http://news.bbc.co.uk/2/hi/business/4955418.stm


US war costs 'could hit $811bn'

The US is spending more than ever on the conflict in Iraq
The cost of the wars in Iraq and Afghanistan has soared and may now reach $811bn (£445bn), says a report by the Congressional Research Service.
It estimates that Congress has appropriated $368bn for the global war on terror, including both conflicts.

It says that if the current spending bill is approved, US war costs will reach $439bn, and it estimates that an extra $371bn may be needed by 2016.

On that basis, the two wars would cost more than the $579bn spent in Vietnam.

The future costing assumes that US troop levels will drop from the 258,000 currently engaged in all operations to 74,000 by 2010.

Budget gap

The rising cost of the war is leading to growing concerns in Congress, where attempts to control the budget deficit have been hindered by the "supplementary" requests received each year for war spending.

The CRS estimates that the US Department of Defense's annual war funding has risen from $73bn in 2004 to $120bn in 2006, with an increase of 17% this year alone.


Monthly war costs have doubled since the fall of Saddam

There have also been concerns that extra non-related appropriations are often tucked inside the war funding bill.

On Thursday Senators deleted funding for a $15m seafood promotion programme that had been tucked away in the current bill.

Earlier, Senators diverted $1.9bn in war funds to pay for increased immigration controls at US borders.

Troop levels

The cost of the war in Iraq has been increasing since US troops have become bogged down in the conflict.

The CRS says the real cost of the conflict in Iraq has risen to $8bn monthly, nearly double the cost in 2003.

It points out that it is difficult to estimate the exact cost of individual operations, such as the Iraq conflict, because the Defense Department does not break down the figures for individual operations.

And it says that the Defense Department has also minimised the cost of the war by not including other costs, including intelligence and the training of Iraqi and Afghan security forces, in its estimates.

Overall, 71% of the total war costs have been spent in Iraq, 21% in Afghanistan, and 7% on increased protection for US forces worldwide.

The main reason for the rapidly escalating costs is increased spending on ammunition, equipment and operational materials such as petrol.

Over $60bn has been spent on procurement, including improved armour, replacement of damaged vehicles, and the building of a more extensive infrastructure to support the troops on the ground.

The CRS says that "if the global war is likely to become the long war as some administration spokesman have suggested, Congress may want to consider requiring that the Department of Defense request a full year's war funds concurrently with its regular budget".

The estimates do not include the costs of reconstruction, which the US originally estimated at $56bn.

A recent report from the General Accounting Office suggested these costs would be much higher, but also said much of the money disbursed so far had been spent on security, not rebuilding.

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http://www.kansascity.com/mld/kansascity/news/opinion/14406626.htm

Debt is cheating our children’s future


By Isabel Sawhill
Special to The Star

Now that we have all gone through the painful process of paying income taxes, let’s stop and think what tax-paying — and the federal fiscal environment — may be like 25 years from now.

If we think we have it bad, our children and grandchildren face potential tax and financial burdens that will be crippling if nothing is done to reduce our nation’s growing debt.

A recent AARP Bulletin, belying the stereotype of the greedy senior, put two naked toddlers on its cover and superimposed on their backs the grim headline “$156,000 in debt.” That’s the amount that every American child already owes, on behalf of his or her country, if you add our $8.3 trillion national debt, plus unfunded commitments to Medicare, Social Security and other entitlement programs.

That’s nearly three times the average household’s net worth and about four times the average American’s annual income.

And it’s all because of our fiscal profligacy — or should we say immorality?

We’re the grown-ups who should be taking care of America for future generations. Instead, we’re bequeathing a fiscal mess of biblical proportions.

This is not just an abstraction or a problem that will go away with faster economic growth, cutting government “waste,” or as one focus-group participant recently suggested, requiring the Bush daughters to spend less on designer shoes.

To put it in more personal terms, rising deficits will slow economic growth and reduce the average family’s income by $1,800 by 2014, drive up interest rates (costing the average American an additional $2,000 per year in mortgage interest), and force average taxes to rise by $7,000 by 2030 if we keep our current promises to the elderly.

Moreover, deficits have other perverse effects. As our debt grows, we will soon pay one-quarter of our taxes on interest on that debt — with that money going to our creditors, half of whom are Chinese, Japanese, Saudis and other foreigners. That, of course, is if they don’t dump our T-bills and send our financial markets tumbling.

The second perverse effect: The more we spend on entitlements and debt service, the less there is to spend on investments in the future. When people talk of cutting nondefense “discretionary spending” — i.e., everything that government does other than support the big entitlement programs and defense — they’re talking about less than one-fifth of the federal budget. Yet, it is these investments — not just in scientific research, transportation and other infrastructure or environmental protection, but also in children themselves — that are increasingly shortchanged.

The 77 million 0-to-18-year-old Americans are our future. If we don’t invest in their education, health and general well-being, we might as well say that we don’t care about their future or the future of the United States. Without the best education, health and other opportunities — which our society is more than wealthy enough to provide — America may well fall behind in global competitiveness.

Secondly, by piling up 12-figure deficits, we constrain our children’s and grandchildren’s freedom. If most public spending when they are adults is devoured by entitlements and debt service, they will be unable to make the political choices promised by a democracy on what they want to spend their tax dollars. And if their incomes fall, and their taxes and interest payments rise, that will financially constrain their historic American freedom to the “pursuit of happiness.”

Is this what we want? No one in his or her right mind would say yes, but that’s the course we’re on.

The glimmer of good news is that this is not inevitable. It’s like the future shown in Charles Dickens’ A Christmas Carol — what might be, if nothing is done. With political leadership and public outcry, a can-do country like the United States can reform its entitlement programs, cut wasteful spending and find ways of raising new — but not onerous — revenues.

Look into your child’s or grandchild’s eyes and think of their future when you consider what our president and Congress must do.


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"The 77 million 0-to-18-year-old Americans are our future. If we don’t invest in their education, health and general well-being, we might as well say that we don’t care about their future or the future of the United States."


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Isabel Sawhill is vice president and director of the Economic Studies Program at the Brookings Institution.