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Iraq War Costs

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Report: The 'real' costs of the Iraq war

By Hannah K. Strange
UPI Correspondent

Washington, DC, Jul. 1 (UPI) -- The average U.S. household has already spent almost $1600 on the war in Iraq, according to a report presented in Washington Wednesday. The final bill will be an estimated $3,415, based on the U.S. military's prediction of a three-year military occupation, says the report, citing calculations by economist Doug Henwood.

"We don't hear about how the costs have affected us where we live," says Karen Dolan, one of the authors of the study. This report, she says, aims to "help the public stay as informed as they can be about the real costs of this war."

The study, a joint project of the Institute for Policy Studies and Foreign Policy in Focus, both non-partisan Washington-based think-tanks, was presented Wednesday in a live radio broadcast at the Institute. It is, according to John Cavanagh, director of IPS, "the first comprehensive accounting of the cost of the war on the U.S., on Iraq, and on the world."

An additional emergency supplement of $25 billion dollars was appropriated by the administration in June, bringing the total bill to date to $151 billion. Congress has also promised another supplemental appropriation after the election. This figure, Cavanagh notes, stands square in the $100-200 billion projection that White House economic advisor Lawrence Lindsay was fired for giving as the likely cost of the Iraq War in 2002.

In the run-up to the Iraq war, administration officials gave the impression, co-author Phyllis Bennys points out, that the cost of reconstruction would be largely covered by Iraqi oil revenues.

Secretary of Defense Donald Rumsfeld told a Senate hearing last March : "When it comes to reconstruction, before we turn to the American taxpayer, we will turn first to the resources of the Iraqi government and the international community."

"There's a lot of money to pay for this that doesn't have to be U.S. taxpayer money, and it starts with the assets of the Iraqi people," said Deputy Defense Secretary Paul Wolfowitz at a House of Representatives appropriations hearing the same day.

However it later emerged that behind the scenes experts had warned officials that the Iraqi oil industry was badly dilapidated and would in no way cover reconstruction costs. James Schlesinger, former secretary of defense and energy who co-chaired an independent task-force set up by the Council of Foreign Relations, a prestigious independent think-tank, and who briefed administration officials, told the Financial Times last year that "nobody" believed oil revenues would support reconstruction costs. He said his advice, and that of the CFR report, forecasted that oil would produce at most $10-12 billion annually, if captured intact and with no further deterioration.

White House spokesman Trent Duffy, speaking to U.P.I., dismissed the notion that the public had been initially misled over the likely cost of the war, saying that it was "naivety that you could put a cost estimate on a war prior to it happening."

The current financial cost to the American taxpayer, according to the IPS report, now rivals that of the Vietnam War on a monthly basis. Operations in Iraq are estimated at 4-5 billion a month whilst the average monthly figure during Vietnam was $5.1 billion, adjusting for inflation. This has had tremendous social and economic effects within the United States, say the authors.

The administration's budget request for 2005 proposes "deep cuts in critical domestic programs," the report details, "(and) virtually freezes funding for domestic discretionary programs other than homeland security." The White House is seeking the elimination of programs including grants for firefighters' assistance, low-income schools, family literacy, rural housing and economic development. As written, the proposal would keep such cuts in place until 2009.

A White House memo, leaked in May to the Washington Post, outlined further cuts in 2006, including funding for education, Head Start, home ownership, job training, medical research and homeland security.

"The Bush vow to 'leave no child left behind'" the report adds, "remains underfunded by at least $14.1 billion, with the new budget threatening to reduce funding by an additional $9.4 billion."

Duffy contends however that cuts have only been made to programs that were established in the 1990s and are now defunct.

The report also details how the heavy deployment of National Guard troops in Iraq has created a security vacuum at home, as so many serve as first-responders. The study cites a poll by the Police Executive Research Forum, which found that 44 percent of the nation's police forces have lost personnel through deployment to Iraq. Last year a survey by the International Association of Fire Chiefs predicted that 75,000 firefighters would be lost through deployment in the first few months of the war alone.

Homeland security funding has not lived up to promises either, says Dolan. A June study by the U.S. Conference of Mayors found that only 24 percent of the 231 major cities surveyed had received any of the first responder/critical infrastructure funding pledged by the Department of Homeland Security, while another 24 percent had been notified of the funds' impending arrival.

To put the figures into context, Dolan offers a summary of what could have been purchased with the Iraq appropriations so far. Purchases could have included, she says, 678,000 new fire trucks, health care coverage for 82 million children, or for 27 million adults, almost 23 million housing vouchers or over 20 million Head Start slots for children. On a global level, the war budget could supply all impoverished people worldwide with sufficient food, childhood immunization, HIV/AIDS medicine and clean water and sanitation for two years, according to U.N. and World Water Council estimates.

"The administration's budget priorities," the report concludes, "have privileged a war of choice over human needs at home."

Neither is the future looking bright, says Dolan. She cites economist James Galbraith, former executive director of the Joint Economic Committee in the U.S. Congress, who predicted in the Los Angeles Times that, long term, the Iraq war will be "a dagger at the heart of (the) U.S. economy." Without the requisite tax increases to pay for it, he said, the war, underestimated in terms of costs, losses and challenges, is likely to worsen national debt and inflation, possibly triggering worldwide commodity shocks. This is likely to lead, he said, to "international monetary disorder and a decade of economic troubles."

"One can only imagine," she says, "five to 10 years down the road if we continue in this vein."

However Duffy says that such costs could not be viewed in a vacuum.

"We could not afford to pursue the war on terror on all fronts, in terms of security and economically. Had we pursued a different route, the economic costs could have been much greater."

He denies that the Iraq war is having a significant harmful effect on the U.S. economy.

"The war that the terrorists declared on 9/11 certainly had a detrimental effect on the economy. The Iraq proportion is only a terms of the share of the U.S. economy, it's been relatively modest given the impact 9/11 had."