deficit reduction

1. Costs of Nation Building

   Published: November 13th, 2012
   

   

   The resignation of CIA Director General David Petraeus as head of the CIA last Friday led many to reflect on the legacy of the man who led U.S. and allied forces in Afghanistan from 2010 to 2011.

   Bing West, assistant Secretary of Defense for President Reagan, had this to say about Gen. Petraeus and Afghanistan:

   “Gen. Petraeus’s concept of nation building as a military mission probably will not endure. Our military can train the armed forces of others (if they are willing) and, in Afghanistan, we can leave behind a cadre to destroy nascent terrorist havens. But American soldiers don’t know how to build Minneapolis or Memphis, let alone Muslim nations.”

   West pinpointed one of the fundamental flaws of nation-building. U.S. troops are most capable in the world, but they are trained for combat, not building roads and distributing food aid.

   There’s another big problem with nation-building in Afghanistan: it is very expensive. And with the a national debt of over $16 trillion, the U.S. cannot afford to spend billions more on the war in Afghanistan.

   War costs ramped up significantly as the U.S. mission in Afghanistan expanded. From 2001 to 2006, spending on the war did not exceed $20 billion per year. In 2010, 2011, and 2012, war costs were over $100 billion per year.

   As U.S. combat troops leave Afghanistan, war funding will decline, but not as much as you might expect. The Pentagon’s request for operations in Afghanistan in 2013 is $85.6 billion, or $1.6 billion per week.

   The U.S. military presence in Afghanistan after 2014 is still unclear. But if 20,000 troops remain, a plan that some members of Congress support, war costs could top $25 billion per year for years to come.

   Meanwhile, the U.S. is facing a fierce budget debate at home. With a national debt of over $16 trillion, finding ways to cut back government spending is critical. The Pentagon is already facing significant budget reductions of $487 billion over the next ten years, plus another $500 billion in automatic, across-the-board cuts if Congress fails to agree on a budget deal before January.

   The war has already cost over $580 billion. Spending billions more on nation-building in Afghanistan, while the U.S. economy is still recovering, doesn’t make sense.

   
   

   Tags: Afghan security forces, aid, defense spending, deficit reduction, economy, General Petraeus, nation building, War costs

2. How much will “victory” in Afghanistan cost?

   Published: October 30th, 2012
   

   

   After eleven years, more than $570 billion, and no end in sight, it seems clear that the U.S. needs a new strategy for Afghanistan. But some are still arguing that we are winning the war in Afghanistan, and that all we need to achieve our goals is stay the course.

   Of course, from one perspective, the U.S. has already won in Afghanistan. The original goal was to disrupt and dismantle the al Qaeda network. The U.S. achieve this goal relatively quickly. In 2010, then CIA Director Leon Panetta estimated that the number of al Qaeda in Afghanistan totaled “maybe 50 to 100, maybe less.”

   Since 2010, the U.S. has spent over $300 billion on the war in Afghanistan. In 2012 the war cost $110 billion. That’s about $2 billion per week, or over $1 billion for each member of al Qaeda that may still be in Afghanistan.

   We stayed in Afghanistan long after our original goals had been accomplished. The mission changed.

   We went to Afghanistan to protect U.S. national security. We stayed to nation-build.

   The nation-building plan was deeply flawed. Its architects lacked a basic understanding of the region’s historical and cultural background, the key actors and dynamics at play. The idea that the counterinsurgency campaign could root out the Taliban, establish an effective central government and competent security forces, and stabilize the economy was overly ambitious.

   Tactically, the U.S. plan also missed the mark. The cornerstone of the U.S. plan for Afghanistan is the Afghan national security forces, who will take the lead in the counterinsurgency after coalition forces withdraw. Military planners focused on the rapid expansion of the force. Today, the Afghan army and police have almost achieved their target number — but their capabilities remain in serious doubt.

   The “quantity over quality” strategy left Afghans with a massive, but corrupt and incompetent security force. It also cost U.S. taxpayers over $50 billion.

   When it comes to the war in Afghanistan, the question isn’t whether we are winning. The question is what we’re trying to achieve, and whether the goal is worth the costs.

   Maybe the nation-building experiment in Afghanistan will succeed, but only at an unacceptable price. The U.S. cannot afford to spend another eleven years and another $570 billion.

   With a national debt of over $16 trillion, spending billions on the war in Afghanistan doesn’t make sense. It’s time to bring that money home and build the U.S. economy, rather than nation-building halfway around the world.

   
   

   Tags: COIN, corruption, debate, deficit reduction, drawdown, strategy, War costs

3. War Costs Part 3: The Exploding Defense Budget

   Published: October 22nd, 2012
   

   Note: This is the third in a three-part series on the economic costs of the war in Afghanistan. Part one, $570 Billion and Counting, can be found here. Part two, The War That Won’t End, can be found here.

   

   An Exploding Defense Budget: One Result of Afghan War

   According to official accounts, the war in Afghanistan has cost the United States over $570 billion to date. However, the actual cost of the war has been much greater. A blank check for the war budget allowed the broader defense budget to spiral out of control.

   Today, policymakers struggle to rein in Pentagon spending, which has taken an almost sacred status over a decade with little accountability.

   The way we budgeted for the war in Afghanistan directly contributed to the spike in defense spending over the past decade. Funding for the war was separated from other defense spending into its own account. The “overseas contingency operations” account, as it was called, was supposed to include all the costs of the war; other defense spending, called the base defense budget, was in the traditional accounts.

   The goal of the separate war account was to ensure that combat operations received adequate support, without forcing tradeoffs with base defense costs.

   What actually happened was that both the base and the war budget exploded. Policymakers were hesitant to scrutinize spending labeled “for the war.” As a result, the war budget account was the perfect safety valve—a hiding place for defense costs that couldn’t fit into the base defense budget.

   Policymakers weren’t eager to trim the base defense budget either. From 2001 to 2011, the amount appropriated for the base defense budget totals $5.2 trillion, an increase of $670 billion over the pre-2001 defense budget plan.

   More than ten years of war helped to foster an aura of sacredness around the defense budget. Policymakers, unwilling to exercise oversight, turned a blind eye to budget gimmicks and signed off on the Pentagon’s requests each year.

   Today, we’re starting to feel the the results going ten years without taking a hard look at defense spending. With the national debt at $16 trillion and counting, policymakers are trying to rein in out-of-control spending. Reintroducing fiscal responsibility to the Pentagon budget is proving difficult, but eliminating unnecessary defense programs is the key to a more effective and efficient defense strategy.

   Ending the war in Afghanistan is a good place to start. Fiscally responsible policymakers know that much of the $570 billion allocated for the war in Afghanistan was spent unnecessarily. Eliminating waste in the war budget is one step towards a smarter, more sustainable defense strategy.

   
   

   Tags: Congress, defense spending, deficit reduction, drawdown, strategy, War costs

4. Hiding in the war budget: billions for weapons upgrades

   Published: October 2nd, 2012
   

   Sustaining combat operations in Afghanistan costs billions of dollars each year. The costs of other operations associated with warfighting have driven the war budget even higher.

   Take this small piece of the Afghanistan drawdown, for example. Over the next couple of years, the U.S. Marine Corps will ship tens of thousands of weapons, vehicles, and pieces of gear back from Afghanistan. The costs of transporting and repairing that equipment is an estimated $3.2 billion.

   Bringing home and refurbishing or replacing equipment used in Afghanistan, a process known as “reset,” has been factored into the war budget for years. In fiscal year 2012 the Pentagon’s war budget included $13 billion for equipment reset. The request for 2013 is $9.3 billion.

   The billions of dollars allocated for funding the reset have allowed the military to do much than transport equipment back from Afghanistan and patch it up.

   In fact, according to analysis from the Stimson Center, war funding “significantly enhanced” funding available for weapons procurement, accounting for over $230 billion, or 22 percent of procurement funding from 2001 to 2010.

   “Over the last decade, we spent roughly $1 trillion on defense procurement and the military services used that funding, including that provided in the supplemental war funding, to modernize their forces,” the Stimson report concludes.

   How much of the war funds labeled “reset” actually go towards refurbishing equipment used for the war? Less than 60 percent, according to a 2007 report by the Congressional Budget Office.

   “More than 40 percent of the requested funds have been designated for activities other than replacing lost equipment or repairing returned systems,” the CBO report reads. “Those activities include upgrading systems to make them more capable and buying new equipment to eliminate shortfalls in the Army’s inventories, some of which are long-standing.”

   The war budget may have been a useful loophole for the Pentagon, looking to upgrade its weapons systems, but the resulting expansion of war costs has had serious repercussions for the U.S. economy.

   According to the Center for Budget and Policy Priorities, the costs of the wars are a driving factor of projected budget deficits over the next ten years.

   
   

   Tags: defense spending, deficit reduction, drawdown, strategy, War costs

5. Borrowing to pay for war

   Published: September 18th, 2012
   

   Earlier this month, the U.S. hit another economic low point: the national debt topped out at an astounding $16 trillion. The rising debt isn’t entirely due to the war in Afghanistan. But the war, which has cost over $500 billion to date, is a factor in America’s economic crisis.

   In fact, the wars in Iraq and Afghanistan have raised deficits by about 1% of GDP each year since 2001. The Center for Budget and Policy Priorities finds that the deficit-financed wars are one of the main drivers of the projected debt, totaling $20 trillion by 2019 if current policies continue.

   The growing debt has serious consequences for the U.S. economy. Congressional Budget Office Director Doug Elmendorf, listed some of these consequences in a recent talk: higher interest payments on the federal debt, a reduction in national saving, and increased chances of a fiscal crisis.

   This has an effect on individual Americans too. The Costs of War Project, an initiative by Brown University’s Eisenhower Study Group, estimates that in 2010 the average homebuyer’s mortgage payment was $600 higher due to increased interest rates caused by war borrowing.

   Some believe that all of the problems—strategic, economic—with the war in Afghanistan will go away when the U.S. withdraws its combat troops at the end of 2014. This is not true. U.S. taxpayers will continue to pay for the war long after it is officially over. And the problem will get worse if decisionmakers don’t come up with a smarter Afghanistan strategy.

   If the U.S. sustains a military presence of 20,000 troops—an idea that some policymakers support—and continues to finance the Afghan security forces, war costs could exceed $25 billion each year.

   $25 billion is much lower than the Afghanistan war budget for this year—over $110 billion. But $25 billion still a significant amount by any measure. Certainly it’s too much to spend on a war that many Americans want to end now.

   
   

   Tags: Afghan security forces, aid, defense spending, deficit reduction

6. $300 Million Taxpayer Dollars for a Broken Power Plant

   Published: April 10th, 2012
   

   

   The deaths of 16 Afghan civilians at the hands of a US soldier raised a number of questions about the psychological effects of war on the men and women of our armed forces, and whether the military is doing enough to care for them. The tragedy also points to a more fundamental problem: after more than ten years of war, the US forces are worn out.

   It didn’t have to be this way. We could have employed a smarter, more efficient strategy, relying on intelligence assets and special operations forces, like Seal Team Six.  Instead, the US pursued a strategy of dedicated nation-building. The burden for executing that strategy fell on a small percentage of deployable troops. According to the Defense Business Board, 30% of active duty troops have deployed two or more times, while 40% have never deployed.

   Nation-building requires significant investments. It eats up decades, dollars, and lives, and gives little in return.

   The nation-building experiment in Afghanistan has been a disaster for armed forces, and a fiscal disaster as well. Military spending has grown out of control. For Afghanistan alone, war costs total more than $550 billion since 2001. In that same time frame the base defense budget grew almost $700 billion over the pre-war plan.

   The decade of war was an excuse to pour money into the Department of Defense. But there was no incentive to spend wisely. Overhead costs ballooned, totaling at least $200 billion in 2010, according to the Defense Business Board. While costs for new programs like the F-35 soared, funds for vital programs like the Mine-Resistant Ambush Protected vehicle, designed to protects troops from IEDs, were delayed.  Billions of dollars were invested in unsustainable Afghanistan reconstruction projects—like the $300 million Kabul Power Plant that is seldom used because the government cannot afford to operate and maintain it.

   Boondoggles like the Kabul Power Plant are a sign of where the U.S. strategy Afghanistan went wrong. Surely we could have used those funds for United States infrastructure projects.

   
   

   Tags: COIN, deficit reduction, nation building, strategy, timetable, War costs, withdraw

7. Wars End, but War Costs Continue

   Published: March 27th, 2012
   

   The Afghanistan War will end eventually, the troops will come home, and the United States taxpayer will start saving billions a week. However, U.S. operations in Afghanistan will continue to be a significant expense long after the troops come home.

   We can look to Iraq as an example. The last U.S. troops left Iraq in December 2011, three months into fiscal year 2012. In FY12, we budgeted over $14 billion for operations in Iraq—that includes Department of Defense funding ($9.6 billion) as well as Department of State and foreign aid ($4.8 billion).

   The fiscal year 2013 request is much less than that, but still significant—about $7.6 billion. $2.9 billion is for DOD’s “reset of equipment from deploying in Iraq.” Assuming reset costs decline steadily, that still leaves over $5 billion for State and foreign aid. Further, assuming we continue to maintain a diplomatic presence in Iraq, that $5 billion per year will likely continue.

   There’s every reason to believe that the transition from DOD to State,soldiers to civilians, in Afghanistan will be at least as expensive. For one, Afghanistan already gets more in foreign aid than Iraq—$2.3 billion in 2012. Assuming the civilian presence expands as U.S. diplomats replace soldiers, the Department of State in Afghanistan will increase too.

   On top of diplomatic operations and State-funded foreign aid, Afghanistan gets a big chunk of change through the Department of Defense. The Afghanistan Infrastructure Fund and the Commander’s Emergency Response Program came to $800 million in 2012. Since these funds are for Afghanistan reconstruction projects, they may continue after U.S. troops leave.

   Then there is the small matter of training and equipping the Afghanistan Security Forces. The 2013 DOD request is $5.7 billion, a big drop from $11.2 in 2012. Considering Afghanistan’s financial situation, local security forces will likely rely on foreign funds for many years—meaning $5 billion per year is about what we can expect to pay for the next several years to support Afghan’s security forces.

   We still haven’t even gotten to the one big question: what about U.S. troops? If you thought that all U.S. troops will be leaving Afghanistan by 2014, think again. The administration has consistently emphasized 2014 deadline, the date agreed to at the Lisbon summit, as the deadline for transitioning to a training role, meaning local forces will take the lead in combat. By and large U.S. officials have stuck to that date, with a few hints of starting to transition early and ending by 2013.

   Here’s the catch: the U.S. combat mission may end in 2014, but that doesn’t mean all troops will leave. The majority of the 68,000 left may come home by 2014. However there is considerable support for leaving anywhere from 10,000 to 35,000 troops to serve as trainers and advisors to the Afghan National Security Forces. The costs associated with maintaining a military presence after 2014 are unclear, but it won’t be cheap.

   There are good arguments to be made for leaving military advisors and for maintaining a diplomatic presence in Afghanistan. But that argument must be made in a budget context, because whatever we decide, we’ll have to pay for it.

   
   

   Tags: defense spending, deficit reduction, drawdown, strategy, timetable, War cost estimates, War costs

8. Afghanistan Weekly Reader: Billions of Taxpayer Dollars at Stake in Afghanistan

   Published: March 12th, 2012
   

   Last December, Defense Secretary Panetta said the Afghanistan war was at a turning point and theAmerican people agree.
   It’s no wonder that the public is war-weary. Ten years of war and over $500 billion dollars, and we have little to show for it. And yet the costs of war continue. Pentagon officials say that the cost of deploying one solider to Afghanistan for one year is $850,000 and rising. Looking ahead, budget gimmicks and the lack of restraint in government spending may keep the war budget high for years to come.

   From ASG
   3/6/12
   DOD Comptroller: Fielding One Soldier In Afghanistan Costs Taxpayers $850,000
   Afghanistan Study Group by Mary Kaszynski
   Recent violence in Afghanistan has led to the deaths of six U.S. troops. Despite this clear sign that the U.S. strategy isn’t working, politicians and pundits are insisting that the war is still “winnable.” Their solution is to leave twenty or thirty thousand troops behind—but how much will it cost?

   ARTICLES
   3/7/12
   US commanders: No plan to cede Afghan war to CIA
   Associated Press
   U.S. military commanders said Wednesday there are no plans to turn the Afghan war over to CIA control after 2014, with special operations answering to American intelligence officials.

   OPINION
   2/29/12
   Leave Afghanistan now
   Washington Examiner by Cal Thomas
   Can Afghanistan be stabilized so as not to pose a threat to America and American interests? Probably not, if the surge forces pull out on schedule and America continues to fight under restrictive and self-imposed rules of war while the enemy does not…If our troops are coming out anyway and if the administration can’t define victory, or commit the resources necessary to achieve it, waiting longer only ensures more casualties.

   3/6/12
   How to Pay for Wars
   The National Interest by Benjamin Friedman and Charles Knight
   Done right, spending caps would improve national decision making about war. Because American wars have broadly distributed and often obscured costs, the public and Congress have little incentive to carefully consider their consequences. Leaving aside the volunteer military, the only cost of war for most Americans is marginally higher taxes. And deficits subsidize war costs, diluting their effects on current voters.

   
   

   Tags: Afghanistan Weekly Reader, deficit reduction, overseas contingency operations, Pubic opinion, War costs

9. Capping War Costs at Only $450 Billion

   Published: February 14th, 2012
   

   The president’s budget plan for fiscal year 2013, unveiled yesterday, includes $96.7 billion for war funding ($88.5 billion for the Department of Defense and $8.2 for State – see page 89 of the budget). The Afghanistan war accounts for almost all of the request – $88.9 billion.

   While the numbers themselves are interesting (interestingly high, that is), even more significant is the administration’s proposal to establish a cap on the war funds account:

   Leaving OCO [overseas contingency operations, or war costs] funding unconstrained could allow future Administrations and Congresses to use it as a convenient vehicle to evade the fiscal discipline that the BCA [Budget Control Act of 2011] caps require elsewhere in the Budget. With the end of our military presence in Iraq, and as troops continue to draw down in Afghanistan, this Budget proposes a binding cap on OCO spending as well. From 2013 through 2021, the Budget limits OCO appropriations to $450 billion. [Emphasis added. See page 26 of the president’s budget.]

   Before diving into the implications of the proposed cap, a couple of notes. First, the debt deal left a loophole for war costs, and that that loophole must be closed if policymakers are serious about getting nation’s fiscal house in order. Second, this is a cap, not a request. So $450 billion over the next nine years is a maximum; costs may not get that high.

   These caveats aside, take another look at the cap itself. The proposal would limit war costs to $450 over the next nine years, an average of $50 billion per year. That might seem like a good deal, until you remember that we have spent $570 billion on the Afghanistan war since 2001. Assuming most of the proposed $450 billion would be for Afghanistan, that would bring the cost of the war to over $1 trillion.

   Remember too that the Pentagon has announced plans to transition to local security forces by mid-2013. If the US combat role ends in 2013, what could possibly account for $450 billion in war costs through 2021?

   A couple of explanations come to mind. First, the drawdown plan for 2013 and beyond is still unclear. US troops’ combat role may be ending, but who knows how long the training mission will last, and how many troops will be left in Afghanistan to see it through. Estimates range from 5,000 to 30,000, according to Afghanistan’s former deputy interior minister.

   The second explanation isn’t much better. Troop levels alone are unlikely to account for $450 billion, meaning there will still be plenty of room for shady budgeting. Federal budgeters intend to keep doing what they’ve been doing all along, hiding non-war costs in the war budget. This has happened before – in 2012 alone some $7 billion was moved from the base defense budget to the war account. And it’s likely to happen again, with a cap as high as $450 billion.

   Capping war costs is a good step towards fiscal responsibility in the defense budget. But this cap still leaves plenty of room for unnecessary spending. More serious efforts to restrain spending are necessary.

   
   

   Tags: defense spending, deficit reduction, fiscal responsibility, overseas contingency operations, War costs

10. Afghanistan Weekly Reader: U.S. Spends More on Military Than Medicare

    Published: January 12th, 2012
    

    The budget debate is heating up in Washington. With a national debt of over $15 trillion, the question is not whether to cut government spending, but where to make those cuts. The Department of Defense budget is a logical target. Military spending came close to $700 billion last year – that’s $200 billion more than the amount spent on Medicare and more than ten times the Department of State’s budget. The Pentagon has committed to finding $500 billion in savings over the next ten years, but defense analysts say they could cut another $500 billion without risking national security.

    The wars in Iraq and Afghanistan have been a big factor in defense spending increases. Last year we spent $120 in Afghanistan alone; this year’s budget request of $110 billion is only slightly lower.
    

    Ending the war in Afghanistan won’t solve the fiscal crisis. But it is a good place to start. And it’s certainly preferable to cutting spending in other areas.

    From ASG
    1/8/12
    New Strategy Looks Forward, But We’re Still Stuck In Afghanistan
    Afghanistan Study Group by Mary Kaszynski
    The new defense strategy guidance takes a step in the right direction by acknowledging that Afghanistan and similar conflicts should not be a part of future US strategy. Whether this strategic reality translates into a more disciplined budget remains to be seen.

    ARTICLES
    1/11/12
    Panetta Said Ready to Release First Budget Numbers Jan. 26
    Bloomberg by Tony Cappacio
    Defense Secretary Leon Panetta is scheduled Jan. 26 to release the first details of the Obama administration’s fiscal 2013 defense budget…The administration plans $82.54 billion in funding for the Afghanistan and Iraq wars for 2013, according to OMB.

    1/8/12
    Security transition in Afghanistan ongoing
    Army Times by Michelle Tan
    As it looks to bring all U.S. forces home, the military continues to apply the Iraq playbook to operations in Afghanistan.
    Beginning this spring, elements of four brigade combat teams will deploy and organize — not as combat units, but to advise and assist Afghan army and police units as the U.S. looks to withdraw its forces after more than 10 years.

    Karzai’s Ultimatum Complicates U.S. Exit Strategy
    New York Times by Matthew Rosenberg
    President Hamid Karzai’s denunciation last week of abuses at the main American prison in Afghanistan — and his abrupt demand that Americans cede control of the site within a month — surprised many here. The prison, at Bagram Air Base, is one of the few in the country where Afghan and Western rights advocates say that conditions are relatively humane.

    OPINION
    1/3/12
    How to Save the Global Economy: Cut Defense Spending
    Foreign Policy by Barney Frank
    One major change that can reverse this: a substantial reduction in America’s military spending. In the current fiscal year, the United States is spending upwards of $650 billion on its military, including the costs of the wars in Iraq and Afghanistan. This is far more than it spends on Medicare and, more importantly, considerably in excess of what is required for America’s legitimate national security needs.

    1/9/12
    Why the new Defense Guidance is still interventionist
    Foreign Policy by Stephen Walt
    These changes do not herald a philosophical shift away from a highly interventionist outlook. The new DG [defense guidance] says the United States will still “take an active approach to countering [terrorist] threats,” meaning continued drone strikes, night raids, and various forms of covert action. The decision to “invest as required to ensure [our] ability to operate in anti-access and area denial environments” tells you that the U.S. intends to retain the capability to use force just about anywhere it decides it wants to. And although it declares that the U.S. “will continue to promote a rules-based international order,” we will undoubtedly reserve the right to ignore any of those rules if they prove to be inconvenient.

    1/10/12
    Beaufort: Why We Must Leave Afghanistan Now, Not End 2014
    Atlantic Council blog by Julian Lindley–French
    Afghanistan was always a risk but the essential failing from the outset was to equate ridding the space quickly of Al Qaeda (achieved relatively quickly) with ‘doing good’ by Western liberal criteria and then to organise poorly both the effort and the resources.

    
    

    Tags: Afghanistan Weekly Reader, defense spending, deficit reduction, War costs