Tracking Hidden War Costs

Mary Kaszynski
Afghanistan Study Group

How much have the wars in Afghanistan and Iraq cost the American taxpayer? It seems like an easy question. Add up all those supplemental war appropriations from the Bush years and the overseas contingency operations, and you should have the answer.

It’s not that simple. The US invaded Afghanistan in October 2001. More than ten years later, we’re still at war, and we still don’t know how much we’ve spent on it. That says something about the Pentagon’s accounting practices—the Department of Defense still can’t complete an audit—and the way we budget for war in particular.  Most importantly, it says something about accountability and transparency in government spending in general.

We recently tried to add up America’s war bill and encountered some difficulties just trying to get the right number.  We looked at various agency budgets to locate line items that contribute to the cost of war in Iraq and Afghanistan.  Our hope is to demonstrate that arriving at a firm number is a herculean task.

Defense War Budget – the primary costs of war should be in the Department of Defense Overseas Contingency Operations (OCO) account. However, all war costs are not in the OCO account – and everything in the OCO account is not for the war. Included in OCO is the cost of the military “reset”, which allocates monies for repairing and restoring equipment used during the war.

How much of the reset actually has to do with the war is unclear. The Congressional Research Service estimates that more than 40% of what the Army calls “reset” is used for things other than repair and replacement.

Defense Base Budget – Sometimes non-war costs are moved from the base to the war account to evade budget caps. Sometimes it goes the other way; In this year’s budget the administration moved about $10 billion in enduring operations costs to the base budget.

It’s hard to estimate just how much of the base defense budget goes towards the wars. The defense budget, excluding war funding, has grown significantly since 2001, which shows that some portion of the base defense budget can be attributed to the cost of war in Afghanistan and Iraq. How much? Economist Joseph Stiglitz estimates at least 25% of the base budget increase is due to the wars (The Three Trillion Dollar War, page 46). With an increase of $670 billion since 2001 in the base budget, that would mean an additional $168 billion in war costs.

Other Agencies
– Since 2001, CRS estimates that State and USAID have spent $67 billion in Iraq and Afghanistan. These agencies will take on more as combat operations wind down, and war funding reflects this. State’s 2013 request for OCO (a new account in 2012) is $8.2 billion.

State’s OCO account may be small, but that doesn’t mean following the money is any easier. Take state money for Afghanistan for example. State OCO includes $3.3 billion for the war in Afghanistan.

Associated Costs
– There is much more to paying for war than the costs of ongoing operations. One big associated cost is caring for veterans of Iraq and Afghanistan. The Veterans Affairs budget has grown significantly over the past ten years, and it will continue to grow long after the wars are over.

The cost of caring for veterans is never included in the Pentagon’s war estimate, but full-cost analyses commonly take this into account. The projected total cost of veterans’ health care and disability is $422 billion to $717 billion, according to a recent study by the Center for American Progress. The 2013 VA request is $140 billion.

The wars in Iraq and Afghanistan are also a main driver of the national debt. In 2013, the payment on the national debt due to DOD war costs will be about $5.8 billion.* Stiglitz estimates that the wars are directly responsible for at least a quarter of the increase in the national debt – that’s over $2 trillion since 2003.

So how much have the wars in Iraq and Afghanistan cost? The Department of Defense war budget (supplementals plus OCO) totals $1.2 trillion since 2001. But as you can see, DOD OCO is just the beginning. Once you start adding in all the hidden costs, the total is much, much greater.

*DOD OCO is approximately 2.3% of total government spending (88.5/3800). Payment on the debt in 2013 is $248 billion. Assuming war costs account for the same percentage of debt as total government spending, we have $248B*2.3%=$5.7B. See Winslow Wheeler’s calculation for the defense budget and payment on the debt: “Which Pentagon Numbers Are Real? You Decide!

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