, competing issues began jockeying for "air time" in the broader public interest and for ever-dwindling scarce resources. As a consequence, Congress began serially withdrawing much of the delegation it had granted to DoD and eventually dismantled the entire DERF appropriation. CDR Candreva's presentation explored the conditions that fostered this series of events.

Civil-Military Relations

CDR Candreva began his discussion of civil-military relations by pointing out that a major dilemma of the modern state is fielding a military force that is strong enough to deter and defeat enemies of the state but, at the same time, that is subordinate enough so as not to threaten the state's own survival. Centralization of power in a civilian-led DoD and a professional officer corps is historically cited as key to ensuring balance between military power and legitimate civilian control. (2)

CDR Candreva reported that the recent trend in theories about civil-military relations reflects a more complex view. This perspective emphasizes the role of the legislation and holds that control of the military is not necessarily an executive function, but a democratic one. This view suggests that civilian control of the Armed Forces is exercised by Congress in "policy setting, oversight, and resource allocation decisions." (2) As elected representatives of the people, Congress introduces a pluralistic calculus and democratic values into the pattern of civilian control of the military.

A more pronounced role for Congress in military control sets the stage for friction between the executive and the legislative branches of the U.S. federal government. The constitutional underpinnings of congressional authority have popularly been characterized as "the Sword and the Purse."

Sword. U.S. Constitution: Article 1, Section 8: To raise and support armies ... To provide and maintain a Navy; To make Rules for the Government and regulation of the land and naval Forces.

Purse. U.S. Constitution: Article 1, Section 9: No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.

In his next workshop theme, CDR Candreva focused on the "power of the purse" to control the military, as well as the forms that control may take.

Delegation of Resource Management Authority by Congress to DoD

CDR Candreva situated the case of DERF in the context of congressional delegation of budget authority to the Armed Forces. Prior to the 1960s, the nature of world conflicts and the American public's shared perception of the threat they posed were such that defense programs and budget appropriations handily were approved. Divisions over policy and funding for the war in Vietnam, however, gave rise to greater restrictions on the use of funding for military action. (2) Since then, budget appropriations have evolved to become report cards from Congress on DoD's policy preferences.

DoD, the largest of the executive branch departments and agencies, has long attempted to secure more resource decision flexibility from Congress. (2) CDR Candreva reviewed a number of examples of initiatives from the 1960s to the present that sought "greater autonomy in budget execution." However, virtually every DoD attempt was stymied (2) because Congress is motivated to micromanage DoD for such reasons as advocacy of constituent interests; pure partisanship; responses to perceived mismanagement; influencing public policy; and even duty, honor, and patriotism. (2)

The "why" of congressional micromanagement cannot be discussed without the "how." CDR Candreva pointed out that opening up an appropriation bill to any page will quickly illustrate the myriad mechanisms that Congress employs to maintain accountability. The tools at Congress' disposal include line item adjustments to the budget; earmarked funds; reprogramming and transfer restrictions; formal reviews, audits, investigations, and hearings; program execution requirements; reporting requirements; informal communication between DoD and congressional staffs; and restriction of access to funds pending compliance with some other requirement. (1)

This portion of the presentation, then, firmly established that Congress has the means and motive, as well as the authority, "to actively manage defense policy and budgets." (2) CDR Candreva then turned his attention to the case of the DERF and why it clearly can be seen as a historical anomaly.

The Case of the DERF

CDR Candreva suggested that the attacks on September 11, 2001, were such a powerful shock to the nation's fabric that the political incentive structure shifted as a unifying purpose took hold. As a result, normal wrangling that is grist for the mill of political debate all but disappeared. The nation had entered uncharted waters, and the need to right the crisis at hand required timely action--not congressional micromanagement. CDR Candreva suggested that Congress essentially had no incentive for denying the Bush administration's plans for responding to the attacks. Furthermore, the existing DERF appropriation readily provided the means of delegating the flexibility that DoD needed in a time of great crisis.

The DERF was created in the fiscal year (FY) 1990 Defense Appropriation Act and originally was conceived as a transfer account to reimburse defense appropriations for DoD support to natural disasters or other domestic emergencies. (1) Operationally, the advantage of DERF for the field level was its lack of appropriation restrictions such as obligation rate goals, funds expiration pressures, and investment thresholds. (2)

Of note, DERF initially was not intended for overseas military activities, since they traditionally were funded within the top line or through emergency supplemental appropriations. In the aftermath of September 11, however, DERF was used to convey enormous discretionary budget flexibility to DoD for urgent, yet still ill-defined requirements associated with what subsequently would be called the Global War on Terrorism (GWOT).

CDR Candreva then described the course of events in the budgetary process following the events of September 11, 2001. Figure 1 illustrates the DERF timeline. Included in President George W. Bush's FY 2001 supplemental appropriation request was $20 billion to cover the costs of the immediate response to the terrorist attacks. With less than three weeks remaining in the fiscal year, and with most of the funds for that fiscal year already depleted, Congress quickly appropriated a staggering $40 billion as an emergency response fund at the Executive Office of the President. (2) A large portion of these funds, which were provided with virtually no purpose or time period associated with them, became DERF when transferred from the emergency response fund to the DoD.

[FIGURE 1 OMITTED]

As a concession to a few dissenting voices in Congress, some minimal constraints (for example, reporting requirements and funding release triggers) were placed on the execution of this $40 billion. Without question, though, the view of Congress was that response and recovery would be costly and that the nation needed healing through unity and the support of the President.

A few months later, the FY 2002 Defense Appropriation Act provided an additional $3 billion for emergency recovery and response; however, the first signs of unease about the extent of discretionary authority given to DoD began appearing. The FY 2002 funding went directly into DERF and was further allocated into specific spending categories. In addition, several earmarks and transfer restrictions were levied on the funds. (2)

Emboldened by the discretionary budget authority it was granted, the Administration included a $19 billion request for DERF in the FY 2003 budget, of which $10 billion was identified for pure wartime contingency unknowns. (2) Including DERF in the budget was an unusual move since DoD, as a matter of policy, does not budget for contingency operations. A few weeks later, President Bush submitted an FY 2002 supplemental appropriation request seeking another $27 billion, $11 billion of which was identified as DERE. (2)

The Congress' appetite for supplemental requests was waning and the Administration's budget autonomy started to erode. Though the final version of the FY 2002 supplemental totaled $29 billion, with $12 billion for DERF, many concerns emerged about material weaknesses in cost accounting, whether all costs characterized as contingency operations were valid, and if the separation of powers doctrine was being violated. (2)

Also, there was a significant tightening of controls: DERF authority was again allocated into specific spending categories, funds for military construction projects in seven states were included, and non-defense special-interest items were added as riders to the appropriations bill. (2) Even the unspecified $10 billion DERF wartime contingency request in the FY 2003 budget request had to be amended to reflect specific spending categories.

With the GWOT expanding into new areas, including a possible U.S.-led invasion of Iraq, the Bush administration made its boldest request with the FY 2003 supplemental appropriation request. The DoD portion of the request was $ 63 billion, of which $ 60 billion was in DERF. (2) By this time, however, a host of factors conspired to create a fierce backlash from Congress against the President's budget proposal. Specifically, the inability of DoD to provide fully accurate accounting of the use of DERF funds, media criticism of the appropriateness of invading Iraq, and the sheer brazenness of requesting such a large supplemental with such broad discretionary authority produced a resurgence of congressional micromanagement. (2)

Although DoD received the $63 billion it requested, the funding did not come with the flexibility previously available through DERF. Instead, Congress created the Iraqi Freedom Fund (IFF) and provided only about $10 billion of flexible budget authority within it. The remainder of the $63 billion was earmarked for or subject to much tighter restrictions. Moreover, Congress provided no funding for DERF, and the appropriations act stipulated that all remaining DERF balances must be transferred to the IFF as of October 31, 2003. (1)

DERF would continue to be scrutinized long after it ceased to exist as Congress and the media became increasingly suspicious that DERF funds had been used to prepare for the invasion of Iraq. (2) By October 2003, the political framework had regained its footing and the incentives returned for Congress to curb the authority given to the Bush administration and DoD. Without question, Congress again was wielding its power of the purse, and the Administration faced tighter controls and the need to maintain greater accountability over GWOT funding.

Conclusion

DERF provides an example of a shift in constitutional power from the legislative branch to the executive branch due to the exigency of the situation at hand. Unprecedented budget authority was granted to DoD in the face of extraordinary circumstances. Over time, as Congress and the public became more dubious of the Adminstration's execution of the GWOT and as the national security emergency became subsumed by broader public interests, congressional behavior regressed to the mean, and the status quo returned. (2) Delegations of authority to the DoD were reduced, micromanagement re-emerged, and the system corrected itself.

The nature of civilian control of the military has shifted and become more complex as members of Congress, acting as the elected representatives of the people, have assumed greater oversight, particularly through the budget process. Competing with other interests in the public policy "trade space" has given rise to a military that is more democratic and accountable. CDR Candreva posits that the rise and fall of DERF "demonstrates the evident will of Congress to continue to intervene in civil-military relations, particularly when it believes that DoD has overreached in its request for authority." (2)

CDR Candreva delivered an intelligent, entertaining, and compelling account of his research on the delegation of budget authority and what it means with respect to civil-military relations. The case analysis of DERF provided a great opportunity to study the dynamics of constitutional power and made a major contribution to understanding why Congress seeks control over the military and why some believe that it is desirable that Congress do so.

If you would like more information, you may contact CDR Candreva at [phone] or DSN 756-2884 or via e-mail at [e-mail].

References

(1) Candreva, Philip J. The Sword and the Purse: The Why and How of Congressional Delegation of Budget Authority to DoD. Presentation prepared for the American Society of Military Comptrollers (ASMC) Professional Development Institute, Salt Lake City, Utah, June 1-3, 2005.

(2) Candreva, Philip J. and L.R. Jones. Congressional Control over Defense and Delegation of Authority in the Case of the Defense Emergency Response Fund. Forthcoming in Armed Forces & Society. Anticipated publication: Spring 2006 (Vol. 33, No.2).

Reported by Paul Schmidt 

Mr. Paul Schmidt is financial specialist in the Air Force Research Lab, Sensors Directorate, Air Force Material Command. A Certified Defense Financial Manager, he is currently pursuing APDP certification. Mr. Schmidt is a member of ASMC's Aviation Chapter.