May 02, 2006
Tuesday

WASHINGTON -- When Lawrence Lindsey, then President Bush's top economic adviser, said in September 2002 that the war in Iraq might cost the United States as much as $200 billion, other top aides rebuked him and Bush fired him three months later.

Turns out, Lindsey's projection was indeed way off the mark - way low off the mark.

The Senate is expected to pass an emergency spending bill this week to provide $71 billion for military costs in Iraq and Afghanistan, with the bulk of it going to Iraq.

The new money would bring to at least $320 billion the total cost of a war that senior Bush aides once promised would be financed largely by Iraqi oil revenues.

Soaring costs driven by the harsh Iraqi climate's wear-and-tear on tanks, trucks and helicopters have more than tripled U.S. spending on equipment - from $7.2 billion in 2003 to $24.4 billion this year - according to a new report by the bipartisan Congressional Research Service.

The Iraq campaign's total cost is still well behind the $549 billion price tag for the country's decade-long debacle in Vietnam, after adjusting for inflation. But the government's rate of spending on Iraq has outpaced the average spending rate in Vietnam - passing $8 billion a month.

The spending measure is the fourth emergency appropriations bill Bush has asked Congress to pass to pay for the war in as many years, with each legislative initiative larger than the last.

While the Iraq spending bills have gained huge majorities from lawmakers fearful of being seen as voting against the needs of American soldiers, Republicans are beginning to join Democrats in criticizing the use of emergency funding bills to pay for the war.

"The whole idea of this supplemental is something the American people should reject," said Sen. Tom Coburn, an Oklahoma Republican. "We have been in a war now going into the fourth year. We should have the money for funding this war as part of the regular budget. It should not be an emergency supplemental."

Coburn, who had partial success in offering 17 amendments to pare from the bill spending unrelated to the war, said the war supplementals allow Bush and Congress to portray themselves as acting more fiscally responsible than they really are.

Before U.S. troops invaded Iraq in March 2003, Defense Secretary Donald Rumsfeld forecast that the entire war might cost $50 billion or so.

Paul Wolfowitz, then Rumsfeld's top aide, confidently predicted that profits from Iraq's vast oil reserves would pay for the war. He put those figures between $50 billion and $100 billion - far more than the $25 billion that Iraqi oil wells are projected to produce this year, with much of the profit paying for security to guard pipelines under frequent attack from insurgents.

"We're dealing with a country that can really finance its own reconstruction, and relatively soon," Wolfowitz told Congress scarcely a week after the war started.

Steven Davis, a public-policy and economics professor at the University of Chicago, said U.S. officials grossly underestimated the war's cost for a variety of reasons.

"The occupation phase of the war has been much longer and more difficult than anticipated," Davis said Friday in an interview. "And the initial cost estimates didn't really recognize that when you take equipment into a war theater and use it intensely, it depreciates much more quickly than during peacetime."

The U.S. military's high-tech equipment is costly, Davis said, and today's volunteer armed forces are paid more than draftees of the Vietnam War.

Davis, though, thinks that the cost comparisons between the Iraq and Vietnam wars are flawed.

"Iraq is probably going to be more expensive than Vietnam in inflation-adjusted dollars, but we also have a much bigger economy and we are a much richer country than we were in the 1960s and 1970s," he said. "Measured as a percentage of our gross domestic product, Iraq will be much less expensive than Vietnam or Korea."

Linda Bilmes, who served as assistant secretary of commerce under President Bill Clinton, said the current cost figures for the Iraq war are too low because they don't include a broad range of indirect costs Americans will endure for years to come.

"There will be a million or so veterans who will qualify for a number of benefits for the rest of their lives," said Bilmes, now a lecturer at Harvard University's Kennedy School of Government. "We essentially will have another large entitlement program that will need to be funded in additional to Social Security and Medicare."

Winslow Wheeler, director of military reform at the Center for Defense Information in Washington, said much of the Iraq war's economic impact is deferred because Bush has successfully pushed tax cuts through Congress while waging the war.

Bush's predecessors, by contrast, raised taxes to pay for military conflicts.

"Lyndon Johnson increased taxes and so did Kennedy before him," Wheeler said. "This is the first war we've tried to finance with reduced taxes."

Bush is not the first president to finance war through supplemental spending bills, Wheeler said, but he has taken the practice to new levels.

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