What’s all the fuss over the Air Force’s ‘pass-through’ funding?

Why are some members of Congress grousing about the Department of the Air Force’s budget and its so-called “pass-through” funding? It’s because they are questioning a Cold War-era practice that misrepresents the Air Force’s annual budget as to the total amount of taxpayer dollars it receives for its now two armed services, the U.S. Air Force and the U.S. Space Force.  It’s time to end this cloudy budgeting practice and restore a clear view to Congress and the American public of the Department of Defense’s (DOD) funding allocation among the military services.

For decades, a significant portion of the Department of the Air Force’s budget has been appropriated as a “pass-through” — that is, the money is passed through the Air Force to be spent by other government agencies. The Air Force has no control over these funds to fulfill its “organize, train and equip” military responsibilities, even though the money is counted toward its total annual budget. This means, according to Rep. Don Bacon (R-Neb.), that this portion of their budget “neither implements nor advances the force design and operational readiness needs of our Air and Space Forces.” In the Air Force’s fiscal year 2022 budget request, this pass-through amounts to $39.7 billion, or about 18 percent of the $212.8 billion budget request. In some past years, the pass-through amount was as high as 23 percent of the Air Force’s total annual budget.

Yet, when the DOD releases its budget each year, the effect of this pass-through funding is not readily apparent. According to DOD’s fiscal year 2022 budget briefing, the Department of the Air Force’s budget appears as the highest of all the military departments — but, in fact, the total spendable budget available for use by the Secretary of the Air Force is actually much less, at $173.1 billion. This prompted Sen. Kevin Cramer (R-N.D.) to ask Acting Air Force Secretary John Roth at a recent hearing, “Can we do something about a more transparent budgeting system that doesn’t give this view that the Air Force is getting a whole bunch of money that they really don’t control?”

Why does this matter? When members of Congress, the DOD, the military services, and national security experts debate the weighty issues of how best to fund our various national defense capabilities to preserve America’s strategic interests and defend our nation, they must have an accurate understanding of the starting points for the argument. Today they do not, because of this pass-through. 

Blake Herzinger, a fellow at the Pacific Forum, recently published an article in War on the Rocks making a case for increased Navy funding to build more ships. He used a chart to demonstrate how he would redistribute funding between the military services that shows the Air Force receiving more money than the Department of the Navy and the Army. However, if the pass-through funding is removed from the Air Force line in the chart, the truth is the Air Force is getting less money than either the Army or the Navy. This is a consequence that Herzinger likely did not intend, given the crucial importance of air and space power to an American victory in a major conflict with a near-peer military force.

Why hasn’t this pass-through issue been fixed? When responding to Sen. Cramer’s question on transparency at the hearing, Acting Secretary Roth explained, “There’s classified reasons why that exists. And so we need to make sure that we don’t uncover things that ought not be uncovered.” But when Cramer asked how much of the Air Force’s $212.8 billion budget the secretary actually controlled, Roth responded, “One hundred seventy-four billion dollars. Thirty-nine billion dollars is what’s been referred to frequently as the ‘pass-through.’” While there are certainly valid national security reasons to not reveal specific budget numbers from which our enemies may be able to infer capabilities, the total amount of the pass-through is obviously not classified since it was mentioned in testimony in a public hearing.

The most transparent remedy for this issue is to move all military service pass-throughs to the defense-wide budget lines. The pass-through funding still would be accounted for in the total DOD budget, but would finally enable a clear, accurate view of the true funding each military service receives, leveling the playing field for important national debates on maximizing American military capabilities.

Matt Donovan is the director of the Mitchell Institute Spacepower Advantage Research Center.  He is the former Under Secretary of Defense for Personnel and Readiness, and former Under Secretary of the Air Force.