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 3 of 4)

Even that staggering amount strikes Winslow Wheeler, director of the Strauss Military Reform Project at the nonpartisan Center for Defense Information, as incomplete. Wheeler argues that an inclusive definition of the defense budget should also include the $18 billion requested for nuclear weapon costs by the Department of Energy and another $6 billion for miscellaneous defense costs borne by other agencies, such as the General Service Administration, plus funding for the National Defense Stockpile, the Selective Service, some Coast Guard, and the International FBI. Together, that would make a grand total of $700 billion for 2008.

The real number may be higher still, when factoring in the billions of dollars in other federal programs that are spent as a direct result of maintaining the military. According to Christopher Hellman, a defense analyst at the Center for Arms Control and Non-Proliferation, you could include $43 billion spent on homeland security activities outside of the Pentagon (mainly through the Departments of Homeland Security, Health and Human Services, and Justice), $88 billion for the Department of Veterans Affairs, a portion of the estimated $40 billion intelligence budget, and some of the $9 billion spent annually on foreign military aid, plus expenditures on international peacekeeping, nonproliferation, antiterrorism, demining, military space programs, employees’ and retirees’ compensation and benefits at the Pentagon, veterans’ benefits, military pensions, and, finally, a conservative $100 billion estimate for the share of the country’s annual interest payment on the national debt that is directly attributable to past military spending. That gives us a grand total of nearly $1 trillion—that’s 12 zeros—in national security spending for 2008 alone.

Even when using only direct outlays by the Defense Department, 2008 funding was more than 100 percent above 2001. It is unlikely that the president would have been able to achieve such an increase if he had to include the costs of war in his budget requests. Sen. Jon Kyl (R-Ariz.), the chairman of the Republican Policy Committee, spelled out the utility of shell-game finance in an April 12, 2005, report: “Congress should fund operations in Iraq through emergency supplemental appropriations (because funding it through the regular appropriations process would unnecessarily inflate the defense budget).”

Well, yes, exactly. As a Defense News editorial put it in 2005, the White House is “using the supplemental as a thinly veiled political attempt to keep the public from lapsing into sticker shock, and so, losing support for the war.”

At a requested $892 billion and counting—including a new $70 billion emergency war request for fiscal 2009—the Global War on Terror is now the second priciest conflict in U.S. history in inflation-adjusted terms (see Table 1). Only World War II cost more: $3.2 trillion in adjusted 2007
dollars.

And that’s only for the direct cost of the war. As my colleague Tyler Cowen at George Mason University’s Mercatus Center wrote in The Washington Post last November, “these figures don’t quite get at Iraq’s real cost,” because they focus on what we paid for rather than recognizing what we have lost. Among other things, Cowen lists more than 3,800 U.S. soldiers dead and more than 28,000 wounded (many of them severely), more than 1,000 private contractors killed and many more injured, and hundreds of thousands of Iraqi deaths—plus the contributions that all of these people would have made to their families and to humanity at large. A newly released study by the Harvard economist Linda Bilmes puts the combined war costs as high as $3 trillion.

Christmastime for the Pentagon
War supplementals have become the Pentagon’s tool of choice to obtain more funding than it would otherwise receive. Helped by its friends in Congress, the Defense Department keeps finding pretexts to move nonemergency programs, including some wholly unrelated to the war, into emergency supplementals. This frees space under the baseline to stuff in additional spending.

Winslow Wheeler has traced where these “transfer” stunts are readily apparent in the department’s procurement accounts. For example, in the account for “Aircraft Procurement, Army” on page 249 of the regular 2006 Pentagon budget, there is the notation “Transfer to Title IX,” indicating $11.2 million deducted from the president’s regular annual request that was originally intended to purchase “aircraft survivability equipment.” The money is then reinserted on page 477 in Title IX, under the designation of “emergency” spending.

In this one procurement account alone, Wheeler counted 17 such transfers from peacetime budgeting to “emergency” war spending, totaling $654 million, plus another $107 million more in the small print. The best part of the maneuver from the Pentagon’s point of view, Wheeler says, is that the transferred money freed space to buy one F-15E fighter-bomber ($65 million), two Littoral Combat Ships ($440 million), and hundreds of other smaller items. Because similar gimmicks are used in most of the regular budget’s procurement accounts, Pentagon watchers say that the emergency transfers add up to tens of billions of dollars, allowing the Defense Department to boost other parts of its budget by an equal amount.

The practice is so routine and uncontroversial that the military openly admits it. Army Chief of Staff Gen. Peter Schoomaker testified before the Senate in 2005 that the Army preferred to fund 30,000 additional troops through supplementals because if it included the necessary funds in its annual budget request, it “would have to displace other things that are too important to us as we transform—equipment and other readiness issues. So the department has elected to do it with emergency and supplemental funding since we have the options to do so.”

The president’s latest emergency war request included many nonemergency items, some not even related to war. According to a document released by the Senate Budget Committee, $4 billion of the $196 billion officially allocated for the wars has nothing to do with Iraq or Afghanistan, including $500 million for six electronic warfare planes (neither the insurgents in Iraq nor Al Qaeda has an air force or radar) and $400 million for two developmental aircraft that won’t see service until 2013.

This practice is about to get much worse. After years of war, U.S. military equipment is wearing out five times faster than normal. In the next few years, says the Center for Arms Control and Non-Proliferation’s Travis Sharp, we can expect many more high-priced “emergency” Pentagon wish lists for equipment that may or may not be used in the emergencies being funded. “The problem,” Sharp says, “is that the line between war-related spending and normal Department of Defense ‘base’ budget spending is increasingly becoming blurred.” The price tag for equipment replacement is impossible to predict.

The Pentagon recently made such budgetary bait-and-switches even easier by greatly expanding the definition of “war costs” while putting the finishing touches on its fiscal 2007 war supplemental. Now reconstituting or replacing military equipment for the “longer war on terror” is reason enough to designate a military line item as an “emergency.” So any new toy the Pentagon wants can be stuffed in a supplemental bill. No congressional review need be done, and no compensatory sacrifices need be made in the regular budget. Nor are any real explanations needed. Emergency supplementals are not required to contain the “budget justifications” that are attached to all items in non-emergency defense bills.

Adding final insult to injury, the Department of Defense deliberately obscures what exactly is being spent on war. During past conflicts, the Pentagon usually established a separate account to keep track of operation funds. However, no such account exists for the war in Iraq. It’s impossible to tell in 2008 how much the U.S. is spending on defense and where the money is going.

On Capitol Hill, Everybody Wins!
The Pentagon is not the only shill in the supplemental shell game. Everyone in Washington is addicted to the fiction of the “emergency” loophole. These bills have become a magnet for pork and other projects that would have a much tougher time getting funded on their own merits. Because no member wants to vote against emergency aid money to support the troops, and because most supplemental spending does not count against House and Senate budget limits, Congress has used the legislation to get around the Bush administration’s recent rhetoric about limiting the growth of spending unrelated to defense or homeland security. An increasing number of nonemergency, nondefense programs have found their way into emergency war bills, increasing overall government spending without the usual consequences.

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.