WAR REAL COSTS ARE $1.7 TRILLION SO FAR, CONGRESS REPORT SAYS

by Jim Lobe

(IPS) WASHINGTON -- The U.S. wars in Iraq and Afghanistan could cost U.S. taxpayers as much as $3.5 trillion through 2017 if both direct and indirect, or "hidden," costs are taken into account, according to a new report released here Tuesday by Democrats in Congress.

The 27-page report, entitled "War at Any Price?," concluded that the total economic costs incurred to date -- including "hidden" expenses, such as higher oil prices, interest on borrowing, and the long-term care of injured soldiers -- are already about twice the $800 billion the Bush administration has asked Congress to appropriate through 2008.

"We cannot afford this war," said Senate Majority Leader Harry Reid. "We are funding this war with borrowed money, Americans are paying more at the gas pump, and it will take years for our military to recover from the damage of the president's failed war strategy.

"And if President Bush gets his way, and we do not significantly draw down our troops (in Iraq), the total costs of this war will reach astronomical heights," he added, noting the conclusions of the report, which was released by the Democratic members of the Joint Economic Committee (JEC).

The report, which assumes that Washington will reduce its troop presence in Iraq from the current 180,000 to about 90,000 by 2013 and then maintain some 75,000 troops there through 2017, comes amid a new struggle between Congressional Democrats and a few Republicans over next year's financing of the war, which despite a recent reduction in violence, remains deeply unpopular with the electorate here, according to recent polls.

It also comes amid growing evidence in recent public opinion polls that the plight of the U.S. economy is becoming a much more important issue in the minds of many people who will likely vote in next year's presidential election.

On the Iraq front, Democrats have offered to immediately approve $50 billion out of a pending 200-billion-dollar administration request to finance both wars through 2008. Under the plan, the administration could use the $50 billion for funding operations through early next year at which time Congress would take up the remaining $150 billion.

But the $50 billion in interim spending is conditioned on Bush's agreement to begin withdrawing troops from Iraq immediately with the goal of withdrawing all U.S. combat troops -- about half the troops deployed there now -- by the end of next year.

Bush has firmly resisted such a timetable in the past, but Democrats hope that a sufficient number of Republican lawmakers will support such a plan that it will overcome procedural hurdles that in the past have prevented bills requiring withdrawal of U.S. troops from reaching the president's desk. But, if this bill garners enough Republican backing, then Bush will be forced to decide whether to veto or sign it.

During an off-the-record meeting last week, the Speaker of the House, Rep. Nancy Pelosi reportedly told her fellow-Democrats that, if Bush vetoes the bill, then no additional money for the war in Iraq will be approved this year, requiring the Pentagon to divert money from other accounts to maintain operations there. Reid reiterated that position Tuesday.

Even as Congress takes up continued war funding, however, concerns about the economy and the growing possibility of a recession are grabbing the public limelight.

While the Democratic report does not explicitly link war costs to mounting anxiety over the economy, it stresses that the economic costs of the war are being borne by the taxpayer, above all.

"The back-breaking costs of this war to American families, the federal budget and the entire economy are beyond measure in many ways," said New York Sen. Charles Schumer during the report's Capitol Hill release.

"The total economic cost of the war in Iraq to a family of four is $16,500 from 2002 to 2008," the report asserts in its main conclusions. "When the war in Afghanistan is included, the burden to the American family is $20,900."

"The potential future impact on the family of four skyrockets to $36,900 for Iraq and $46,400 for Iraq and Afghanistan from 2002 to 2017," it states.

The report's total estimate for war costs from 2002 through 2017 is about one trillion dollars more than that of a similar report by the non-partisan Congressional Budget Office (CBO) late last month.

While both reports made the same assumptions about troop levels over that period, the CBO estimates were based mostly on the direct costs of the maintaining U.S. operations in both countries, caring for wounded troops, and the costs of borrowing the money needed to fund those costs.

The Democratic report, on the other hand, considers a much wider range of "hidden costs," including higher energy prices resulting from the war's disruption in the supply of oil ($270 billion); the loss or productive investment by U.S. companies due to increased government borrowing to fund the war ($870 billion); and other indirect costs.

Critics of the report said such estimates were highly speculative.

The report stressed that a faster and more sweeping drawdown of troops in Iraq, in particular, would result in major savings. A rapid reduction to 10,000 U.S. troops in Iraq by 2010 and a complete withdrawal after that date would knock the total price for both Iraq and Afghanistan down to $2.6 trillion by 2017.

On the other hand, a status-quo scenario in which the current 180,000 troops in Iraq are simply reduced to 155,000 by 2009 and then remain constant will increase the total costs for both wars through 2017 to $4.5 trillion, according to the report.

Some of the report's work is based on the methodology used by Nobel Economics Laureate Joseph Stiglitz and Harvard lecturer Linda Bilmes who early last year gained headlines when they estimated the total cost of the Iraq war alone as some two trillion dollars, depending how long it lasted.

In September, the American Friends Services Committee, a peace group, released a report based on the Stiglitz-Bilmes findings that concluded that the war was costing $720 million a day, the equivalent of providing health care for nearly half a million U.S. children or buying the equipment to provide 1.27 million U.S. homes with renewable energy.