Study Criticizes Bush Approach to War Funding, Calls for Changes

By Ann Scott Tyson
Washington Post Staff Writer
Friday, December 26, 2008

President-elect Barack Obama's administration needs to monitor war spending much more closely than the current White House has, according to a new study that criticizes President Bush's approach to funding the Iraq and Afghanistan wars -- a bill that is projected to approach nearly $1 trillion next year.

Even with declining troop numbers in Iraq, the direct price tag of the two wars could grow as high as $1.7 trillion by 2018, the Center for Strategic and Budgetary Assessments reported last week. The defense think tank's figure does not include potentially hundreds of billions more in indirect economic and social costs, such as higher oil prices and lost wages.

The war in Iraq alone has already cost more in inflation-adjusted dollars than every other U.S. war except World War II, the CSBA found.

Defense Secretary Robert M. Gates, named by Obama to continue in that job, has made it clear that the incoming administration will scrutinize defense spending, which has mushroomed since 2001 as a result of the wars and related costs.

"There clearly is going to be very close scrutiny of the budget," Gates said this month, adding: "We need to take a very hard look at the way we go about acquisition and procurement."

The CSBA agreed and blamed the ballooning budgets on the Bush administration's unprecedented decision to fund the wars through giant emergency spending measures rather than through appropriations requests.

"The process has reduced the ability of Congress to exercise effective oversight. It has also tended to obscure the long-term costs and budgetary consequences of ongoing military operations," the report says. It also warns that such emergency bills have included "substantial amounts of funding for programs unrelated to the military operations in Iraq and Afghanistan."

Steven M. Kosiak, a defense budget expert and author of the study, said the Obama administration should "budget in a more straightforward way, to provide better justification for war-related costs" by having a budget for military operations and long-term force modernization, and limiting supplemental spending to "a real emergency."

The Office of Management and Budget declined to comment on the CSBA report. It said that Congress had appropriated $819.6 billion for the conflicts in Iraq and Afghanistan through fiscal 2008. Fiscal 2009 ends Sept. 30.

The report noted that the Iraq war has cost far more than the Bush administration estimated before the March 2003 invasion, and it cited an interview that Mitch Daniels, then the OMB director, gave to the New York Times, in which he indicated the Iraq war could cost $50 billion to $60 billion. "These estimates have already proven to be wildly optimistic," the report says.

Direct costs of the wars have increased from about $17 billion in 2001, when the United States overthrew the Taliban government in Afghanistan, to $93 billion in 2003, when the U.S. military invaded Iraq, and $182 billion for 2008. Those costs cover military operations, the building of Iraqi and Afghan forces, foreign assistance, and veterans benefits. The study was based on a broad survey of official and unofficial war-cost assessments.

The report also rapped the Bush administration's paying for the wars through borrowing, rather than tax increases and spending cuts. That approach, it concluded, will lead to interest costs through 2018 that range from about $70 billion to as high as about $700 billion, depending on how much of the war funding came through bond sales.

"If you want to go to war . . . we should probably pay for more of that war upfront rather than borrowing for it," Kosiak said, because the public feels more of the war's real burden through tax increases and spending cuts.

The study also explored various estimates of the macroeconomic costs of the war from higher oil prices and diverted investment. For example, if the war in Iraq caused a $5-per-barrel rise in the price of oil through 2006, as some experts estimate, that would have cost $235 billion in economic output. Social costs based on the value of lost lives and injuries are harder to measure, but some say they have already exacted a toll of hundreds of billions of dollars.

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