The U.S. military has spent most of the $65 billion that Congress approved for fighting the wars in Iraq and Afghanistan and is scrambling to find $12.3 billion more from within the Defense Department to finance the wars through the end of the fiscal year, federal investigators said yesterday.
The report from the Government Accountability Office, Congress's independent investigative arm, warned that the budget crunch is having an adverse impact on the military as it shifts resources to Iraq and away from training and maintenance in other parts of the world. The study -- the most detailed examination to date of the military's funding problems -- appears to contradict White House assurances that the services have enough money to get through the calendar year.
Already, the GAO said, the services have deferred the repair of equipment used in Iraq, grounded some Air Force and Navy pilots, canceled training exercises, and delayed facility-restoration projects. The Air Force is straining to cover the cost of body armor for airmen in combat areas, night-vision gear and surveillance equipment, according to the report.
The Army, which is overspending its budget by $10.2 billion for operations and maintenance, is asking the Marines and the Air Force to help cover the escalating costs of its logistics contract with Halliburton Co. But the Air Force is also exceeding its budget by $1.4 billion, while the Marines are coming up $500 million short. The Army is even having trouble paying the contractors guarding its garrisons outside the war zones, the report said.
White House spokesman Trent Duffy said the Defense Department continues to believe that extra funds will not be needed this fiscal year. President Bush had requested a $25 billion reserve to cover shortfalls that may arise between Oct. 1, when the new fiscal year begins, and February, when the White House plans to submit a detailed funding request for military operations. But for now, Duffy said, there are no plans to tap the reserve. He added: "This president has said repeatedly the troops will have what they need, when they need it. That's why he has stood steadfastly in support of funding for our troops."
Lt. Col. Rose-Ann Lynch, a spokeswoman for the Pentagon's comptroller, said that though the fiscal 2004 budget is tight, "the department still anticipates sufficient funding to finance ongoing operations."
Democrats quickly pounced on the report, charging that the Bush administration is turning a blind eye to military funding issues to avoid adding to the overall budget deficit or conceding that the Iraq operations are off-course.
"George W. Bush likes to call himself a wartime president, yet in his role as commander in chief, he has grossly mismanaged the war on terrorism and the war in Iraq," contended Mark Kitchens, national security spokesman for Democratic presidential candidate John F. Kerry. "He went to war without allies, without properly equipping our troops and without a plan to win the peace. Now we find he can't even manage a wartime budget."
The GAO report detailed just why a $65 billion emergency appropriation has proved to be insufficient. When Bush requested that money, the Pentagon assumed that troop levels in Iraq would decline from 130,000 to 99,000 by Sept. 30, that a more peaceful Iraq would allow the use of more cost-effective but slower sea lifts to transport troops and equipment, and that troops rotating in would need fewer armored vehicles than the service members they replace.
Instead, troop levels will remain at 138,000 for the foreseeable future, the military is heavily dependent on costly airlifts and the Army's force has actually become more dependent on heavily armored vehicles. The weight of those vehicles, in turn, has contributed to higher-than-anticipated repair and maintenance costs. Higher troop levels have also pushed up the cost of the Pentagon's massive logistical contract with Halliburton subsidiary Kellogg Brown & Root.
About 4,000 Navy personnel in Iraq and Kuwait were not expected to be there, contributing to a $931 million hole in the Navy's budget for fiscal 2004. The Marine Corps was supposed to have decreased its presence in Iraq but instead has 26,500 Marines in the country and an additional two expeditionary units supporting the war on terrorism.
The strain is beginning to add up, the GAO said. The hard-hit Army faces a $5.3 billion shortfall in funds supporting deployed forces, a $2 billion budget deficit for the refurbishing of equipment used in Iraq and a $753 million deficit in its logistics contract. The Army also needs $800 million more to cover equipment maintenance costs and $650 million to pay contractors guarding garrisons.
The Air Force has decreased flying hours for pilots, eliminated some training, slowed civilian hiring and curtailed "lower priority requirements such as travel, supplies and equipment," the report said.
The Pentagon comptroller told GAO investigators that the Defense Department has sufficient funds to cover the shortfalls, provided Congress gives officials more authority to transfer money among accounts.
But the GAO report warned that there will be a serious downside to that approach, especially the deferral of maintenance and refurbishing plans until next year.
"We believe that the deferral of these activities will add to the requirements that will need to be funded in fiscal year 2005 and potentially later years and could result in a 'bow wave' effect in future years," the report cautioned. "Activities that are deferred also run the risk of costing more in future years."
A "bow wave" refers to a time when deferred costs confront Congress all at once, making it impossible to meet the demands.