Dienstag, 8. April 2008

Costs of war: US budgetary apocalypse

by Shaun Waterman in Washington, DC for ISN Security Watch (08/04/08)

An estimate of the cost of war in Iraq is US$12 billion per month, and in the meantime, demographic trends are creating a budgetary apocalypse, Shaun Waterman writes for ISN Security Watch.

Before the 2006 election campaign, I asked a veteran congressional aide how Republicans would explain to voters the ruinous continuing costs of the war in Iraq.

"They'll just tell 'em the good news," he said. "There's money. Money to build new roads, bridges and tunnels; money for new hospitals and schools; money to pay teachers and policemen."

"What's the bad news?" I asked.

"It's all in Iraq," he said.

Indeed. When you add the military costs of war and occupation to the money being spent on reconstruction, Iraq is, by one estimate, currently costing US taxpayers US$12 billion a month. That's nearly US$400 million a day, or US$17 million dollars an hour.


Using a slightly lower figure - US$339 million a day - the Democrat-controlled House Committee on Appropriations provided a list of other ways that money could be spent, including: opening community health centers to serve 2.6 million of the 40 million or so Americans without adequate health insurance; helping nearly a million families with their energy bills through the Low-Income Home Energy Assistance Program, or LIHEAP; giving food stamps to nearly half-a-million women and children in poor families; providing accommodation for more than 48,000 homeless veterans; hiring 4,400 more cops for local towns and cities for the next three years; or ensuring that over 300,000 children receive every recommended vaccination.

The US$12 billion monthly estimate comes from Harvard academic Linda Bilmes, a former chief financial officer at the Commerce Department, and Columbia University Professor Joseph Stiglitz, who was chairman of the Council of Economic Advisers under President Clinton.

They say that by the time you add in what military budget planners call the "out year costs" - the monies that will have to be paid out in the future to meet existing commitments, for instance to wounded veterans - the total cost of the Iraq war is likely to be the nice round sum of US$1.5 trillion.

And that figure does not include the indirect economic costs of the war, which are another US$1.5 trillion.

Pentagon officials pooh-poohed their numbers, claiming that they included "everything in the kitchen sink." A spokesman criticized their decision to include the interest on the national debt and part of the increased cost to the economy of higher oil prices in their estimate. "It seems like an exaggerated number to us," Pentagon Press Secretary Geoff Morrell told reporters.


Nor has the administration become more transparent or accurate with its own estimates. In January 2007, according to Stiglitz and Bilmes, the administration said it estimated the "surge" - an extra 21,000 troops going to Iraq - would cost of US$5.6 billion for four months.

But their numbers included only the costs of actually deploying the combat troops themselves, excluding the expense of deploying the necessary 15,000 - 28,000 support personnel. That raised the figure to at least US$11 billion for four months, rising to almost US$50 billion if the "surge" lasted more than a year (as it looks like doing).

Even this expanded estimate excluded any consideration of long-term health and disability costs for veterans, or the cost of replacing the additional equipment that the extra troops are using.

But even when there is agreement about what should be included, congressional auditors say the Defense Department often does not provide accurate and useable data about spending, and has never been able to pass an audit.

Anthony Cordesman of the Center for Strategic and International Studies says the administration's "wartime budget submissions began badly and have steadily deteriorated in content and credibility with time."

Administration data "lump together" military expenditures on the Iraq war, Afghan war and US counterterrorism operations in all other parts of the world; but fail to combine "all civil and military costs into a single credible budget estimate."

Moreover, the spending is able to blow through the budgetary caps imposed by legislation because the administration requests it in the form of emergency expenditure in special supplemental appropriation bills.

Cordesman calls the supplementals "poorly explained and justified," pointing out that they cover "expenditures that were clearly predictable during the drafting of the baseline budget." The emergency requests "have also come to include a steadily rising amount of items [with a] very uncertain relation to the war."

Cordesman, whose labels the Bilmes-Stiglitz estimate a "worst case scenario," says that the war in Iraq is now not only the second longest war in US history, after Vietnam; it is also the second most costly in inflation adjusted dollars - surpassed only by World War II.

Yet national spending on defense as a proportion of national income remains at an historically low level.

During World War II, nearly 40 percent of US gross national product (GNP), the nation's total income for the year, was spent on defense. That was a gargantuan effort, never matched before or since.

Even at its peak in 1968, spending on the Vietnam war never got into double figures as a percentage of GNP, Cordesman says.

Spending on the current Iraq war, at 4 percent of GNP, is barely higher than its 3 percent low during the Clinton era - widely derided by defense hawks as a period of unwise-in-retrospect retrenchment of military power driven by spending cuts.

As a result, there has been little visible effect of the cash hemorrhage the war has become on other US government spending, for instance on homeland security, which has continued to grow at the steady rate it acquired after ballooning so astronomically in the years immediately following 11 September.

But, combined with the Bush tax cuts, war spending has driven a cataclysmic rise in the national debt, which has climbed by 50 percent in the last eight years.

More troubling still, as David Walker, the departing comptroller general, or auditor-in-chief, of the US government has pointed out, is that demographic trends are creating a budgetary apocalypse for the country.

So-called entitlement spending - programs like social security and Medicare which provide for the elderly - are set to soar as the population ages, creating a structural deficit which Walker has said will mean that interest on the federal debt will absorb the entire budget within 50 years unless corrective action is taken.

That action could take three forms: raising taxes, cutting spending or reforming or abolishing the programs.

Both raising taxes, or even rolling back recent tax cuts, and reforming entitlement programs have proved politically impossible so far. Cutting, or to be more accurate, controlling the growth of spending, while politically possible in the sense that a majority will vote for it in Congress, has proved all-but-impossible in practice, because of the tortuous way that US lawmakers write the federal budget line by line and then submit it in one huge "take it or leave it" package to the president.

Keine Kommentare: