Iraq Bleeds U.S. Treasury, Enriches Contractors

At Asia Times Online, Eli Clifton writes:

In a report to US lawmakers this week, the non-partisan Congressional Budget Office found that the war in Iraq could cost US taxpayers more than a trillion dollars when the long-term costs of caring for soldiers wounded in action, military and economic aid for the Iraqi government, and ongoing costs associated with the 190,000 troops stationed in Iraq are totaled up.

White House Office of Management and Budget director Mitch Daniels' 2003 estimate that the war in Iraq could cost US$50 billion to $60 billion stands in stark contrast to the $500 billion already allocated to the conflict in Iraq and reconstruction projects.

"We are now spending on these activities more than 10% of all the government's annually appropriated funds," said Robert A Sunshine, the assistant director for budget analysis.

In Sunshine's report to Congress, he showed that in an optimistic scenario - the United States reduces its troop levels in Iraq to 30,000 by 2010 - the war will still cost taxpayers an additional $500 billion.

In a less optimistic scenario in which 75,000 US troops remain in Iraq over the next five years, the cost to the US government would total an additional $900 billion.

"This is the consequence of going to war haphazardly and without a plan," Brian Katulis, senior fellow at the Center for American Progress, told Inter Press Service (IPS). "We're at a point where we look at how much is approved by Congress, we're at $450 billion. Then the $116 billion requested by the [George W] Bush administration puts the total at over $556 billion.

"The Vietnam War, when inflation-adjusted, cost $652 billion," he added.

While Congressional Budget Office reports showed a gloomy outlook for US costs in Iraq, last week several of Washington's biggest defense contractors released profit reports disclosing huge growth in divisions benefiting from military contracts in Iraq and Afghanistan.

Northrop Grumman's information and services division showed 15% growth and its electronics division 7% for the second quarter compared with the same fiscal quarter last year.

General Dynamics' combat-systems unit experienced 19% growth in sales due to continued demand for tanks and armored vehicles, while Lockheed Martin announced a 34% rise in profits to $778 million.

Lockheed's newest revenue projections are now as high as $41.75 billion.

Miriam Pemberton, research fellow at the Institute for Policy Studies, told IPS that 2008 military-related appropriations are the highest they've ever been. The year 2007 was the highest before that.

"War spending continues to go on. In addition, [contractors] are cashing in on increasing military budgets that have nothing to do with the war, such as the F-22 Raptor and large-scale weapon systems. Not only has this recent quarter been profitable, they have now locked in spending that will keep those profits going," she said.

The increase in profits by defense contractors can be correlated to only a portion of the current and predicted spending associated with the war in Iraq.

The Congressional Budget Office's report estimated that medical costs will exceed $9 billion if the US stations 30,000 troops in Iraq, but could exceed $13 billion if 75,000 troops remain in Iraq over the next several years.

Training of police and soldiers in Iraq and Afghanistan over the next decade is estimated to cost at least $50 billion.

Estimates for rebuilding and diplomatic expenses suggest that the US government will need to spend at least $20 billion through 2017, outside of military expenses.

Costs in coming months may continue to rise as the military will require funding for the troop "surge" and for the purchase of armored vehicles for the additional troops and to replace vehicles unsafe because of the threat posed by roadside bombs.

In January 2006, Joseph Stiglitz, a Columbia University professor who won the Nobel Prize for economics in 2001, and Linda Bilmes, a Harvard University budget expert, released a report estimating that the cost of the war in Iraq may come to more than $2 trillion when costs associated with lifetime disability and health care for injured soldiers and the overall effect on the economy are taken into account.