The Trillion-Dollar War

The War on Terror is now more expensive than Vietnam or World War I—but the dishonest way Washington is paying for it may prove costliest of all.

Veronique de Rugy from the May 2008 issue

(Page 2 of 4)

What changed? Aside from internal fiscal discipline, the single biggest procedural shift came in 2002, when the Congress let lapse a law that had required budget cuts to “offset” emergency expenditures.

Who benefited? The Pentagon, the political party that ran Washington in the early 2000s, and their friends.

“The Bush administration is clearly capable of projecting costs in Iraq,” says Travis Sharp, “and has simply ignored historical precedent.”

The Size of the Con
This year the Department of Defense once again failed to include the cost of war in its record-breaking $515 billion defense budget for fiscal year 2009. Instead, it included a placeholder for yet another $70 billion emergency war supplemental—which, conveniently for the administration, does not get counted in deficit projections.

Pressed by Democrats during the annual defense budget hearings in February, Defense Secretary Robert M. Gates confirmed that the $70 billion was only a small fraction of the total expected war cost for the year. Pressed further, Gates estimated that military operations in Iraq and Afghanistan would cost at least $170 billion in 2009.

He immediately added, “I have no confidence in that figure.”

From the beginning, the administration has argued that supplemental bills have the advantage of being prepared closer to the time when the funds will be used, allowing for a more accurate assessment of needs and quicker access to money. It also notes that making the spending separate prevents it from becoming a permanent feature of the defense budget. In other words, the administration argues, using supplemental bills is the fiscally responsible thing to do.

A more likely explanation has little to do with military strategy or budgetary concerns, and everything to do with the fact that “emergency” spending has very beneficial features for big spenders in Washington.

In 1990, under bipartisan congressional pressure to reduce the size of the deficit, President George H.W. Bush signed the Budget Enforcement Act (BEA), which exempted emergency bills from other rules of the era designed to restrain spending. The BEA allowed the government to exclude emergency spending from the deficit projections required in the annual budget. To prevent lawmakers from abusing that loophole, the law required that Congress offset supplemental spending with rescissions—that is, by permanently withholding already appropriated funds.

For a while, this plan worked well, at least by today’s standards. According to a 2005 Congressional Research Service report, between 1981 and 2002 Congress offset an average of 40 percent of supplemental appropriations with rescissions. And those emergencies weren’t for war; during the recession- and inflation-plagued early 1980s, supplementals were used to fund mandatory outlays for unemployment compensation. In the early 1990s, the purpose shifted to natural disaster relief.

But Congress let the BEA expire in 2002. Since then, supplemental appropriations exceeding budget caps have no longer triggered automatic cuts elsewhere. Today the only legislative limit on emergency spending is a congressional prerogative to raise a point of order to protest the “emergency” designation. This happens rarely if ever.

The floodgates are now open. According to data compiled by the Congressional Research Service, inflation-adjusted supplemental spending has increased nearly fivefold in less than three decades, from $36 billion in fiscal year 1980 to $160 billion in 2007, boosting its share of the overall budget authority from 3 percent to 7 percent. And these numbers don’t even catch all of the federal government’s “emergency” spending measures, because some are attached to regular appropriations, such as the December 2007 omnibus bill containing the $70 billion bridge fund.

But for a true measure of the increase, we ought to look at supplemental spending as a share of total new discretionary spending. And there, the trend lines are striking (see Figure 3). Except for a sharp spike in 1991 to fund the first Gulf War (which was largely offset later), emergency appropriations remained a very small share of new discretionary spending through most of the 1990s, staying below 3 percent. Compare that to 2007, when Congress appropriated over 18.3 percent of all discretionary spending through the supplemental process.

This profligacy is par for the course with President Bush. Since fiscal year 2001, the Bush White House has expanded federal spending by 66 percent, in nominal terms, enacting extremely expensive and pork-swollen bills covering agriculture, highway, energy, and prescription drugs while doubling the same federal education budget that Republicans once sought to eliminate.

Regular military appropriations, too, have more than doubled under Bush. According to the Office of Management and Budget, the $481 billion defense request for fiscal year 2008 is 66 percent higher than the budget Bush inherited from Clinton in 2001. If you add to that amount the $196 billion of requested emergency war funding, the Pentagon’s budget is, in inflation-adjusted dollars, larger today than at any point since the end of World War II.

Comments

Elemenope|4.7.08 @ 12:06PM|#

Also, (expanding upon an earlier point) Kosovo didn't cost a trillion dollars.

Elemenope|4.7.08 @ 12:15PM|#

Who benefited? The Pentagon, the political party that ran Washington in the early 2000s, and their friends.

This Quo Vadis?(tm) moment brought to you by the Eisenhower administration. "We're ready to desegregate your schools! Let me just get this hole down to four strokes..."

j/k. I like Ike.

Elemenope|4.7.08 @ 12:20PM|#

Not to be a total thread hogg, but I found this fascinating:

Revolution!

|4.7.08 @ 12:37PM|#

I haven't received my print copy of the May issue yet. What gives?

Maybe my mailman is a closet libertarian.

|4.7.08 @ 12:44PM|#

Also, (expanding upon an earlier point) Kosovo didn't cost a trillion dollars.

Neither did the first Gulf War. In both instances, since we didn't act like assholes we were able to get western Europe and/or Japan to underwrite the cost. Neat huh?

|4.7.08 @ 12:46PM|#

"More expensive than Vietnam or WWI" is a bit misleading. As a percentage of GDP I believe the Iraq War is far less than both of those.

Abdul|4.7.08 @ 12:53PM|#

I suppose we could've saved some money by fighting the Iraq war with WWI technology, but I'm willing to spend the extra buck on kevlar and repeating rifles.

|4.7.08 @ 12:53PM|#

OK. So, what the war in Iraq is expensive. It is still a drop in the bucket compared to what we have spent, and are still spending, on LBJ's War on Poverty. This war is a much bigger disaster. It's not making our country better. It provides disincentive for being productive, and incentive for reproducing when you can't afford to. It's nuts. How about an exit strategy from that war?

Elemenope|4.7.08 @ 12:55PM|#

It provides disincentive for being productive, and incentive for reproducing when you can't afford to. It's nuts. How about an exit strategy from that war?

Whatever plan we do have, it must include stopping you from speaking on our behalf.

Man, you sound like such an arrogant douche, it makes me *want* to redistribute wealth.

|4.7.08 @ 12:56PM|#

Hmm, if we expand the war on terror we get to use more bombs and destroy more stuff. Then we can replace the bombs and rebuild the stuff. That will drive GDP up and if we can hide some of these expenses in another part of the budget then the WOT will be even smaller as a proportion of GDP.

Cool, huh?

fyodor|4.7.08 @ 1:02PM|#

matth,

Since GDP measure the size of the economy, you must be saying that increased defense spending benefits the economy?

Brandybuck|4.7.08 @ 1:10PM|#

OK. So, what the war in Iraq is expensive. It is still a drop in the bucket compared to what we have spent, and are still spending, on LBJ's War on Poverty.

Careful there! A lot of people are using similar arguments to *justify* the Iraq invasion and occupation.

Husband: "You paid HOW much for those shoes?"
Wife: "$3000. But that's cheap, because Betty bought some shoes last week that were $5000!"
Huband: "Oh that's okay then."

|4.7.08 @ 1:11PM|#

The GOP apologists tend to trot out the "percentage of GDP" nonsense to justify their party's sloven fiscal sense.

As Milton Friedman has pointed out, the Bush portion of the debt is actually a $5 trillion dollar tax INCREASE (to be paid later) - the largest in history. Making interest payments on that debt will be a burden - interest alone will dwarf HUD, welfare and the food stamp programs combined. In 2006 interest on the federal debt was $226 billion - around 8.5 per cent of all spending. I never hear a GOPer complain about that line item.

fyodor|4.7.08 @ 1:15PM|#

Careful there! A lot of people are using similar arguments to *justify* the Iraq invasion and occupation.

Why be "careful"? I thought that was the point! (Or at least to make it seem less unpalatable.)

|4.7.08 @ 1:16PM|#

Shrike is right the "as a percentage of GDP" stuff is a smoke and mirrors shell game to hide fiscal irresponsibility.

fyodor|4.7.08 @ 1:20PM|#

Regarding how to measure the costs, I think the best measure is against what you're getting for it. I suppose opinions will vary on that. But if this war is as important as I would think any war should be to be fought, lots of people would be motivated to buy war bonds, right? Heh, actually, Obama will probably have a better chance of financing his occupation of Darfur that way.

Guy Montag|4.7.08 @ 1:26PM|#

I suppose we could've saved some money by fighting the Iraq war with WWI technology, but I'm willing to spend the extra buck on kevlar and repeating rifles.

Probably not as that stuff would be incredibly expensive now (more man-hour intensive in use and maintenance) plus pretty darn inefficient. Even WWII technology tanks had a 1:13 chance of a first round hit (WWI tanks 1:50 chance). Numbers are from memory from the US Army Armor School, 1983.

WWII bombers had to drop ZADS of iron bombs to cover a target, vs. one modern bomb today. Even in ODS we only used about 10% "smart" bombs vs. about 90% today.

Oh yea, if you think the animal freaks are nutty now, just imagine what the video of dead horses would do to that movement!

|4.7.08 @ 1:34PM|#

Not to mention trench warfare sucks big time. I'd much rather be a soldier in World War II--yes even on the Eastern Front--than be stuck in a trench at Ypres for four years straight.

|4.7.08 @ 1:40PM|#

Why not use WWI technology to invade Iraq? It turned out the only "WMD" Saddam had was some old mustard gas cannisters.

The War on Terror dealt its biggest blow by nineteen guys with boxcutters.

And Bush says we need a Missile Defense Shield to fight these guys? When we get nuked it will delivered by a yacht in a major city harbor.

Guy Montag|4.7.08 @ 1:48PM|#

shrike,

Just like all that money we "wasted" in WWII trying to beat the Axis powers to the Atomic Bomb that they turned out not to have a viable program for either?

Just like all the chemical warfare we prepared for that was never used against us in the same war?

Is that what you are complaining about?

|4.7.08 @ 1:56PM|#

You're equating the Axis Powers with stateless guerrilla fighters?

My only complaint would be your bad analogy, Guy.

Abdul|4.7.08 @ 1:56PM|#

Guy,

I think you're highlighting the difficulty of the comparison between old wars and modern wars. It's true that WWII bombers had to drop hundreds of bombs to get one target, but one of our hyper-accurate JDAMs costs as much as mid-level toyota, and we often the use the things just to take out a truck or a shed that costs half as much. Also, just bullets cost upwards of $2/shot nowadays, whereas they were much cheaper in WWI, and the doughboys weren't spraying dozens of rounds with each press of the trigger.

|4.7.08 @ 2:01PM|#

I still say it was better when we got Europe and Japan to write a check for the 1991 war.

|4.7.08 @ 2:02PM|#

Also nevermind comparing a total war to what is essentially the 21st century version of a colonial war. The stakes of losing the second kind are much, much smaller.

thoreau|4.7.08 @ 2:14PM|#

Good article on the costs.

For a while I tried to figure out how people who describe themselves as libertarians could maintain their support for something that has turned out to be so expensive and destructive. Eventually, I concluded that they're either stupid, deep in denial, amoral, or bloodthirsty.

Windypundit|4.7.08 @ 2:16PM|#

Keep in mind that the costs of some older wars are necessarily understated because those wars were fought with conscripted soldiers. That artificially lowers both the direct cost of salary and the indirect costs of providing the soldiers with good equipment and services. The costs are still paid---by the conscripted soldiers themselves, as lost income and greater danger---but they don't show up in the official budget.

Fluffy|4.7.08 @ 2:22PM|#

Just like all that money we "wasted" in WWII trying to beat the Axis powers to the Atomic Bomb that they turned out not to have a viable program for either?

If the United States had not developed the atomic bomb, would the atomic bomb currently exist?

I doubt any individual European power would have gotten there in the post-war era without using work the US already did. So that leaves it up to the Soviets. Without our work to steal, would they ever have developed the atomic bomb? It's hard to say whether a nation with a quantitative conventional weapons advantage would have developed the bomb on its own.

|4.7.08 @ 2:22PM|#

The pols (collectively, us) are hardly even trying to pretend to live within our means anymore.

We've been doing this for decades, in increasing amounts. Social Security, Medicare, padded highway construction, agricultural subsidies, defense contractors and war costs, huge new bureaucracies of every kind, and now bailing out failing Wall Street banks.

Baldfaced budgetary lying like this is just a symptom of some sort of final blowoff phase.

It's like the guy who has no hope of ever making his credit card and mortgage payments and so he decides to borrow to the limits and then throw a big party, and never mind what happens when the partygoers wake up tomorrow.

When people quit buying our bonds (or decide to sell them in a panic), what will our dollars be worth then? In that case, what will we do for a medium of exchange?

When no one will trust us to pay back our debts, we will revert to a cash and carry economy. What will we do, if simultaneously we have nothing to use as cash?

|4.7.08 @ 2:38PM|#

There's a great article in National Review that is total bull, but must be what the Bush Administration was told.

It has a fabulous economic analysis: There is not a 1:1 tradeoff of butter for guns, but wars stimulate the economy. If we spend money in Iraq, it's not $1 trillion that was lost, but a job creator. The housing crunch caused the slowdown, not the other way around. The idea that spending a trillion of our money to destroy 2 trillion of there stuff creates jobs on both sides. To doubt that, you must believe outdated Mercanilist theories, which had to do with favorably regulating trade to build up surpluses and hoard gold.

It is particularly amusing to hear that the Iraqis all want to get along because there are some Shia-Sunni marriages. And this is just like Germany where there conflict between the Catholics and Protestants, which were no doubt resolved when there country was destroyed in WW2; no doubt creating jobs just like we are creating jobs for Iraqis in rebuilding homes and businesses and burying the dead.

LINK:
http://article.nationalreview.com/?q=MmUxZjE4YmJhOWQ2OGQ0NTcwMzJkNDYzNzIzNWEwYzA=&w=MA==

|4.7.08 @ 2:49PM|#

If the United States had not developed the atomic bomb, would the atomic bomb currently exist?

Who knows?

However, definitely not currently existing would be the offspring of hundreds of thousands of dead US GIs and Japanese, killed in the invasion of the home islands.

BakedPenguin|4.7.08 @ 2:50PM|#

The idea that spending a trillion of our money to destroy 2 trillion of [their] stuff creates jobs on both sides.

I've heard that one before. If they were logically consistent, they'd advocate bombing the US, as it would mean that all the "economic development" from destruction would be included in our GDP.

Guy Montag|4.7.08 @ 2:51PM|#

Are you all forgetting the rising cost of indestructium for armored vehicles? Not to mention that they run on unobtainium? Aircraft are not that big of a problem, since upsidasium can still be found in great supply, but the invisibisium coating is a whole other problem.

J sub D|4.7.08 @ 2:55PM|#

I doubt any individual European power would have gotten there in the post-war era without using work the US already did. So that leaves it up to the Soviets. Without our work to steal, would they ever have developed the atomic bomb? It's hard to say whether a nation with a quantitative conventional weapons advantage would have developed the bomb on its own.

Prior to the Trinity test, pulp science fiction writers were already writing about nuclear fission chain reactions and the atomic bomb. That genie was coming out of the bottle whether the Manhattan Project occurred or not. Delayed a few years? Sure. Delayed until 1960? Not a snowball's chance.

Guy Montag|4.7.08 @ 3:04PM|#

JsD,

I guess I could believe pre-1960, maybe. But I can't help but believe that the British and the USA would have scrapped their projects and the Soviets would not be very efficient, or fast, at developing their own, even if all those "fellow traveler" Physicists went across the Iron Curtain to help.

PALEOGILMORE|4.7.08 @ 3:09PM|#

Yet another example of Reason's Pro-War leanings

Guy Montag|4.7.08 @ 3:11PM|#

You guys are destracting me from my Greater Purpose as a cog in the Military Industrial Complex. Now I must remember what I was doing so the endless river of money does not slow.

Fluffy|4.7.08 @ 3:13PM|#

Delayed a few years? Sure. Delayed until 1960? Not a snowball's chance.

It's the scale of the industrial work that was necessary for the bomb that I question.

I think the theoretical, Los-Alamos type work could certainly have been done.

I just wonder if the Oak Ridge type work would have been done without the blank check of a world war to make it get done.

And you don't do the Los Alamos work if the Oak Ridge work isn't getting done. There's no point.

However, definitely not currently existing would be the offspring of hundreds of thousands of dead US GIs and Japanese, killed in the invasion of the home islands.

That's true.

Fluffy|4.7.08 @ 3:15PM|#

After all, science fiction writers can keep writing about space elevators [for example] all they want.

Writing about it is not the same as writing checks, and without the checks there ain't gonna be no space elevator [or insert any other hugely expensive but theoretically possible notion embraced by science fiction writers].

Guy Montag|4.7.08 @ 3:16PM|#

Fluffy,

If you never POM for the space elevator we will never get it. Who is the MDEP manager for that one?

|4.7.08 @ 3:27PM|#

Was this part of the Contract with America?

Guy Montag|4.7.08 @ 3:29PM|#

TV,

I think it was that contract between Slashdot and Arthur C. Clark.

|4.7.08 @ 3:30PM|#

"""The idea that spending a trillion of our money to destroy 2 trillion of there stuff creates jobs on both sides."""

WOW think of all the jobs we'll have if we spend 10 Trillion!!!

Guy Montag|4.7.08 @ 3:42PM|#

BP,

I've heard that one before. If they were logically consistent, they'd advocate bombing the US, as it would mean that all the "economic development" from destruction would be included in our GDP.

That is a variant on what many left-leaning to far Leftists say, basically that wars "stimulate the economy". BTW, when I was younger and Lefter, I used to say the same thing as if it were fact. Truth is, wars are a major drag on the economy, as you obviously know.

Gilbert Martin|4.7.08 @ 4:12PM|#

"Who knows?

"However, definitely not currently existing would be the offspring of hundreds of thousands of dead US GIs and Japanese, killed in the invasion of the home islands."

Indeed.

Also not existing would be all the people that would have been killed in a conventional WW3 against the Soviet Union which would have most certainly invaded western europe without the threat of nuclear weapons being used against it.

BakedPenguin|4.7.08 @ 4:14PM|#

Guy, I think it was Henry Hazlitt who first had the "if that's true, why not bomb Cleveland?" argument. In a way, though, it at least goes back to Bastiat.

fyodor|4.7.08 @ 4:27PM|#

Truth is, wars are a major drag on the economy, as you obviously know.

There's certainly the appearance and impression, FWIW, that WWII lifted us out of the depression. Though it's hard to imagine. Without having researched it one iota, I figure it's either coincidence or perhaps the pyschological by-product of mobilization against a common enemy.

Also, while I'd expect wars to be major drags on the overall economy, they may be beneficial for certain well placed, well connected players, and I think you know who I mean, nod-nod, wink-wink....

Kolohe|4.7.08 @ 5:02PM|#

The 'broken windows' fallacy is not necessarily one, if you draw your boundary conditions right.

If I am Amalgimated Glass, Inc. more broken windows help with my bottom line. For the broader economy however, it is obviously not a bennefit.

Likewise, if I bomb the crap out of somewhere else but maintain my own shit relatively unscathed, I bennefit greatly during the reconstruction.

fyodor|4.7.08 @ 5:26PM|#

Kolohe,

Re: "Likewise, if I bomb the crap out of somewhere else but maintain my own shit relatively unscathed, I bennefit greatly during the reconstruction."

I assume, the "I" is still "Amalgamated Glass," i.e., someone who has a vested interested in reconstruction per se? Because the overall society that does the bombing would probably be better off trading with the "somewhere else" than bombing it and then paying Amalgamated Glass to fix all the bombed windows. But if you were still focusing on "AG," then I agree!

Douglas Gray|4.7.08 @ 5:31PM|#

Most Iraqi's now believe that the primary cause of the current violence is the presence of the American Occupying forces.

If you look at homicide stats going back to 1950 or so, we have around a quarter million homegrown murderers out there that have never been caught. We'd have to have a lot of successful terrorists to match that.

|4.7.08 @ 5:35PM|#

Baked Penguin says:
"I've heard that one before. If they were logically consistent, they'd advocate bombing the US, as it would mean that all the "economic development" from destruction would be included in our GDP."

well Operation northwoods was a plan to bomb this country and it was approved by the entire Jont Chief of Staff including Almirant George W. Anderson Jr. (Chief of Navy Operations), General George H. Decker (Chief of the Land Forces section), General Leyyman L. Leymnintzer (Chief of the Joint Chief of Staff), General Curtis E. LeMay (Chief of the Air Force section), General David M. Shoup (Commander of the Marines)

Leymnintzer went on to work with Paul Wolfowitz in special national security groups under the Ford Administration.

Michael Ejercito|4.8.08 @ 3:43PM|#

When we get nuked it will delivered by a yacht in a major city harbor.

It would have to be an unsinkable yacht.

Maybe you should learn why the Soviets invested so much in a submarine fleet.

And look up why submarines are called submarines.

|4.12.08 @ 8:05AM|#

Veronique de Rugy - who is this clown, must be French with a name like that. Crawl back into your institutional echo chamber with your theory's and numbers. Talk about Hit and Run, come back to me when the US has been attacked again but this time by Iranian made dirty bombs after the Democratic Surrender Monkeys have left Iraq. Sadly these events will probably take place in big cities like LA,Philli, NYC, DC, Boston, filled with unexpecting people and mostly of liberals. Us gun toting, bitter church goers with pray for you. I certainly don't need numbers and charts to identify who the enemy is and what they want to our country.