A Bottomless Pit at the Pentagon | CQ

By Shawn Zeller, CQ Staff

The war on terrorism that began in full after the attacks on New York and Washington in 2001 has been phenomenally expensive, but not many people know just how costly.

The Congressional Research Service put a number on it last month, tallying up appropriations for the wars in Iraq and Afghanistan, plus the costs of military base security, and found that America’s longest war has cost the American people $1.6 trillion through fiscal 2014. Add about $73.5 billion for fiscal 2015, the appropriations for which were settled after the report came out.

That overall cost is equal to nearly half of the total federal budget for fiscal 2014, which was about $3.5 trillion.

Because the number is shocking, it’s prompted plenty of second-guessing. Interest groups and university professors have examined different ways in which Congress could have spent the money and argued that it would have been wiser to do so. Members of Congress, of course, have questioned the purpose of the war in Iraq, and even some of the expenditures in Afghanistan. Others have drawn attention to waste in government contracting and suggested that Congress needs to treat the war on terrorism like it does other federal programs, by weighing the costs and benefits.

As yet, though, there’s been no consensus about whether to actually try to do that, or how to more carefully review the administration’s spending requests.

In the meantime, the costs continue. CRS projects that they will gradually decline throughout the decade to about $15 billion a year, but much remains unknown. President Barack Obama is eager to step up the U.S. attacks on Islamic radicals in Syria and Iraq, for instance, a mission that could prove very expensive.

“We’ve never fully articulated how we are going to fight this war” on terrorism, says Christopher Shays, a former Republican member of the House from Connecticut who served on Congress’ Commission on Wartime Contracting from 2009 to 2011. “We’ve never determined if the things we are doing are resulting in the outcomes we want.”

The CRS’s $1.6 trillion tally makes the war on terrorism America’s second-most expensive conflict. World War II cost more than $4 trillion in today’s dollars. But the CRS figure is clearly an underestimate. It doesn’t include the vast expense of improving security at government facilities in the United States, of creating a Department of Homeland Security, or of federalizing airport security. Nor does it consider the private sector’s costs to bolster security for facilities and intellectual property. Other estimates put the broader cost of fighting terrorism, so far, at between $3 trillion and $5 trillion.

In war-fighting, the normal economies of scale don’t seem to apply, the CRS report reveals. As the number of soldiers deployed rises, one would expect the cost per soldier to fall. But this has not been the case. In both Afghanistan and Iraq, the cost per deployed soldier rose, in Iraq from $490,000 in fiscal 2005 to $800,000 in fiscal 2008, and from $580,000 to $820,000 over the same period in Afghanistan.

CRS speculates in some detail about the reasons. More soldiers, of course, need more hardware, like armored Humvees, to protect them from harm. They’re also drawing better pay and benefits, thanks to Congress’ moves in recent years to improve those to help military recruiters convince more people to volunteer. More elaborate bases are built when more soldiers arrive, which require all sorts of support services, from intelligence to communications. And then, CRS adds, there was also corruption that pervaded wartime contracting practices.

It might also seem logical that costs would fall as troops are pulled out. In fact, they grow exponentially as support services for the remaining soldiers remain in place. CRS reports that in Iraq, per-troop costs doubled from $800,000 in fiscal 2008 to $1.6 million in fiscal 2012 when the last U.S. troops left the country. In Afghanistan, per-troop costs fluctuated between $820,000 and $910,000 between fiscal 2008 and fiscal 2011, and are expected to hit $3.9 million per deployed soldier in fiscal 2015 as the U.S. draws down.

It’s certain that the costs are not going to go away and will continue to accrue for generations, reducing corporate profits, increasing government borrowing and driving up interest rates for everyone. “We’re talking about immense implications,” says Winslow Wheeler, director of the Straus Military Reform Project at the Project on Government Oversight, a watchdog group. “The $1.6 trillion is just a down payment.”

A Ledger of War Costs

CRS’s report is mostly a dry accounting of the appropriations so far. It parses its number in various ways. The war in Iraq is the most expensive piece at $815 billion. Afghanistan has cost $686 billion. The Defense Department has overseen $1.5 trillion of the spending. The State Department and U.S. Agency for International Development have received $93 billion, while Congress has appropriated $17.6 billion to pay for medical care for the wounded. Totals rose until fiscal 2008 when they hit a peak of $195 billion and have declined since.

The Cost of Terrorism

The author, Amy Belasco, a specialist in U.S. defense policy and budget, has been tracking the cost of the wars since 2001, and she makes a case that Congress has mostly given both Obama and George W. Bush before him what the administrations have wanted. Even the tight spending caps that Congress enacted in 2011’s Budget Control Act, and the across-the-board cuts that followed, have mostly left war funding untouched. Early in the war, Congress enacted emergency spending measures to cover war costs, exempting them from budget controls. More recently, Congress has funded an Overseas Contingency Operations budget at the Pentagon to avoid spending limits.

In some cases, Congress has put more in the fund than the administration requested. “Congress has actually been a greater offender in this area,” said Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee, at a hearing last year. Added Bill Pascrell Jr., a New Jersey Democrat on the panel: “The administration, the Congress have used the [Overseas Contingency Operations] budget in the past to skirt the Budget Control Act caps.”

Congress has mostly given in to the Pentagon’s requests for more flexibility over its war-fighting funds. Belasco notes that since the 2001 terrorist attacks, Congress has created 10 new flexible funding streams from which the DoD can draw without having to get Congress’ permission on how to use the money. Between fiscal 2005 and fiscal 2014, she finds that Congress has allowed the Defense Department to spend between 15 percent and 23 percent of its war budget this way.

And she raises questions about whether Defense has inflated its budget requests for the war. The department has allowed more than 2 percent of its war funding to lapse each year, on average — money that is supposed to be repaid to the Treasury, though Defense has also occasionally used money from its base budget to cover war costs. In addition, during the 2013 sequestration, when Congress ordered the Department of Defense to find $37.2 billion in cuts, the department opted for an across-the-board cut to both its war funding and base budget, indicating there’s some fat in the war budget.

Certainly, Defense has not always spent its war funds to the maximum effect. Belasco focuses on the tens of billions the Pentagon has received to help train and equip Iraqi and Afghan military forces. Congress has rarely questioned these requests, but it’s plain that the Pentagon’s efforts haven’t worked out very well. Last year, Iraqi security forces lost crucial battles to Islamic militia, forcing the United States to conduct bombing raids and send military advisers to help protect Baghdad. As U.S. forces prepare to withdraw from Afghanistan, the same problem could arise there. Afghan forces show many of the same problems as those in Iraq, writes Belasco, and continue to be tested by Taliban insurgents. About a third of Afghan soldiers quit each year, and new, perhaps less well-trained recruits take their place.

A Broad Economic Impact

Plenty of activists and scholars have tried to draw attention to the costs of the war on terrorism over the past decade. In 2010, scholars at the Watson Institute for International Studies at Brown University assembled more than 30 economists, anthropologists, lawyers, humanitarian personnel and political scientists to compile a comprehensive assessment of the war’s costs. The Costs of War Project issued its report in 2011, since updated, that puts the total cost at more than $4.4 trillion.

The project members say that while the spending has given the U.S. economy a boost, it is “small and declining.” The economic effect of all the spending has been muted because the government borrowed the money for the wars, incurring debt and raising interest rates. The scholars project that by 2023 the U.S. will have paid $1 trillion in interest on its war debt. They figure that interest rates are about a third of a percentage point higher now than they would have been, absent the loans, forcing every borrower to pay more to service debt to buy a home or run a business. Their report says that “estimates suggest that in total, war spending has probably raised Gross Domestic Product by .5 percent in 2011, but the net effect will fall to zero by 2020 and turn negative” as the war’s costs continue to drag on the economy.

Linda J. Bilmes, a lecturer at Harvard’s John F. Kennedy School of Government, goes further. “If you’d spent the money on digging holes and filling them in, that would have stimulated the economy more,” she says, given that some of the spending was lost to corruption or went to foreign contractors.

Bilmes and Columbia University economist Joseph E. Stiglitz have written a book on the cost of the wars in Iraq and Afghanistan and pegged it at $3 trillion or more. They include in that tally the human productivity lost in the deaths and injuries of soldiers and the time family members have spent caring for the wounded. They also count rising oil costs, which they link to the reduction in refining capacity caused by the Iraq war. Stiglitz believes that the financial crisis of 2008 is in part a result of the wars, arguing that the easy money policy adopted by the Federal Reserve in response to rising oil prices may have led to excessive risk-taking on Wall Street.

The National Priorities Project, an advocacy group in Massachusetts, has tried to draw attention to war spending by offering ideas on how Congress might have otherwise spent the money, and by breaking down the costs of war borne by each taxpayer. Heidi Garrett-Peltier, an economist at the University of Massachusetts at Amherst, says if the money had been spent on more labor-intensive fields, such as clean energy development, education or health care, it would have created between 1 million and 2 million more jobs.

Even defense hawks such as Judd Gregg, a former Republican senator from New Hampshire who served as Budget Committee chairman, say the CRS tally of costs is too limited. “The $1.6 trillion is extremely conservative,” he says. “Look at the hardening of security in cities and police departments, the reallocation of resources by business in cyber-defense, the reallocation of resources to protect infrastructure, electrical transmission lines and financial houses.”

But where Gregg and many of his colleagues in Congress differ from the advocates and the scholars is over the value of the spending. He says that, certainly, Congress should do a better job of scrutinizing war costs and should try harder to offset the expenses. But he won’t join Shays in suggesting that Congress has been derelict in its duties.
“The first obligation of the federal government is to defend the country,” Gregg says. “You spend whatever it takes.”

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