Casualty of War: The U.S. Economy

by James Sterngold

San Francisco Chronicle, July 17, 2005

The wars in Iraq and Afghanistan have already cost taxpayers $314 billion, and the Congressional Budget Office projects additional expenses of perhaps $450 billion over the next 10 years.

That could make the combined campaigns, especially the war in Iraq, the most expensive military effort in the last 60 years, causing even some conservative experts to criticize the open-ended commitment to an elusive goal. The concern is that the soaring costs, given little weight before now, could play a growing role in U.S. strategic decisions because of the fiscal impact.

"Osama (bin Laden) doesn't have to win; he will just bleed us to death," said Michael Scheuer, a former counterterrorism official at the CIA who led the pursuit of bin Laden and recently retired after writing two books critical of the Clinton and Bush administrations. "He's well on his way to doing it."

The Center for Strategic and Budgetary Assessments, a nonpartisan Washington think tank, has estimated that the Korean War cost about $430 billion and the Vietnam War cost about $600 billion, in current dollars. According to the latest estimates, the cost of the war in Iraq could exceed $700 billion.

Put simply, critics say, the war is not making the United States safer and is harming U.S. taxpayers by saddling them with an enormous debt burden, since the war is being financed with deficit spending.

One of the most vocal Republican critics has been Sen. Chuck Hagel of Nebraska, who said the costs of the war -- many multiples greater than what the White House had estimated in 2003 -- are throwing U.S. fiscal priorities out of balance.

"It's dangerously irresponsible," Hagel said in February of the war spending.

He later told U.S. News & World Report, "The White House is completely disconnected from reality." He added that the apparent lack of solid plans for defeating the insurgency and providing stability in Iraq made it seem "like they're just making it up as they go along."

The Democrats have also raised concerns about the apparent lack of an exit strategy and the fast-rising costs, particularly since President Bush has chosen to pay for the war with special supplemental appropriations outside the normal budget process. Some Democrats have insisted that, to cover war costs, the president should propose comparable reductions in other government programs, in part to be fiscally responsible and in part to make the price of the war more tangible.

"We are not going to be stinting in our support of our troops," said Rep. John Spratt, D-S.C., a senior member of both the Budget and Armed Services committees. "The least we can do is make sure they have everything they need to do the job. On the other hand, we need to understand the long-term costs. We need to know it to make honest budgets.

"Are there trade-offs we can make to pay for this? We have to look at that. This has been longer-lasting and more intense than anybody anticipated."

Some conservative experts outside Congress also have started questioning whether the war and its uncertain conclusion are worth the cost, in money and blood.

"The objective has always been to install a friendly government," said Charles V. Peña, director of defense policy studies at the Cato Institute in Washington, a libertarian think tank. "Are the costs worth that? No, because it's not something we can accomplish for the long term. It's just going to continue to drain the American taxpayer. I don't see how it's going to get better. It's only going to get worse."

James Jay Carafano, a senior fellow for national security and homeland security at the Heritage Foundation, which supports the president on most matters, warned that the war's costs would only rise because of the growing need to repair and replace battered military equipment, from helicopters to Humvees. In addition, the rising death toll is making it harder for the military to recruit new soldiers, and long deployments are hurting the morale of National Guard and reserve units sent to Iraq.

If the White House does not increase military spending, Carafano warned, the United States could end up with both a looming disaster in Iraq and a weaker military.

"I don't think we're going to have enough money to run this military based on what they're asking for," said Carafano. "If you don't increase spending, you can hollow out the military."

He added that the war itself increasingly looks like a bad investment: "I think there is a point of diminishing returns in Iraq. There is a point where you're just throwing money at the problem. Quite frankly, I think we're at the tipping point."

Since the shooting war in Iraq began in March, 2003, 1,763 U.S. soldiers have been killed in Iraq, and at least 13,336 have been wounded, according to data collected by the Iraq Index, which is assembled by the Brookings Institution in Washington.

In September 2002, the Congressional Budget Office, a nonpartisan research arm of Congress, estimated that the war would cost $1.5 billion to $4 billion per month. In fact, it costs between $5 billion and $8 billion per month.

The Pentagon says the "burn rate" -- the operating costs of the wars --

has averaged $5.6 billion per month in the current fiscal year, but that does not include some costs for maintenance and replacement of equipment and some training and reconstruction costs, experts say.

According to an analysis by the Democratic staff of the House Budget Committee, from the beginning of the war in March, 2003, through the fiscal year that ends Sept. 30, the Bush administration has received a total of $314 billion in special appropriations for the wars.

Unlike the Persian Gulf War against Iraq in 1991, the U.S. has had to bear nearly all this war's costs on its own. The Congressional Research Service reported that, as of early June, 26 countries had military forces in Iraq, but they make up a small fraction of the U.S. troop levels, about 140, 000; another 11 countries have already left Iraq.

Just for the current fiscal year, the administration has received $107 billion in special appropriations, about $87 billion of which is directly related to military operations, according to the Center for Strategic and Budgetary Assessments. Most of the remainder has been spent on training and equipping Iraqi forces.

U.S. taxpayers must also cover other costs. For instance, the United States is spending $658 million to construct an embassy in Baghdad, which, with initial operating costs, could bring the expense of this super-secure facility to nearly $1.3 billion by the time it opens in several years.

"Two years ago, no one expected the war would take this long," said Steven Kosiak, director of budget studies at the Center for Strategic and Budgetary Assessments. "On a per-troop basis, this war has been far more costly than expected, almost double the estimates."

Edward Luttwak, a senior fellow at the Center for Strategic and International Studies in Washington and a former military consultant to both Republican and Democratic administrations, said the unexpectedly high costs show inappropriate military priorities in Iraq. He said too much is being spent on operating high-tech weaponry, such as jet fighters and naval battle groups, and not enough on troops, which are best at fighting elusive insurgents. That just further proves that the U.S. military, Luttwak said, is the best on earth at fighting conventional wars, but one of the worst at policing and counterinsurgencies.

For example, he noted that heavy Air Force fighters, such as the F-15E, are being used for aerial reconnaissance, when cheaper aircraft might work better. He questioned why a huge Navy battle group, including an aircraft carrier, is stationed near Iraq, when it offers little help in fighting a largely hidden insurgency in Iraq's towns and cities.

"It's quite important to look at the costs of the war, quite apart from counting the money, which is substantial," Luttwak said. "It is a good way to assess what is going on. It's not worth the price of what we're paying."

E-mail James Sterngold at jsterngold@sfchronicle.com.

Economics watch

Index of Website

Home Page