Budget office reports war costs could reach $2.4 trillion by 2017

Even if U.S. troop levels in Iraq and Afghanistan are reduced by more than two-thirds from the average numbers, the cost to the taxpayers of those conflicts could reach $2.4 trillion in 10 years, the Congressional Budget Office estimated Wednesday.

That projection, presented to the House Budget Committee, includes repairing or replacing damaged equipment, expenditures by the military and the Veterans Affairs Department to care for injured or disabled service members, and as much as $415 billion in interest on the national debt added because of deficit spending to pay for the wars, CBO Director Peter Orszag said.

But Linda Bilmes, who teaches public policy at Harvard, testified that the economic cost to the nation from the loss of lives, lost earnings potential and lifetime care for injured veterans, the increase in oil prices attributable to the war and other impacts on the economy could add more than $1 trillion.

Amy Belasco, defense specialist at the Congressional Research Service, presented numbers similar to Orszag's on past and projected fiscal 2008 costs of the conflict and noted that the yearly cost of the war has more than doubled over the last three years.

All three of the witnesses protested the use of emergency supplementals rather than the normal budget process to pay for the wars. The supplemental process prevents the usual detailed review of the spending requests and has allowed the services to use the money for expenditures not directly related to the war, they said.

"It is difficult to understand why, five years into the war, we are still funding it largely in this manner," Bilmes said.

House Budget Chairman John Spratt, D-S.C., who had requested the CBO report, also complained about the use of supplementals and deficit spending for the war and called the projected costs of the conflict staggering. But, he added, "the dearest price has been paid" by the more than 4,200 service members killed and more than 35,000 wounded.

"As long as they are in harm's way, we owe them our continued support," Spratt said.

Budget ranking member Paul Ryan, R-Wis., did not challenge Orszag's numbers, but said that the costs of the wars in Iraq and Afghanistan, when measured by the percentage of the gross national product going to defense-related spending, is low compared to previous conflicts and the average during the Cold War. He agreed with Spratt and the witnesses that the war funding should be part of the regular budget, but noted that, despite their protests, the Democrats have continued to approve the supplementals.

CBO's estimate of the total war costs out to 2017 was based on past and current costs and two projections of troop levels in Iraq and Afghanistan. One projection cut the number from the average of 200,000 to 30,000 by 2010, and the other had 75,000 troops deployed after 2010. The first estimate produced a total estimated cost by 2017 of $1.7 trillion, while the larger commitment would cost a total of $2.4 trillion.

Belasco said the Pentagon had at least $45 billion in unobligated funds, which could allow it to pay for operations until mid-January without the $192 billion in supplemental funding President Bush has requested. The Democrats have said they do not intend to pass the supplemental until next year.