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  1. #1
    Join Date
    Feb 2005

    The Cost Is `Unknowable'

    Cost Is `Unknowable'
    Congress Struggles To Determine War Spending

    March 20, 2006
    By DAVID LIGHTMAN, Washington Bureau Chief

    WASHINGTON -- This much is clear: The 3-year-old war in Iraq has cost taxpayers $226 billion so far, and if the Senate goes along with last week's House action, the government will spend at least $54 billion more this year.

    But much is unknown - including whether the United States is spending too much or not enough, and whether the Pentagon, Congress or anyone else is adequately monitoring how the money is being used.

    House members concede they do not know whether the amounts they approved by an overwhelming vote were bloated or inadequate.

    "You really don't know the right amount. You only know what they're trying to do in Iraq," said Rep. Christopher Shays, R-4th District.

    "You vote for the bill so the military can have flexibility in fighting the war, but really, how do you ever know anything?" asked Rep. Rob Simmons, R-2nd District.

    The Senate is expected to pass the legislation when it returns from a spring recess March 27, but it's unlikely it will get any fresh clues that will help members learn how much spending is enough.

    "I don't know if there is a mechanism in place to ever honestly answer that question," said Christopher Hellman, military policy analyst at the Center for Arms Control and Non-Proliferation. "It's an unknowable number."

    The experts can offer some perspective on the spending. Since the United States invaded Iraq three years ago, its costs have jumped from about $4.4 billion a month to an estimated $7.1 billion a month this year, according to a Congressional Research Service study. Like the $226 billion total, these figures reflect only the cost of the war in Iraq - not U.S. operations in Afghanistan or the war against terror elsewhere in the world.

    The higher costs reflect increases in military personnel as well as "investment obligations," such as buying and replacing equipment, equipping more modular units and other expenses, CRS analyst Amy Belasco said.

    The war is more expensive than the 1991 Persian Gulf War, which cost about $87 billion in current dollars and was funded mostly through contributions from U.S. allies, according to data compiled by Steven M. Kosiak, director of budget studies at the Center for Strategic and Budgetary Assessments, a Washington research group.

    He found Iraq has not been as expensive as U.S. military operations in the Korean conflict ($445 billion in current dollars) or Vietnam ($635 billion).

    The Iraq numbers could top Korea and even Vietnam within the next few years, according to Congressional Budget Office estimates, unless Congress applies some brakes.

    Critics have offered lawmakers many ways to curb spending - notably by more intensely scrutinizing how the government is spending the money.

    A Government Accountability Office study in September found "significant concerns about the reliability of the Department of Defense's reported cost data."

    "As a result," the GAO said, "neither Congress nor [the Defense Department] can reliably know how much the war is costing and details on how appropriated funds are being spent."

    Since that report was issued, Congress has tightened requirements on Pentagon reporting on spending, but even with that new directive, analysts question whether Congress will do anything with the material it receives. Normally, Congress' armed services committees as well as its spending committees consider military budget requests.

    But since the war on terror began in 2001, the Bush administration has routinely sought war funding through emergency legislation, bypassing the armed services panels, which have the lawmakers and staffs with expertise in the military system.

    As a result, said Kosiak, "war spending just doesn't get the same level of scrutiny."

    Simmons, who serves on the House Armed Services Committee, said members keep up with legislation not only by hearing regularly from military personnel but by visiting Iraq. "There is a constant focus on this war," he said.

    But even with heightened congressional scrutiny, members face challenges ascertaining what constitutes war-related spending. "If you have an 18-year-old piece of equipment that needs repair, how do you determine whether or not it wore out because it was used in Iraq?" Kosiak asked.

    Cutting spending on popular programs also poses a political problem, as is evident in the saga of the C-17 aircraft, which moves cargo and troops around the world. The president wants to end production of the planes in 2008, but the Iraq war bill provides $100 million "to ensure consideration of all available options" because "replacements may ultimately be needed."

    And, said the House Appropriations Committee report on war spending, the C-17 money is essential "due to the importance of these aircraft in the global war on terror." The project's survival would be a boon to the economies of California, Ohio and other states where jobs depend on the plane.

    The plane's inclusion in the war appropriations measure is an example of how "there's a lot of stuff in those war bills that doesn't belong there," concluded Winslow Wheeler, director of the military reform project at the Center for Defense Information, a Washington research group.

    Members of Congress are inclined to back a project like the C-17 knowing that colleagues whose states benefit from its budget will back other members' local initiatives. The C-17's F117 engine, made exclusively by East Hartford-based Pratt & Whitney, is tested and assembled at its Middletown plant.

    Even if members are not prone to such horse-trading, they are often compelled to approve the war bills for another reason: They are reluctant to cast a vote that would suggest they don't support U.S. troops. As a result, last week's war spending debate was laced with the kind of rhetorical pivot offered by Rep. Nita M. Lowey, D-N.Y.

    "I am not convinced that providing more money for Iraq will cure the problems for that country," she said. "But I will support the additional funding because I think we owe our men and women in uniform in Iraq every tool to achieve success."

    The war bill, said Rep. David R. Obey, D-Wis., "came before us with the United States divided and with the American people confused about what our mission is, what our purpose is and what our plans are."

    But he voted yes, as did every member of Connecticut's congressional delegation.

    As Rep. Rosa L. DeLauro, D-3rd District, put it, "You don't have any choice."

    Last edited by sojustask; 03-20-2006 at 08:23 PM.

  2. #2
    Join Date
    Feb 2005

    Re: The Cost Is `Unknowable'


    Cost of Iraq war could surpass $1 trillion
    Estimates vary, but all agree price is far higher than initially expected

    By Martin Wolk
    Chief economics correspondent
    Updated: 7:25 p.m. ET March 17, 2006

    One thing is certain about the Iraq war: It has cost a lot more than advertised. In fact, the tab grows by at least $200 million each and every day.

    In the months leading up to the launch of the war three years ago, few Bush administration officials were willing to comment publicly on the potential costs to the United States. After all, no cost would have been too high if the United States faced an imminent threat from an Iraq armed with weapons of mass destruction, the war's stated justification.

    In fact, the economic ramifications are rarely included in the debate over whether to go to war, although some economists argue it is quite possible and useful to assess potential costs and benefits.

    In any event, most estimates put forward by White House officials in 2002 and 2003 were relatively low compared with the nation's gross domestic product, the size of the federal budget or the cost of past wars.

    White House economic adviser Lawrence Lindsey was the exception to the rule, offering an "upper bound" estimate of $100 billion to $200 billion in a September 2002 interview with The Wall Street Journal. That figure raised eyebrows at the time, although Lindsey argued the cost was small, adding, "The successful prosecution of the war would be good for the economy.”

    U.S. direct spending on the war in Iraq already has surpassed the upper bound of Lindsey's upper bound, and most economists attribute billions more in indirect costs to the war effort. Even if the U.S. exits Iraq within another three years, total direct and indirect costs to U.S. taxpayers will likely by more than $400 billion, and one estimate puts the total economic impact at up to $2 trillion.

    Back in 2002, the White House was quick to distance itself from Lindsey's view. Mitch Daniels, director of the White House budget office, quickly called the estimate "very, very high." Lindsey himself was dismissed in a shake-up of the White House economic team later that year, and in January 2003, Defense Secretary Donald Rumsfeld said the budget office had come up with "a number that's something under $50 billion." He and other officials expressed optimism that Iraq itself would help shoulder the cost once the world market was reopened to its rich supply of oil.

    Those early estimates struck some economists as unrealistically low. William Nordhaus, a Yale economist who published perhaps the most extensive independent estimate of the potential costs before the war began, suggested a war and occupation could cost anywhere from $100 billion to $1.9 trillion in 2002 dollars, depending on the difficulty of the conflict, the length of occupation and the impact on oil costs.

    The most current estimates of the war's cost generally start with figures from the non-partisan Congressional Budget Office, which as of January 2006 counted $323 billion in expenditures for the war on terrorism, including military action in Iraq and Afghanistan. Just this week the House approved another $68 billion for military operations in Iraq and Afghanistan, which would bring the total allocated to date to about $400 billion. The Pentagon is spending about $6 billion a month on the war in Iraq, or about $200 million a day, according to the CBO. That is about the same as the gross domestic product of Nigeria.

    Scott Wallsten, a resident scholar at the conservative American Enterprise Institute, put the direct cost to the United States at $212 billion as of last September and estimates a "global cost" of $500 billion to date with another $500 billion possible, with most of the total borne by the United States.

    That figure is in line with an estimate published last month by University of Chicago economist Steven Davis and colleagues, who put the likely U.S. cost at $410 billion to $630 billion in 2003 dollars.

    Joseph Stiglitz, a Nobel Prize-winning economist and self-described opponent of the war, puts the final figure at a staggering $1 trillion to $2 trillion, including $500 billion for the war and occupation and up to $300 billion in future health care costs for wounded troops. Additional costs include a negative impact from the rising cost of oil and added interest on the national debt.

    In the buildup to any war, financial costs rarely play a big role in the debate, especially for a superpower like the United States, which is presumed to have virtually limitless resources. But economists like Wallsten and Davis say there is no reason wars cannot be subjected to the same type of cost-benefit analysis as other government activities.

    After all, even a society as rich as ours has finite resources, and the public has a limited appetite for absorbing the costs of war, whether human or economic.

    "I come at this from a background in regulation," said Wallsten, who served in the Clinton White House but said his analysis is not rooted in any particular perspective on the war.

    "When the government proposes a new regulation they have to by law do a cost-benefit analysis," he noted. "So we have this framework, but it's never been applied to this kind of policy decision."

    Wallsten said some people might look at his estimate of up to $1 trillion in costs and conclude that the war was worth it given its benefits, such as the removal of Saddam Hussein from power and the possible installation of a democratic government in the heart of the Middle East.

    "I wasn’t trying to say whether the war was worth it or not. There are lots of benefits that could arise, and I don't know how to place a probability on whether they would occur. I was interested more than in coming up with a number, coming up with a framework that people might want to have in coming up with such decisions in the future," Wallsten said.

    Wallsten also offers amateur and professional policy-makers the chance to come up with their own cost estimates by plugging in values for variables like the length of the occupation (up to nine more years) the number of annual deaths and injuries and the statistical "value" of a life. (To try your own assumptions, click here.)

    In addition to the economic costs, any military conflict can also have financial benefits, although in this age of more limited wars and a service-oriented economy, war is not the economic pump-primer it once was.

    Davis and his colleagues at the University of Chicago recently updated a paper to make the point that the cost of the war alone is not necessarily an iron-clad argument against it.

    They estimate that continuing the previous policy of containment with a deployment of 28,000 troops in Turkey, the Middle East and the Persian Gulf would have cost $14.5 billion a year for many years to come. And they say containment eventually could have failed, meaning a more costly armed conflict might have broken out anyway. Factoring in those possibilities, they say containment could have cost $350 billion to $700 billion over the long term, possibly as much as the war option.

    They also point to potential net economic benefits to Iraqis, concluding that the war is likely to lead to "large improvements in the economic well-being of most Iraqis relative to their prospects under the policy of containment."

    And, Davis and his colleagues argue, even though the war has led to thousands of Iraqi deaths, tens of thousands were dying prematurely each year under Saddam's regime, due to repression, economic failure or UN sanctions.

    "If, over the course of a generation, Iraqis recover even half of the economic losses they suffered under Saddam Hussein, then they will be significantly better off in material ter.ms as a consequence of forcible regime change," they say.

    © 2006 MSNBC Interactive
    Last edited by sojustask; 03-20-2006 at 08:36 PM.

  3. #3
    Join Date
    Feb 2005

    Re: The Cost Is `Unknowable'

    Congress last week raised the nation's borrowing limit to $9 trillon. We are already at just over $8 trillion.
    (See http://www.publicdebt.treas.gov/opd/opdpenny.htm for the exact up to the second amount.)




    03/16/2006 ........$8,271,005,203,336.67
    03/15/2006 ........$8,270,134,498,375.29
    03/14/2006 ........$8,270,260,017,805.93
    03/13/2006 ........$8,270,385,415,129.52
    03/10/2006 ........$8,270,763,143,272.32
    03/09/2006 ........$8,270,889,116,189.68
    03/08/2006 ........$8,270,020,560,975.99
    03/07/2006 ........$8,270,137,961,985.81
    03/06/2006 ........$8,270,260,474,453.58
    03/03/2006 ........$8,270,568,938,276.67
    03/02/2006 ........$8,270,651,337,575.14
    03/01/2006 ........$8,269,768,312,946.41


    02/28/2006 ........$8,269,885,515,386.04
    01/31/2006 ........$8,196,070,437,599.52
    12/30/2005 ........$8,170,424,541,313.62
    11/30/2005 ........$8,092,322,205,720.65
    10/31/2005 ........$8,027,123,404,214.36

    Prior Fiscal

    09/30/2005 .......$7,932,709,661,723.50
    09/30/2004 .......$7,379,052,696,330.32
    09/30/2003 .......$6,783,231,062,743.62
    09/30/2002 .......$6,228,235,965,597.16
    09/28/2001 .......$5,807,463,412,200.06
    09/29/2000 .......$5,674,178,209,886.86
    09/30/1999 .......$5,656,270,901,615.43
    09/30/1998 .......$5,526,193,008,897.62
    09/30/1997 .......$5,413,146,011,397.34
    09/30/1996 .......$5,224,810,939,135.73
    09/29/1995 .......$4,973,982,900,709.39
    09/30/1994 .......$4,692,749,910,013.32
    09/30/1993 .......$4,411,488,883,139.38
    09/30/1992 .......$4,064,620,655,521.66
    09/30/1991 .......$3,665,303,351,697.03
    09/28/1990 .......$3,233,313,451,777.25
    09/29/1989 .......$2,857,430,960,187.32
    09/30/1988 .......$2,602,337,712,041.16
    09/30/1987 .......$2,350,276,890,953.00

    Last edited by sojustask; 03-20-2006 at 08:36 PM.

  4. #4
    umdkook Guest

    Re: The Cost Is `Unknowable'

    eh, whats a few hundred billion dollars when at least we can sleep safely knowing Saddam and his terrible WMD's are no longer a threat??

  5. #5
    Join Date
    Feb 2005

    Re: The Cost Is `Unknowable'

    Quote Originally Posted by umdkook
    eh, whats a few hundred billion dollars when at least we can sleep safely knowing Saddam and his terrible WMD's are no longer a threat??

    I don't know, ask the generations who will shoulder the burden of paying off that debt.

    Lady Mod

  6. #6
    Join Date
    Sep 2004
    New Zealand

    Re: The Cost Is `Unknowable'

    Just out of curiosity, does anyone have any figures of what other countries owe America? Individual figures for each country would be good. Also, figures on other country's debts would be great too. Thought I'd ask on here before I go hunt it down

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