'Hidden Costs' Double Price Of Two Wars, Democrats Say

A New Accounting
SOURCE: | The Washington Post - November 13, 2007
By Josh White
Washington Post Staff Writer
Tuesday, November 13, 2007

The economic costs to the United States of the wars in Iraq and Afghanistan so far total approximately $1.5 trillion, according to a new study by congressional Democrats that estimates the conflicts' "hidden costs"-- including higher oil prices, the expense of treating wounded veterans and interest payments on the money borrowed to pay for the wars.

That amount is nearly double the $804 billion the White House has spent or requested to wage these wars through 2008, according to the Democratic staff of Congress's Joint Economic Committee. Its report, titled "The Hidden Costs of the Iraq War," estimates that the wars in Iraq and Afghanistan have thus far cost the average U.S. family of four more than $20,000.

"The full economic costs of the war to the American taxpayers and the overall U.S. economy go well beyond even the immense federal budget costs already reported," said the 21-page draft report, obtained yesterday by The Washington Post.

The report argues that war funding is diverting billions of dollars away from "productive investment" by American businesses in the United States. It also says that the conflicts are pulling reservists and National Guardsmen away from their jobs, resulting in economic disruptions for U.S. employers that the report estimates at $1 billion to $2 billion.

The committee, which includes House and Senate members from both parties and is chaired by Sen. Charles E. Schumer (D-N.Y.), is expected to present the report this morning on Capitol Hill. Democratic leaders plan to use the report as evidence that the wars are far costlier than most realize and that a change of course could save taxpayers billions of dollars in the coming decade.

"What this report makes crystal clear is that the cost to our country in lives lost and dollars spent is tragically unacceptable," Schumer said in a statement last night.

Brian Hart, a spokesman for Sam Brownback (Kan.), the committee's senior Republican senator, said, "The Democrats didn't bother to run this report by any of their Republican JEC colleagues or staff."

"We'll see what they come up with, but it sure seems that the Senate leadership is trying to protect their continual proclamations of defeat instead of working for bipartisan progress," Hart added.

War funding experts said that the committee's Democrats raise viable arguments but that some of the numbers should be met with skepticism. For example, it is difficult to calculate the precise impact of the Iraq war on global oil prices, and it is speculative to estimate how much the war will cost over time, as situations change daily on the battlefield.

Robert D. Hormats, vice chairman of Goldman Sachs (International) and a member of the National Security Council staff under Presidents Nixon, Ford and Carter, said he agrees that the war is far costlier than the publicly stated price tag but said some of the report's measures are problematic. He said he thinks it would be hard to show that the Iraq war has caused oil prices to skyrocket or oil producers in the Middle East to falter, and he said he does not think there has been a closing-off of U.S. investment because of the war.

Oil prices have more than tripled since the U.S.-led invasion of Iraq in March 2003, the report notes, to a peak of more than $90 per barrel. "The war in Iraq is certainly not responsible for all of this increase," the report states, but it estimates that declining Iraqi production "has likely raised oil prices in the U.S. by between $4 and $5 a barrel." The report added that "because of the many factors affecting oil markets, this should be seen as a highly approximate estimate."

Hormats said he agrees with the report's finding that the United States is dangerously increasing its reliance on foreign debt and that Americans will be paying the price for generations. Hormats, author of "The Price of Liberty: Paying for America's Wars," said that in every other major war, the United States has financed the conflict.

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