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A $2 Trillion Footnote?

By Robert J. Samuelson
Wednesday, February 28, 2007

Anyone who practices deadline journalism is bound to find much to regret -- things you wish you'd said (or hadn't said) and words, arguments and attitudes that, with hindsight, seem poorly chosen. Which brings me to my September 2002 column headlined "A War We Can Afford." As the situation in Iraq has deteriorated, some readers have suggested that I revisit that column and confess to error. Let me take up their invitation, because today's ferocious war debate raises many of the same issues.

Yes, that column made big mistakes. The war has cost far more than I (or almost anyone) anticipated. Still, I defend the column's central thesis, which remains relevant today: Budget costs should not shape our Iraq policy. Frankly, I don't know what we should do now. But in considering the various proposals -- President Bush's "surge," fewer troops or redeployment of those already there -- the costs should be a footnote. We ought to focus mostly on what's best for America's security.

To be sure, the war's costs have been huge. Since September 2001, Congress has provided $503 billion for Iraq, Afghanistan and related activities, says the Congressional Budget Office. The administration's request for fiscal 2007 (ending in September) and fiscal 2008 would bring the total to $746 billion. Iraq represents about 70 percent of that. By contrast, my original column put the cost of an Iraq war at up to $80 billion. That was based on the cost then of the war in Afghanistan ($10 billion), the cost of the Persian Gulf War ($61 billion) and the expectation that another invasion would involve fewer troops (it did).

As to the future, the CBO has created two "illustrative scenarios" -- one involving a troop reduction to 30,000 by 2010, the other a reduction to 75,000 by 2013. In both, troop levels would then remain unchanged until 2017. By CBO estimates, the scenarios would involve extra spending from 2009 to 2017 of $269 billion and $696 billion, respectively.

Finally, the war has created costs that, though they don't appear in accounts labeled "Iraq," are properly attributed to Iraq. Trucks, helicopters and tanks are wearing out at faster rates; they'll have to be replaced or refurbished. Recruiting costs have risen. Veterans' disability benefits and health costs are increasing. Already, 1.4 million U.S. troops have served in Iraq and Afghanistan, says Linda Bilmes, a Harvard budget expert. Since the Persian Gulf War, almost 40 percent of veterans have received disability benefits, she says. The rate for today's wars could be higher. She estimates the present value of future disability and health benefits at $300 billion to $600 billion.

The war on terrorism has clearly worsened the long-term budget outlook. How then can I treat that so lightly? What's missing is context. Dominated by Social Security and health care, the federal budget now totals nearly $3 trillion annually. Suppose the war's ultimate costs reach $2 trillion by 2017 (the figure is cumulative, not in any one year). That's a big number, perhaps too big. It's also a wild guess. Still, the CBO estimates all federal spending over the same period (2002-17) will total $48 trillion; war spending would be about 4 percent. In the same period, the income of the U.S. economy (gross domestic product) would total an estimated $248 trillion; war spending would be less than 1 percent of that. The point, as I said in 2002, is that we're so wealthy we "can wage war almost with pocket change."

With hindsight, it seems almost incontestable that the Iraq war should never have been fought. It has eroded our global power, weakened our military and resulted in thousands of American and Iraqi deaths. What I most regret about my earlier column is that it seemed to bless a war, when I was mainly trying to focus attention on questions more important than money. Given the headline (I wrote it) and the fact that those questions came at the end of the column ("Is this war justifiable? . . . What would happen if we don't fight? What will happen if we do?"), the reaction was understandable. In truth, I was uncertain about the war then, just as I'm unsure of what to do now.

But I am certain -- now as then -- that budget consequences should occupy a minor spot in our debates. It's not that the costs are unimportant; it's simply that they're overshadowed by other considerations that are so much more important. We can pay for whatever's necessary. If we decide to do less because that's the most sensible policy, we shouldn't delude ourselves that any "savings" will rescue us from our long-term budget predicament, which involves the huge costs of federal retirement programs. Just because the war is unpopular doesn't mean it's the source of all our problems.

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