Report: Iraq reconstruction may need more resources

A Congressional Budget Office report released Friday on the costs of reconstructing Iraq argues that additional resources may be needed to foot a bill of $55.3 billion for 2004-07 as tallied by the World Bank and Coalition Provisional Authority.

The report was requested by Senate Budget Committee Chairman Don Nickles, R-Okla., and separately by House Budget ranking member John Spratt, D-S.C.

According to CBO estimates, oil revenues could earn between $44 billion and $89 billion during those years. However, CBO also estimated Iraq's foreign debt and war reparations as low as $40 billion and as high as $120 billion, meaning the extra funds would have to come from U.S. and other international aid.

The report assumes $36 billion in international aid already pledged, including $18.4 billion in U.S. aid appropriated as part of the fiscal 2004 war supplemental spending bill enacted last year. Under a number of different scenarios, additional assistance necessary to provide the World Bank and CPA-reported needs for 2004-2007 could amount to as low as $1.1 billion to as high as $56.2 billion.

The administration is unlikely to request any additional funds for Iraq reconstruction in its fiscal 2005 budget request, due out Feb. 2, although another supplemental may be forthcoming later in the year. Spratt said in a statement that the report "raises concerns that there could well be a gap between reconstruction costs in Iraq and available resources, and that the American taxpayer may be asked to foot the difference." He went on to say that the report does not take into account sabotage by terrorist forces and underestimation of needs, or the possibility that international assistance may not materialize.

Also Friday, a report by Senate Budget Committee staff for Nickles assessed the budgetary situation going into fiscal 2005, arguing that the outlook for the second session will be faced with "big deficits, looming entitlement crunch, and significant uncertainties [War on Terrorism]." It also says presidential politics will be a factor in putting together the budget, and that the timetable will be shortened due to the nominating conventions and spring recess. It also cites "popular, but expensive, legislation," like the reauthorization of federal surface transportation programs -- as a potential wild card.