Submitted by amanitamuskaria on Tue, 04/09/2007 - 14:01.
By Travis Sharp
Military Policy Analyst
tsharp AT armscontrolcenter DOT org
202-546-0795 ext. 123
August 27, 2007
Click here to download this analysis in PDF form
EXECUTIVE SUMMARY
Prior to the invasion of Iraq, Office of Management and Budget director Mitch Daniels predicted that the war would cost somewhere in the neighborhood of $50 to $60 billion dollars. When George Stephanopoulos asked in January 2003 whether estimates of $300 billion were more accurate, former Secretary of Defense Donald Rumsfeld brushed them off as "baloney."
According to the Congressional Research Service, with enactment of the fiscal year (FY) 2007 war funding supplemental on May 25, Congress has approved approximately $611 billion for military operations, base security, reconstruction, foreign aid, embassy costs, and veterans' health care tied to the global war on terror. Of the money appropriated thus far, $450 billion will go to Iraq (74%), $127 billion will go to Afghanistan (21%), and $28 billion will go to enhanced base security (5%).
The original FY 2008 war funding request presented by the administration in February 2007 was for $141.7 billion. On July 31, the Department of Defense (DOD) updated its FY 2008 request by adding $5.3 billion for 1,520 new Mine Resistant Ambush Protected (MRAP) vehicles. This brings the FY 2008 war funding request thus far to $147 billion. Government officials have stated that it may continue to grow.
Including the FY 2008 request of $147 billion, the Bush administration has requested approximately $758 billion for the wars in Iraq and Afghanistan. If the FY 2008 request is approved by Congress, the global war on terror will become the second costliest conflict in U.S. history in inflation-adjusted terms. Only World War II cost more.
DOD's monthly spending rate for the global war on terror is currently $12 billion, including $10 billion per month in Iraq. Using a 30-day month, this means DOD is spending on Iraq roughly $2.3 billion per week, $333 million per day, $13.9 million per hour, $232,000 per minute, and $3,867 per second.
Making detailed war costs a legally stipulated portion of DOD's Section 9010 Measuring Stability and Security reports would improve Congress's ability to track war funding obligations and provide much needed transparency to what has been a haphazard budgeting process. Members of Congress should pursue this much-needed reform as soon as possible.
RECENT HOUSE ACTION
Early the morning of August 5, the House of Representatives passed its version of the fiscal year (FY) 2008 Defense Appropriations bill (H.R. 3222). This "base budget" bill includes $459.6 billion for the Department of Defense (DOD), $3.5 billion below the Bush administration's request of $463.1 billion and $39.7 billion above FY 2007 levels (excluding supplemental war funding). Funding for the administration's FY 2008 request for military operations in Iraq and Afghanistan will be considered separately.
Although President Bush was not happy with some of the funding reductions made in the final version of the bill passed by the House - especially cuts to a planned missile defense site in Europe and the Future Combat Systems program - the White House has not threatened to veto the bill.1
The House Defense Appropriations Subcommittee is expected to begin writing its FY 2008 Iraq and Afghanistan war funding bill in September. Subcommittee chairman John Murtha (D-PA) has indicated that the House might pass a bill that funds military operations in Iraq and Afghanistan for less than six months. He also mentioned that the base budget bill already passed by the House and the yet-to-be-written war funding bill may be merged into a single bill.2
When the war funding bill does come up for House consideration, controversial amendments may include a timetable for withdrawing U.S. troops from Iraq, terminating the detention of "unlawful enemy combatants" at Guantanamo Bay after six months, and requiring minimal readiness standards for U.S. troops before deploying to Iraq.3
RECENT SENATE ACTION
In its markup of the FY 2008 Defense Authorization bill, the Senate Armed Services Committee transferred approximately $13 billion from the war funding request to the base budget. The Committee authorized the base budget at approximately $520 billion and war-related spending for Iraq and Afghanistan at $127.5 billion, for a grand total of $647.5 billion. It is unclear whether the Senate Appropriations Committee will also transfer money from the war funding request to the base budget.
The full Senate began consideration of the Defense Authorization in July, but put off completion until September. The Senate Appropriations Committee has not yet scheduled action on its versions of the FY 2008 Defense Appropriations base budget or war funding bills.
FY 2008 WAR FUNDING REQUEST SET TO GROW
The original FY 2008 war funding request presented by the administration in February 2007 was for $141.7 billion. This marks the first time since September 11 that a war funding request for the full year was submitted alongside the normal February budget request. Since FY 2003, Congress has funded war costs in two bills, typically a "bridge fund" included in the regular DOD appropriations bill to cover the first part of the fiscal year and a supplemental appropriations request enacted after the fiscal year has begun.4
On July 31, the Pentagon updated its FY 2008 request by adding $5.3 billion for 1,520 new Mine Resistant Ambush Protected (MRAP) vehicles, including mission equipment, spares, logistics support, transportation costs, and enhanced armor kits.5 This brings the FY 2008 war funding request thus far to $147 billion.
House Defense Appropriations Subcommittee chairman John Murtha (D-PA) has said that based on discussions with military leaders, he expects the Pentagon to seek another $30 billion to $40 billion for FY 2008 war funding on top of the revised request of $147 billion.6 DOD has stated that its FY 2008 request is preliminary and that it may seek additional funds throughout the year.7
In testimony before the House Budget Committee on July 31, Deputy Secretary of Defense Gordon England told lawmakers that there would likely be increased costs above $147 billion in FY 2008 to sustain President Bush's increased troop "surge" in Iraq, which has been allocated $6.5 billion through September 30 but was not funded after that date. "The decision was made to fund it through September 30. We did not include any costs in the FY 2008 [request] because we did not know how long the surge would last," England explained.8
To help meet the expected shortfall after September 30, DOD could transfer money to the war effort from other accounts through congressionally-mandated budgetary reprogramming procedures. Pentagon Comptroller Tina Jonas told the House Budget Committee July 31 that DOD currently has about $3 billion in reprogramming authority as part of the FY 2008 war funding request. Jonas mentioned that depot maintenance and soldiers' payment accounts might get raided if reprogramming was to take place, but with the Congressional Research Service estimating a monthly spending rate for operations in Iraq of $10 billion, even borrowing $3 billion from these accounts will only fund operations for about nine days.9
Worn down equipment is currently a massive problem for the U.S. military. In-theater pre-positioned supplies both ashore and afloat are at the lowest levels in five years. In fact, the Army estimates that it will take $2.2 billion just to replace pre-positioned supplies that have been depleted as a result of President Bush's surge in Iraq.10 For FY 2008, the Army estimates that it will require $16.1 to $17.1 billion for equipment replacement, but this could increase further due to the requirements of the surge.11
COST OF THE SURGE
The Congressional Budget Office (CBO) has estimated that an additional 30,000 to 40,000 U.S. military personnel from all four branches have been deployed to Iraq as a result of President Bush's surge. CBO estimates that these additional personnel will cost about $10 billion, $22 billion, or $40 billion, depending on whether the surge is sustained for four months, 12 months, or 24 months, respectively.12
WAR COSTS TO DATE
Prior to the invasion of Iraq, White House economic adviser Lawrence Lindsey suggested that a war with Iraq would cost between $100 and $200 billion. Mitch Daniels, director of the Office of Management and Budget, dismissed the figure as "very, very high" and predicted that a total cost of $50 to $60 billion was more realistic. Daniels later commented in May 2003 that "The United States is committed to helping Iraq recover from the conflict, but Iraq will not require sustained aid." When George Stephanopoulos asked in January 2003 whether war cost estimates of $300 billion were accurate, former Secretary of Defense Donald Rumsfeld brushed them off as "baloney." In response to an anonymous defense official's estimate that the war in Iraq might cost $95 billion, former Deputy Defense Secretary Paul Wolfowitz responded. "I don't think he or she knows what he is talking about."13
Graph 1. War Funding Through FY 2008 (in billions). Click graph to enlarge it.
With enactment of the FY 2007 war funding supplemental on May 25, Congress has approved approximately $611 billion for military operations, base security, reconstruction, foreign aid, embassy costs, and veterans' health care tied to the global war on terror. Of the money appropriated thus far, $450 billion will go to Iraq (74%), $127 billion will go to Afghanistan (21%), and $28 billion will go to enhanced base security (5%). Roughly 93% of the money appropriated thus far has gone to DOD, 7% has gone to foreign aid programs, and less than 1% has gone to medical care for veterans.14
If Congress approves the FY 2008 war funding request of $147 billion, total funding for Iraq and the global war on terror would reach approximately $758 billion.15 If the Pentagon does indeed ask for an additional $30 to $40 billion, as John Murtha (D-PA) has suggested, total war funding could balloon to between $788 and $798 billion through FY 2008.
The Congressional Research Service estimates that DOD's monthly spending rate for the global war on terror is currently $12 billion, including $10 billion per month in Iraq.16 Using a 30-day month, this means DOD spending on Iraq equals approximately:
TABLE 1. DEPARTMENT OF DEFENSE SPENDING ON IRAQ
| Monthly |
$10 billion |
| Weekly |
$2.3 billion |
| Daily |
$333 million |
| Hourly |
$13.9 million |
| Per Minute |
$232,000 |
| Per Second |
$3,867 |
|
TABLE NOTES
Source: Amy Belasco, “The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11,” Congressional Research Service (updated July 16, 2007).
|
PROJECTED LONG-TERM WAR COSTS
DOD's FY 2008 war funding request of $147 billion is $16.4 billion or 10% less than the FY 2007 total, mainly due to decreases for Iraq and Afghan security forces. The administration has included only a war funding placeholder figure of $50 billion in FY 2009 and no funds in later years.17 In testimony before the House Budget Committee on July 31, CBO Assistant Director for Budget Analysis Robert Sunshine outlined future war costs under two operational scenarios.
Under CBO's first scenario, U.S. personnel deployed to Iraq and elsewhere to support global war on terror operations would be reduced from the 2007 average of 210,000 to 30,000 by the beginning of 2010, remaining at that constant level through 2017. CBO estimates that this scenario would cost the U.S. between $481 billion and $603 billion from 2008-2017, with the exact amount depending on the duration of the surge in Iraq. This scenario would take total spending for global war on terror operations well above $1 trillion since the September 11 attacks.18
Under CBO's second scenario, U.S. personnel deployed to Iraq and elsewhere to support global war on terror operations would be reduced from the 2007 average of 210,000 to 75,000 by the beginning of 2013, remaining at that constant level through 2017. CBO estimates that this scenario would cost the U.S. between $924 billion and $1,010 billion from 2008-2017, with the exact amount depending on the duration of the surge in Iraq. This scenario would take total spending for global war on terror operations closer to $2 trillion since the September 11 attacks.19
It is worth pointing out that neither of these two future war cost scenarios includes the cost of the administration's initiative to increase active duty Army and Marine Corps personnel levels to 547,000 and 202,000, respectively, by FY 2012, a proposal that enjoys bipartisan support in Congress. CBO estimates that increasing the size of the Army and Marine Corps will cost an additional $162 billion over the 2008 to 2017 period.20 Much of the cost of increasing military personnel levels is tied to health care costs, which have tripled on a per troop basis since FY 1987.21
Another source of future costs is Veterans Administration spending on medical care and disability for soldiers returning from Iraq and Afghanistan. Former Clinton administration budget official Linda Bilmes and Nobel Prize-winning economist Joseph Stiglitz have predicted that after including the long-term costs of caring for American veterans, total war spending could soar well above $2 trillion dollars.22 Estimates for caring for wounded veterans vary widely, however, and CBO estimated in 2006 that the cost to the Veterans Administration of providing care to Iraq veterans and their families totaled only $1 billion through the end of FY 2006.23
Debt service costs could also be added to long-term war cost models. As Steven Kosiak of the Center for Strategic and Budgetary Assessments has pointed out, the global war on terror has been financed mainly by increasing deficit spending. The Bush administration has refused to increase taxes or reduce spending in other federal programs to offset higher defense budgets, explaining why more than $3 trillion has been added to the federal debt during the Bush years.24 Kosiak estimates that including 10 year interest payments on war-related spending just through 2006 could add another $250 billion to the long-term total cost of the global war on terror.25
WAR COSTS IN PERSPECTIVE
Between FY 2001 and FY 2006, DOD outlays have increased 53% in inflation-adjusted terms. The largest relative increase has come in research and development (RDT&E) funding, which went up by 58% in real terms from FY 2001 to FY 2006, while operations and maintenance (O&M) and procurement both increased 47% in real terms during this same period.26
Even though military operations in Iraq and Afghanistan have brought new focus to the challenges of waging low-tech counterinsurgency warfare, planned U.S. weapons system acquisition spending has more than doubled since the terrorist attacks of September 11. The American weapons system acquisition plan has increased from 71 major programs with a combined cost of $936 billion (2007 dollars) in September 2001 to 89 programs with a combined cost of $1.684 trillion by December 2006, a real cost increase of 80%.27
According to Steven Kosiak, congressional approval of DOD's FY 2008 base budget and war funding requests will bring DOD funding to its highest level in inflation-adjusted terms since FY 1946, the last fiscal year to reflect substantial spending for World War II. Total funding for FY 2008 will surpass the peak years of the Korean and Vietnam wars by $36 billion and $126 billion, respectively, in current dollars.28
As a percentage of U.S. gross-domestic product (GDP), however, the FY 2008 combined base budget and war funding requests remain well below previous conflicts. Funding for "National Defense" (budget function 050) was about 4.5% in FY 2007, compared to 14.2% and 9.4% at the height of the Korean and Vietnam conflicts, respectively.29
As a portion of the overall federal budget, defense spending declined from nearly 70% at the height of the Korean War, to below 50% percent at the height of the Vietnam War, to less than 20% in 2007.
Graph 2. FY 2008 Discretionary Budget Request (in billions). Click graph to enlarge it.
As a portion of discretionary spending appropriated by Congress each year, however, defense spending only decreased from nearly 75% during the Korean War to around 50% in 2007. Defense spending continues to consume a very large share of total discretionary spending, which will be stretched even thinner if two-thirds of government revenues are spent on mandatory spending programs and interest payments on the federal debt by 2015, as has been estimated.30
Including the FY 2008 request of $147 billion, the Bush administration has requested approximately $758 billion for the wars in Iraq and Afghanistan (along with enhanced base security). If the FY 2008 request is approved by Congress, the global war on terror will become the second costliest conflict in U.S. history in inflation-adjusted terms. Only World War II cost more, a war where 12 million Americans served at a time in the U.S. military, compared with 1.42 million active duty soldiers and just over one million National Guard and reservists today.31
TABLE 2. COSTS OF PREVIOUS U.S. WARS IN 2007 DOLLARS
| American Revolution |
$4 billion |
| War of 1812 |
$1 billion |
| Mexican War |
$2 billion |
| Civil War (both Union and Confederate costs) |
$81 billion |
| Spanish-American War |
$7 billion |
| World War I |
$364 billion |
| World War II |
$3.2 trillion |
| Korean War |
$691 billion |
| Vietnam War |
$650 billion |
| Persian Gulf War |
$92 billion |
| Iraq/Afghanistan (through FY 2008 request) |
$758 billion |
|
TABLE NOTES
Source: Congressional Research Service and Office of Management and Budget, compiled by Washington Post (May 8, 2007).
|
The ever-increasing defense spending levels maintained as part of the global war on terror also appear to be wearing on the psyche of the American public. A March 2007 Gallup poll found that 43% of Americans, the highest percentage in 15 years, think the U.S. is spending too much on defense, versus only 20% who think the U.S. is spending too little. This is yet another demonstration that war fatigue is plaguing the American public even though the Bush administration has labored to insulate voters from war costs.32
POLICY RECOMMENDATION
Presenting the FY 2008 war funding request for the full year alongside the normal budget request in February 2007 was a step in the right direction by the Bush administration, but more reform is needed to improve Congress's future ability to oversee what U.S. Army General George Casey predicted will be "decades of persistent conflict."33
In a July 26 letter, the Government Accountability Office (GAO) reported that it had previously found the data in DOD's monthly Supplemental and Cost of War Execution Reports to be "of questionable reliability." Consequently, GAO was "unable to ensure that DOD's reported obligations for [the global war on terror] are complete, reliable, and accurate."34
Public Law 109-289, the FY 2007 Defense Appropriations bill, requires DOD to submit a quarterly report on Iraq known as Measuring Stability and Security in Iraq. The eighth and most recent report in the series was issued in June 2007.35 These reports, while valuable, do not contain data on war costs and are not required to by law.
Making detailed war costs a legally stipulated portion of Section 9010 Measuring Stability and Security reports would improve Congress's ability to track DOD war funding obligations and provide much needed transparency to what has been a haphazard budgeting process. Members of Congress should pursue this much-needed reform as soon as possible.
FOR MORE INFORMATION
Analysis of FY 2008 Pentagon Spending Request, February 2007, available online.
Analysis of the FY 2007 Supplemental (H.R. 2206) Spending Package Signed by President Bush (P.L. 110-28), June 8, 2007, available online.
Analysis of Senate Armed Services Committee Action on the FY 2008 Defense Authorization Bill (S. 1585), July 9, 2007, available online.
Analysis of House Appropriations Committee Action on the FY 2008 Defense Appropriations Bill (H.R. 3222), July 31, 2007, available online.
FOR INQUIRIES, CONTACT:
Travis Sharp
Military Policy Analyst
tsharp AT armscontrolcenter DOT org
202-546-0795 ext. 123
OR
Chris Hellman
Military Policy Fellow
chellman AT armscontrolcenter DOT org
703-945-3950
NOTES
1. William Matthews, "Bush, House Differ on '08 Spending Priorities," Defense News (August 13, 2007).
2. John Donnelly, "Defense Spending Bill Passes House," CQ Weekly (August 13, 2007), 2468. Subscription only.
3. Ibid.
4. See Pat Towell, Stephen Daggett, and Amy Belasco, "Defense: FY2008 Authorization and Appropriations," Congressional Research Service (updated July 30, 2007), pp. 21.
5. See John Bennett, "White House Wants $5.3B For 1,.520 New MRAPs in '08," Defense News (August 6, 2007), and Gordon England, testimony before the House Budget Committee (July 31, 2007), pp. 4.
6. Rick Maze, "Pentagon Could Face Cash Crunch Oct. 1," Navy Times (August 1, 2007).
7. See Robert Sunshine, testimony before the House Budget Committee (July 31, 2007), pp.4.
8. England testimony before the House Budget Committee (July 31, 2007), pp. 2.
9. Amy Belasco, "The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11," Congressional Research Service (updated July 16, 2007), summary page.
10. Andrew Feickert, "U.S. Army and Marine Corps Equipment Requirements: Background and Issues for Congress," Congressional Research Service (updated June 15, 2007), pp. 7-8.
11. Ibid., pp. 15.
12. Sunshine testimony before the House Budget Committee (July 31, 2007), pp. 2, 13.
13. Recounted in Robert Hormats, The Price of Liberty: Paying for America's Wars, New York: Times Books (2007), pp. 263-64.
14. Belasco, "The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11," summary page. The Congressional Budget Office differs in its estimate, reporting that only 70% of global war on terror funding has been allocated for the war in Iraq. See Sunshine testimony before the House Budget Committee (July 31, 2007), pp. 2.
15. Based on Congressional Research Service estimate of total funding. See Belasco, "The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11," summary page.
16. Ibid.
17. Ibid., pp. 6.
18. Sunshine testimony before the House Budget Committee (July 31, 2007), pp. 2, 11.
19. Ibid.
20. Ibid., 11.
21. Steven Kosiak, "Analysis of the FY 2008 Defense Budget Request," Center for Strategic and Budgetary Assessments (June 2007), pp. 10, 18.
22. For an example of Bilmes and Stiglitz's argument, see "Encore: Fourth Quarter 2006," Milken Institute Review.
23. Congressional Budget Office, "Estimated Costs of U.S. Operations in Iraq Under Two Specified Scenarios," July 13, 2006, pp. 9.
24. Carl Conetta, "Toward a Sustainable US Defense Posture: An option to save $60+ billion over the next five years," Project on Defense Alternatives (August 2, 2007), pp. 2.
25. Steven Kosiak, testimony before the Senate Budget Committee (February 6, 2007), pp. 3.
26. Petter Stalenheim, Catalina Perdomo, and Elisabeth Skons, "Military Expenditure," in SIPRI Yearbook 2007, Stockholm International Peace Research Institute, New York: Oxford University Press (2007), pp. 275.
27. Office of the Under Secretary of Defense for Acquisition, Technology and Logistics, "Selected Acquisition Report Summary Tables," as of September 30, 2001, available online; as of December 31, 2006, available online.
28. Kosiak, "Analysis of the FY 2008 Defense Budget Request," pp. i.
29. Ibid., 2. Defense budgeting as a percentage of GDP is a matter of contentious debate in policy circles, with advocates of higher defense spending crediting Ronald Reagan-era defense budgets of 6% of GDP with helping the U.S. win the Cold War. Critics point out that defense spending should be allocated only to provide necessary responses to credible threats, not inflexibly bound only by the ever-increasing capacity of the national economy. For an example of the defense budgeting as a higher percentage of GDP argument, see Martin Feldstein, "The Underfunded Pentagon," Foreign Affairs (March/April 2007).
30. See Hormats, The Price of Liberty: Paying for America's Wars, pp. 288.
31. The WWII military personnel estimate comes from Gordon Adams, "The Cost of a Surge," National Interest Online (January 4, 2007). The current military personnel estimate is also from Adams, "The Politics of National Security Budgets," Stanley Foundation Policy Analysis Brief (February 2007), pp. 5.
32. Joseph Carroll, "Perception of 'Too Much' Military Spending at 15-Year High," Gallup Poll News Service (March 2, 2007).
33. Michael Bruno, "Casey: Army Must Upgrade For 'Decades' of War," Aerospace Daily & Defense Report (August 15, 2007).
34. Government Accountability Office, "Global War on Terrorism: Reported Obligations fore the Department of Defense," July 26, 2007, pp. 2.
35. Department of Defense, "Measuring Stability and Security in Iraq," available online.
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