Gallagher Introduces Bill to Save Billions of Disappearing Defense Dollars

In a new Wall Street Journal op-ed, Rep. Mike Gallagher (R-WI) announced he introduced new legislation that would address a significant issue in the defense appropriations and contracting processes that has resulted in $125 billion in previously appropriated funds leaving the Department of Defense over the last decade instead of supplying our military. The Pentagon will lose an additional $11 billion if this issue is not addressed by midnight on October 1, 2023. 

In part, Gallagher wrote, "Given the Air Force secretary’s recent warning that China is preparing for war with America, Congress must fight to ensure every dollar already appropriated to the Pentagon is spent smartly. We can’t waste the next two years waiting for a new president to fix this problem magically. Even as we fight over future defense spending, let’s use past appropriations to solve our most pressing defense problems."

The Problem: 

When the clock strikes midnight on October 1, 2023, nearly $11 billion dollars in previously appropriated defense funds will cancel and be rerouted to the U.S. Treasury. This is because when defense appropriations are not spent by the end of the fiscal year, they expire. These funds then sit in abeyance for five years, where they can be used to pay old or unexpected bills, but the money is only occasionally used. When the clock strikes midnight on the last day of the abeyance period, these Cinderella funds cancel and return to the Treasury, where they then feed the mandatory spending welfare state and trigger new appropriations to be spent for other purposes. This means billions of dollars are stripped from the Department of Defense that could otherwise be used to enhance deterrence in the Indo-Pacific.

The Solution: 

Gallagher's bill, the Funding Pacific Readiness and Enhancing Stockpiles (FIRES) Act, would reroute the canceling funds into a new account, the FIRES Fund, preventing their cancelation and extending their period of availability by 10 years. The bill identifies three specific uses for dollars sitting in the FIRES Fund: 

• To support the Indo-Pacific commander’s Pacific Deterrence Initiative,
• To achieve Congress’s 355-ship statutory requirement, and
• To build operational infrastructure for force mobility in the Indo-Pacific.

Other federal agencies already have similar authorities to recycle canceling funds. FIRES gives the military this authority—parity—and improves oversight of these dollars by requiring congressional notifications and quarterly reporting on exactly how the money is spent. It also requires a minimum of 10% of the reactivated funds to be invested in nontraditional, nonprime defense companies.

Click HERE for bill text. 

The Op-Ed: 

At midnight Saturday, absent a continuing-resolution agreement, the U.S. government will shut down. Another dangerous event is set to occur at the same time: Nearly $11 billion will disappear from the Defense Department’s hands. 

This isn’t a new problem. In the last decade, more than 125 billion defense dollars have evaporated as a result of outdated purchasing processes that aren’t in sync with appropriations timelines. If defense appropriations aren’t spent by the end of the fiscal year, they expire. The money is held in abeyance for five years, where it can be used to pay old or unexpected bills but is rarely used. On the last day of the abeyance period, the money goes back to the Treasury, where it feeds the mandatory-spending welfare state. 

As our military sends badly needed dollars back to the Treasury, our greatest adversary, the Chinese Communist Party, is engaged in the largest sustained peacetime military buildup since World War II. Meanwhile, the Pentagon orders fewer long-range fires and ship-killing missiles than can be produced, lacks the capacity to surge production, and is dealing with a $19 billion backlog of foreign military sales items for Taiwan. The military can’t afford to lose nearly $11 billion in buying power. That is why I introduced the Funding Indo-Pacific Readiness and Enhancing Stockpiles Act, Fires for short. It would reroute these canceling funds to enhance near-term deterrence vis-à-vis China and prevent their misuse for nondefense purposes. But it must pass by 11:59 p.m. Saturday.

To defibrillate a sclerotic munitions and shipbuilding industrial base, Fires would establish a fund, unfreeze these dollars, and reactivate them in an account with only three specific purposes for which the defense secretary can use them: to support the Indo-Pacific commander’s Pacific Deterrence Initiative, with the goal of stockpiling long-range precision fires capable of sinking Chinese ships; to achieve Congress’s 355-ship statutory requirement; and to build operational infrastructure for force mobility in the Indo-Pacific. 

Other federal agencies already have similar authorities to recycle canceling funds. To mitigate worries of weakened oversight, Fires would require congressional notifications and quarterly reporting on exactly how the money is spent. And to ensure that more than just a handful of big defense companies benefit, Fires requires a minimum of 10% of the reactivated funds to be invested in nontraditional, nonprime defense companies.

Given the Air Force secretary’s recent warning that China is preparing for war with America, Congress must fight to ensure every dollar already appropriated to the Pentagon is spent smartly. We can’t waste the next two years waiting for a new president to fix this problem magically. Even as we fight over future defense spending, let’s use past appropriations to solve our most pressing defense problems.

Click HERE to read the op-ed.