The DOD is close to exhausting money allocated by Congress to replace equipment sent by the department to Ukraine to help the country defend itself against the recent Russian invasion, and will need lawmakers to pass a supplemental funding bill, said Mike McCord, the Pentagon's chief financial officer, at a hearing of the House Budget Committee.
"As of this week, we will pretty much have used all of that 'drawdown' and Ukraine security initiative funding authority; we anticipate sending an additional supplemental to Congress this week to continue to message that we are in this with the Ukrainians … The fight's ongoing and so whatever we can get them in the very near future, it could be hugely important to them," he said.
The DOD may also seek to add additional Ukraine assistance in the 2023 budget after it reviews its approach toward European operations this summer, and the department also expects to need an additional $1.8 billion in 2022 to purchase fuel due to a price spike driven largely by the Ukraine invasion, according to McCord.
"Fuel is our most volatile and easily recognizable price increase when prices change," he said.
While the DOD has some fuel contracts with set pricing that is helping it absorb some price increases, those only go so far, and without supplemental funding it will have to "reprogram" money from other accounts, McCord said.
Lawmakers had already added $1.5 billion for additional fuel costs on top of the department's initial request when it passed omnibus 2022 spending legislation in March, amid inflation that is at its highest level in four decades, currently 8.5% under the commonly used consumer price index, or CPI — although the DOD uses a "chain-weighted" CPI that better fits its specific spending, McCord noted.
With inflation surging, McCord defended the 2.2% inflation assumption that had gone into the DOD's $773 billion budget request for fiscal year 2023, which is a 4% increase on the 2022 enacted budget.
Republican lawmakers, and some more hawkish Democrats, have criticized the DOD's 2023 proposal as effectively flat at best in real terms due to inflation, when they had called for an increase of 3% to 5% above inflation.
The assumption in the DOD's budget request was based on the best information available to it and the White House Office of Management and Budget at the time it finished putting together its proposal late in 2021, McCord said. And as prices continue to rise, the DOD is "prepared to work with Congress to find the best solutions" for 2023 budget legislation, he said.
McCord also defended a number of the DOD's proposed spending priorities, such as a request for $34 million to address extremism in the military and, most notably, the department's proposal for $3.1 billion for programs related to climate change, which came in for repeated criticism from Republicans as a "woke" attempt to help fulfill "a Green New Deal agenda."
While conflict rages in Ukraine and security threats rise, "the President wants to spend finite taxpayer resources for butterflies and snakes," Republican ranking member Rep. Jason Smith, R-Mo., said.
But the proposed climate change-related programs were largely things that the DOD was going to invest in anyway, such as modernizing its facilities while making sure they are more resilient, McCord said. DOD bases have already suffered hundreds of millions of dollars in damages in recent years due to extreme weather events, the comptroller noted.
New vehicles, another focus of that proposed spending, is also an area where the DOD would make investments anyway, and increased spending on electric vehicles tracks "where the market is going," at least outside of tactical combat vehicles, McCord argued. Effectiveness continues to be the primary metric the DOD uses when assessing which vehicles to buy, he said.
"We don't feel that it's an either/or that is taking away from things that we would otherwise need," McCord said. "We're always going to invest in vehicles, always going to invest in our facilities."
--Editing by Emily Kokoll.
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