No end to US's war budget woes By David Isenberg AsiaTimes Online Oct 30, 2007
WASHINGTON - To paraphrase an old US Army song (The Caissons Go Rolling Along), the costs of the overall US global "war on terror", including, but not limited to the Iraq war, just keep rolling along and piling up. The title "The Growing Budgetary Costs of the Iraq War" of an October 24 House Budget Committee hearing succinctly summed it up. During a nearly three-hour hearing a trio of witnesses provided detailed testimony. Peter Orszag, director of the Congressional Budget Office (CBO) testified that the CBO had totaled the funding provided through fiscal year 2007 for military and diplomatic operations in Iraq and Afghanistan and other activities associated with the "war on terrorism", as well as for related costs incurred by the Department of Veterans Affairs (VA) for medical care, disability compensation, and survivors' benefits. In addition to totaling the funding provided to date, CBO has projected the total cost over the next 10 years of funding operations in support of the "war on terrorism" under two scenarios specified by the committee chairman. Including both funding provided through 2007 and projected funding under the two illustrative scenarios, total spending for US operations in Iraq and Afghanistan and other activities related to the "war on terrorism" will amount to between US$1.2 trillion and $1.7 trillion for fiscal years 2001 through 2017. In the first scenario, the number of personnel deployed on the ground for the ongoing effort would be reduced from an average of about 200,000 in fiscal year 2008 to 30,000 by the beginning of fiscal year 2010 and then remain at that level through 2017. CBO estimates that costs to the US government under this scenario will total $570 billion over the 2008-2017 period. In the second scenario, the number of personnel deployed to Iraq and other locations associated with the "war on terrorism" would decline more gradually, from an average of about 200,000 in fiscal year 2008 to 75,000 by the start of fiscal year 2013 and then remain at that level through 2017. The CBO estimates that costs to the government under this scenario would total $1,055 billion, just over a trillion dollars, over the 2008-2017 period. Of course, one third or one half of the above total has already been spent, according to Orszag. He said that from September 2001 through the end of fiscal year 2007, Congress appropriated $602 billion for military operations in Iraq and Afghanistan and other activities associated with the terrorism campaign. That does not include an estimated $2 billion has been spent by the VA for war-related benefits. According to CBO's estimates, the majority of the $604 billion appropriated to date - about $533 billion - has been provided to the Pentagon for US military operations and other defense activities. Such war-related appropriations accounted for more than 20% of the department's budget in 2006 and more than a quarter of its budget in 2007. The Department of Defense (DOD) currently is obligating an average of almost $11 billion a month for expenses associated with its operations in Iraq and Afghanistan and for other activities related to the "war on terrorism". Most of that amount (more than $9 billion per month) is related to operations in Iraq. As an example of how hard it is to figure out costs, the next witness, Amy Belasco of the Congressional Research Service, had a slightly higher figure than the CBO. She said that CRS estimated that Congress had provided about $615 billion to date for Iraq, Afghanistan and enhanced security at defense bases. That figure, does not reflect the administration's most recent request. On October 22, the administration submitted an additional request which includes an additional $43.6 billion for Iraq and Afghanistan. If Congress chooses to provide those funds, the CRS estimates that total war costs will reach about $803 billion, including some $192 billion in FY2008. To help put current costs in historical perspective, the CRS noted that the cost of all DOD funds appropriated thus far for the three "war on terror" operations - Iraq, Afghanistan and enhanced security - now equals about 90% of the 12-year war in Vietnam ($670 billion) and about double the cost of the Korean war ($295 billion). Put another way, the cost of all three operations thus far is now over six times as large as the cost of the first Gulf War ($94 billion). Comparisons to that war are problematic, however, because the United States only paid some $7 billion, or about 7% of the cost of that war, because its allies, principally Kuwait and Saudi Arabia, reimbursed the United States for most of the cost. The Iraq war itself has thus far cost about 65% as much as Vietnam. On the other hand, Iraq has cost about 50% more than Korea to date and about four and a half times more than the costs incurred for the first Gulf War. Interestingly, according to Belasco, the current "burn rates" or monthly obligations, such as the nearly $11 billion a month given by the CBO, do not reflect overall costs. The DOD's war cost reporting system captures the amounts that have been obligated for Iraq, for Afghanistan and for enhanced security and hence shows how funds have been allocated after the fact or once contracts or purchase orders are signed and military or civilian personnel are paid. The DOD's figures do not reflect the total amounts that Congress has appropriated to date, which includes funds that remain to be obligated in later years. Nor does the DOD's reporting system capture some intelligence funding that the DOD does not administer and may not include other war funds appropriated. Nor does the DOD capture amounts that have actually been spent. Concerned about the accuracy of its reporting, the DOD asked a private firm to conduct an audit on war cost tracking. Although the DOD's current FY2008 request identifies the funds for Iraq against those for Afghanistan, the DOD has not presented a breakdown by operation of all funds received to date. But the most interesting testimony was that of the final witness, Harvard University budgeting professor Linda J Bilmes. She noted that the process itself by which the war is funded leads inevitably to abuse. She testified: I would like to say something about the use of the "emergency supplemental" vehicle for funding the war. In my opinion as a budgeting professor, this is not the best way for the US budget system - or any budget system - to operate. The purpose of the emergency supplemental facility is to fund a genuine emergency or unforeseen event, such as Hurricane Katrina. The late transmittal of the supplementals during the budget process leads to less congressional review and a lower standard of detailed budget justification than regular appropriations. It is difficult to understand why, five years into the war, we are still funding it largely in this manner. We are denying the budget staff of both parties, who are some of the very best staff members in the Congress - the budget committees, the authorizing committees, and the appropriations committees - the opportunity to review these numbers thoroughly. So it is not surprising, given this lack of transparency, that we have seen widespread waste and alleged corruption in payments to contractors, a lack of timely requests for vital equipment such as MRAPs, and continuing shortfalls in critical areas such as veteran's health care. Bilmes, unlike the CBO or the CRS, counts the full economic costs of the war. This includes long-term accrued liabilities, human costs, social costs and macro-economic costs, and not just budgetary costs. To give just one example, she notes the economic costs of injuries will add a further $200 to $300 billion to the cost of the war. She also pointed out that the US government is grossly underestimating the economic value of American soldiers killed and the cost of caring for the wounded. She testified: Despite the fact that the military "family" mourns the loss of its soldiers, the official budgetary cost for a soldier's death is $500,000 paid to the soldier's family. This amount is a small fraction of the value used in even the narrowest economic estimates - and much lower than the $6-$7.5 million range used by civilian government agencies. In many cases, the dead were young men and women in peak physical condition, at the beginning of their working lives. Their true economic value could easily have been much higher. Using a VSL of $7 million, the economic cost of the more than 4,000 American deaths in Iraq and exceeds $30 billion. And while it seems harsh to convert these deaths into cold financial numbers, at the same time it is important to recognize that our economy will suffer as a result of the fatalities in this war. As for caring for the wounded Bilmes noted that the burden is enormous: The repeated tours of duty have imposed an enormous emotional, social and economic strain on the individuals serving and their families. When a service member is critically wounded, friends and family members put their lives on hold. This puts enormous financial and emotional strain on their loved ones. Current law offers caregivers few employment protections, so they not infrequently lose their jobs and suffer financial consequences. The Dole-Shalala Commission estimated that 20% of families of veterans who were wounded, injured or otherwise incapacitated (such as with mental illness) have been forced to leave their employment in order to become full time caretakers. We are in the process of estimating some of the economic costs to the families of having to sacrifice their income and jobs, some of the additional health care costs that families and society will incur in caring for seriously injured veterans. We believe this will impose an economic cost in excess of $40 billion. David Isenberg is a senior analyst with the British American Security Information Council. He is also a member of the Coalition for a Realistic Foreign Policy, an adjunct scholar with the Cato Institute, contributor to the Straus Military Reform Project, a research fellow at the Independent Institute, and a US Navy veteran. The views expressed are his own. (Copyright 2007 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)
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