Order Code RL33110
CRS Report for Congress
Received through the CRS Web
The Cost of Iraq, Afghanistan and Enhanced
Base Security Since 9/11
October 3, 2005
Amy Belasco
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress
The Cost of Iraq, Afghanistan and Enhanced Base
Security Since 9/11
Summary
Since the 9/11 terrorist attacks, CRS estimates that the Administration has
allocated a total of about $361 billion for military operations, reconstruction,
embassy costs, and various foreign aid programs in Iraq and Afghanistan, and for
enhanced security at defense bases. This total includes $50 billion in “bridge”
funding for the Department of Defense (DOD) provided in H.J.Res. 68 /P.L.109-77,
a FY2006 Continuing Resolution, which was signed by the President on September
30, 2005. More funds will be needed by DOD to cover the rest of the year.
That total includes some $330 billion for DOD and $31 billion for foreign aid
programs and embassy operations. If the bridge funds are split in a fashion similar
to FY2005, funding would total about $255 billion for Iraq, about $83 billion for
Afghanistan, and $24 billion for base security. Iraq’s total is split between $230
billion for DOD and $25 billion for foreign operations. Afghanistan’s total includes
$77 billion for DOD and $6 billion for foreign operations. All base security funds
go to DOD. Based on a CBO estimate that assumes a gradual drawdown in U.S.
troops in Iraq and Afghanistan between FY2006 and FY2010, war-related costs could
total about $570 billion by the end of 2010.
DOD’s current monthly average spending rate is about $6 billion for Iraq, $1
billion for Afghanistan and $170 million for enhanced base security for the first nine
months of FY2005. Compared to FY2004, those averages are 19% higher for Iraq,
8% lower for Afghanistan, and 47% lower for base security.
The Department of Defense has not provided an overall reckoning of these
funds by mission or military operation. Gaps in the figures raise questions such as
whether DOD transferred $7 billion or $14 billion from peacetime funds to meet
higher than expected wartime costs. DOD also used $2.5 billion from prior year
monies to prepare for the Iraq war before passage of the joint resolution authorizing
the use of force in Iraq in October 2002.
The Government Accountability Office (GAO) also found that DOD had lost
visibility on over $7 billion provided for the global war on terrorism. In this regard,
Congress faces two issues — how to get a transparent accounting by mission of all
previously appropriated funds by adjusting current reporting, and how to ensure
accurate accounting in the future by requiring that DOD budget and segregate war-
related spending.
Congress provided about $100 billion to cover DOD’s FY2005 costs — about
$35 billion more than in the previous year — in two bills, including $25 billion in
bridge funds and $75 billion in the FY2005 war supplemental for the rest of the fiscal
year. In FY206, the full amount of war-related funding for FY2006 will depend on
not only the $50 billion in bridge funding but also the amount provided in FY2006
appropriations and a FY2006 supplemental. This report will be updated.
Contents
Defense and Foreign Operations Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Difficulties in Tracking Defense Spending . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Issues for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Costs by Mission: Iraq, Afghanistan and Enhanced Security . . . . . . . . . . . . . . . . 5
Monthly Average Costs For FY2001 Through FY2005 . . . . . . . . . . . . . . . . 6
Trends in War-related Spending Since 9/11 . . . . . . . . . . . . . . . . . . . . . . . . . 8
Defense Funding by Mission and By Year . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FY2002: Afghanistan, Enhanced Security, and Iraq Preparations . . . . 11
FY2003: Iraq War Dominates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
FY2004: Iraq Operations Continue, Others Decline . . . . . . . . . . . . . . 12
FY2005: Iraq Insurgency Intensifies, Procurement Costs Grow . . . . . 13
FY2006: $50 billion in Bridge Funding, Total Unknown . . . . . . . . . . 13
Foreign Operations Activities Funding To Date . . . . . . . . . . . . . . . . . . . . . 13
Assessing and Predicting War-Related Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Effects of Limitations in DOD’s Reporting . . . . . . . . . . . . . . . . . . . . . . . . 15
Comparing DOD Plans and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Future War Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
CBO’s Estimate of Future War Costs . . . . . . . . . . . . . . . . . . . . . . . . . 18
Factors Driving War Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Potential Foreign Operations Costs in FY2006 . . . . . . . . . . . . . . . . . . 19
Potential Total War Funding For FY2006 . . . . . . . . . . . . . . . . . . . . . . 20
List of Tables
Table 1. Defense Department and Foreign Operations Funding for Iraq,
Afghanistan, and Enhanced Security, FY2001-FY2006 to Date (10-3-05) . . 2
Table 2. DOD’s Obligations by Mission, FY2001-FY2005 . . . . . . . . . . . . . . . . . 7
Table 3 . Budget Authority for Iraq, Afghanistan, and DOD
Enhanced Security, FY2001-FY2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 4. Allocation of Foreign and Diplomatic Funds, FY2001-FY2005 . . . . . 14
Table 5. DOD’s Plans vs. Obligations By Mission, FY2001-FY2005 . . . . . . . . 16
The Cost of Iraq, Afghanistan and Enhanced
Base Security Since 9/11
Defense and Foreign Operations Funding
Since the 9/11 attacks, CRS estimates that funds for Iraq and Afghanistan and
enhanced security for defense installations total about $361 billion, including $50
billion in “bridge funds” to cover the first six months of FY2006 that was just
received by the Department of Defense (DOD) in H.J.Res. 68 /P.L.109-77, a
FY2006 Continuing Resolution (see Table 1). More funding will be needed by DOD
to cover the rest of the year. That total includes some $330 billion for the
Department of Defense and about $31 billion for foreign aid programs and embassy
operations and construction.
The $330 billion for the Department of Defense (DOD) is primarily for military
operations, special pay, supporting deployed personnel, repairing and buying
equipment, and additional security. The State Department and USAID have received
about $31 billion for reconstruction, embassy operations and construction, and
foreign aid programs.1 About 75% of the total was provided in supplemental
appropriations and 25% in regular or omnibus appropriations or through transfers
from DOD’s peacetime funds that were made to meet higher-than-anticipated
expenses.
Difficulties in Tracking Defense Spending
Table 1 shows that DOD received between $316.3 billion and $323.4 billion in
supplemental and regular appropriations acts. CRS has provided a range because it
is not clear whether the $7.1 billion that Congress provided to DOD in its regular
FY2003 appropriations act is considered part of funding for the “global war on
terrorism.” Prior to receiving the $50 billion in bridge funding for FY2006, DOD
reported receiving “approximately $260 billion” in appropriations for the “global war
on terror,” a total which suggests that they are not counting the $7.1 billion in
FY2003 monies.2
1 Funds for foreign operations activities are managed by both the State Department and
USAID, which handles most U.S. development assistance programs.
2 DOD response to press query, August 2005. Without the $50 billion for FY2006 and
without the $7.1 billion, the total for appropriations in Table 1 would be $266.3 billion.
CRS-2
Table 1. Defense Department and Foreign Operations Funding
for Iraq, Afghanistan, and Enhanced Security, FY2001-FY2006 to
Date (10-3-05)
(in billions of dollars of budget authoritya)
Foreign
Public Law
Date
DOD
aid/
Total
Name of Law
No.
Enacted Funds reconst/
Cost
embassy
FY2001 Emergency Terrorism
P.L. 107-38
9/18/01
Response Supplemental Appropriations
16.5
0.3
16.7
P.L. 107-117
1/10/02
Act and FY2002 DOD Approps Act
FY2002 Emergency Supplemental
P.L. 107-206
8/2/02
13.3
0.4
13.6
FY2002 Regular Foreign Operations
P.L. 107-115
1/10-02
0.0
0.2
0.2
FY2003 Consolidated Approps
P.L. 108-7
2/20/03
10.0
0.4
10.4
FY2003 Emergency Supplemental
P.L. 108-11
4/16/03
62.6
3.3
65.9
FY2003 DOD Appropriations*
P.L. 107-48
10/23/02
[7.1]*
0.0
[7.1]*
FY2004 DOD Appropriations Act
P.L. 108-87
9/30/03
-3.5
0.0
-3.5
(rescission of FY03 funds)
FY2004 Emergency Supplemental
P.L. 108-106
11/6/03
64.9
20.1
85.0
FY2004 Foreign Operations
P.L. 108-199
1/23/04
0.0
1.6
1.6
FY2005 DOD Appropriations Act,
Titles IX and Xb
P.L. 108-287
8/5/04
24.9
0.7
25.6
FY2005 Supplemental Appropriationsc
P.L. 109-13
5/11/05
75.7
3.1
78.8
FY2005 Omnibus Appropriations
P.L. 108-447
12/8/04
0.0
1.0
1.0
FY2005 DOD Appropriations Actd
P.L. 108-287
8/5/04
2.1
0.0
2.1
FY2006 Continuing Resolution
P.L. 109-77
9/30/05
50.0
0
50.0
316.3
347.3
Subtotal appropriations*
to
31.0
to
323.4*
354.4*
FY2003 Transfers
various
NA
1.2
0.0
1.2
FY2004 Transfers
various
NA
5.8
0.0
5.8
Subtotal transfers
7.0
0
7.0
323.3
354.3
GRAND TOTAL*
NA
NA
to
31.0
to
330.4*
361.4*
Sources: CRS calculations based on public laws.
Notes: Numbers may not add due to rounding.
*DOD appears not to include this $7.1 billion; range reflects totals with and without $7.1 billion.
a. Totals reflect budget authority for war-related expenses from appropriations and transfers, and
exclude funds transferred to other agencies, contingent appropriations not approved, and
rescissions that do not affect war-related funds.
b. CRS included the $24.9 billion provided in Title IX of the FY2005 DOD appropriations bill as
FY2005 because most of the funds will be obligated that year. Since the funds were available in
FY2004, they are formally scored by CBO and OMB as in FY2004.
c. Excludes funds for Tsunami relief and for the new office for the Director of National
Intelligence.
d. Reflects funds likely to be obligated for Operation Noble Eagle in FY2005 from DOD’s regular
bill.
CRS-3
These funds were originally provided to “respond to, or protect against, acts or
threatened acts of terrorism. . . “3 and included funds for a wide range of activities
from adding force protection at defense bases to buying JDAM missiles to replenish
stocks after the Afghan war. In light of their purpose, these funds appear to be war-
related funding and this report includes those funds. DOD may have excluded these
funds because Defense Finance Accounting Service (DFAS) reports, which track
DOD’s contractual obligations for wartime operations, may not have captured these
funds, creating uncertainty about where and how the funds were spent.
Because war-related expenses have proven to be higher than anticipated, DOD
also transferred $7.0 billion from peacetime funds (see Table 1). Based on
notifications to Congress, most of these funds were available because the services
postponed scheduled training and repair of equipment for units that were deployed
in Iraq and Afghanistan. Counting transfers, the total funds now available DOD thus
far is about $330 billion including the $7.1 billion (see Table 1).
In addition to appropriations, another way to track war-related expenses is to
rely on DOD’s DFAS monthly obligations reports. Based on those reports and CRS
estimates, DOD will spend a total of $279 billion for Iraq and Afghanistan from
funds provided through FY2005. That $279 billion is about equal to the higher
amount for appropriated and transferred funds as of the end of FY2005. In light of
that total, DOD would have tapped both appropriated funds and from $7 billion to
$14 billion in funds transferred from peacetime activities. If DOD did not use the
$7.1 billion that it cannot track, then the services would have transferred another $7
billion from peacetime activities to meet war-related expenses.4
DOD may have tapped some of the funds from the $7.1 billion provided in
DOD’s FY2003 regular bill that DOD does not count and may also have transferred
some funds from peacetime activities. If the monies were used for the same types of
activities, for example, operating expenses — but for war rather than peacetime
training — DOD would not report the change to Congress.5 For that reason, we
would not know how or whether peacetime programs were affected by these transfers
to cover war-related expenses.
In addition, DOD used about $2.5 billion from funds appropriated in either the
FY2001 and FY2002 supplementals for Afghanistan and the general war on terror
for activities designed to prepare for the Iraqi war.
In a recent report, GAO found
that in 2001, the President increased DOD’s planned funding for FY2003 through
FY2007 by $10 billion annually for the global war on terrorism and that in later
3 Office of Management and Budget, FY2003 Appendix, Budget of the United States, p. 177
February 2002.
4 Based on a CRS analysis of the composition of FY2003 funds by title, it looks like DOD
tapped some but not all of the $7.1 billion in regular FY2003 funds.
5 DOD has authority to transfer, or move between accounts, a certain amount of funds that
is specified in each act as long as certain criteria are met and the Congressional defense
committees are notified and do not object. Notifications explain why funds are available
for transfer and where funds are to be transferred.
CRS-4
supplementals, DOD did not take these funds into account in calculating incremental
war costs.
In the case of DOD’s regular FY2003 appropriations, GAO found that DOD and
the services had “lost visibility” on over $7 billion in funding and “do not know the
extent to which they are being used to support GWOT [Global War On Terrorism].”6
In addition, GAO found several cases where obligations exceeded appropriations in
FY2004, ranging from a high of $4.3 billion for Army operation and maintenance
funds to a low of $40 million for Navy military personnel in FY2004 where DOD
made up the differences by transferring funds from peacetime activities.7
Issues for Congress
In light of this lack of transparency about funding for war-related activities,
Congress may want to examine current reporting requirements. The Defense
Department is currently not required to identify the amount of funds requested or
report its plans once funds are appropriated for each of the three missions. DOD also
does not report, by public law, which funds are tapped (from supplementals or
regular bills) to meet war expenses. Starting on October 31, 2005, DOD is required
to report the cumulative totals to date for Iraq and Afghanistan but not for enhanced
base security.8 Given DOD’s difficulties in tracking and segregating war-related
costs, Congress may want to consider having DOD set up separate accounts for war-
related expenses that would build on DFAS tracking categories.
DOD is also not required to request all war-related funds on a mission basis.
It would be useful to know DOD’s initial plans by mission for Iraq, Afghanistan,
enhanced security, or other missions in the “global war on terrorism,” for all funds
appropriated and transferred in order to compare those plans with later obligations
and assess the accuracy of DOD’s forecasts.
DOD also uses a cost model to estimate future expenses but additional devices
to cross check estimates appear warranted. Unless DOD makes special efforts to
segregate supplemental appropriations for Hurricane Katrina and Rita, these expenses
may also be mixed in with peacetime and war-related expenses, which would
exacerbate Congress’s ability to separate war, peace, and disaster expenses.
In addition, in order for Congress to assess supplemental requests, Congress
may want to require that DOD describe its assumptions about the number of the
military personnel to be deployed, its plans for rotations, and the major drivers in
6 U.S. Government Accountability Office, Global War on Terrorism: DOD Should Consider
All Funds; Requested for the War When Determining Needs and Covering Expenses; GAO-
05-767, see [http://www.gao.gov/new.items/d05882.pdf], p. 10, p. 29.
7 Ibid, pp. 14-24.
8 P.L. 109-13, the FY2005 Emergency Supplemental, requires for the first time that DOD
report the cumulative total of all funds obligated and expended for Iraq and Afghanistan at
the end of April and October of each year. The report does not cover enhanced base security
(Operation Noble Eagle) or require an estimate of all funds appropriated to date.
CRS-5
support costs. For example, the services could report how costs would change over
time as the number of deployed personnel changes, as support costs fall once a
support infrastructure is in-place, and as operational tempo changes with an enhanced
role for Iraq and Afghan security forces. In another recent report, GAO found that
service budget officials believe that support costs could be reduced through various
control mechanisms as operations mature.9
Thus far, DOD’s reporting to Congress has generally been limited to quarterly
reports of obligations and lists of transfers from its flexible accounts to regular
appropriation accounts. A recent report on metrics for measuring success in Iraq did
not address costs.10
The State Department has provided Congress with more detailed reports on its
various reconstruction activities in Iraq including both monthly reports — required
by statute — and with weekly updates, provided on a voluntary basis.11 Congress
also required that the State Department establish a special inspector general to
monitor the $18 billion. Accurate, consistent and complete reporting by DOD to
Congress on an ongoing and current basis could help Congress assess trends in war-
related spending and DOD’s additional requests for Iraq and Afghanistan in the years
to come.
Costs by Mission: Iraq, Afghanistan and Enhanced
Security
Unlike the State Department which routinely requests funds by country, the
Defense Department does not usually allocate funds by operation or mission until
after-the-fact. For military operations, however, that allocation is an important part
of Congressional debate on the Administration’s requests for funds in supplemental
or regular bills. Defense Department witnesses periodically give average monthly
costs or “burn rates” for Iraq and Afghanistan but DOD has not provided Congress
with a complete or consistent record showing those rates over time or total amounts
for each operation in each year.
9 U.S. Government Accountability Office, Global War on Terrorism: DoD Needs to Improve
the Reliability of Cost Data and Provide Additional Guidance to Control Costs, GAO-05-
882, Sept. 2005, pp. 33,35; [http://www.gao.gov/new.items/d05882.pdf].
10 DOD, Report to Congress, "Measuring Stability and Security in Iraq,” July 21, 2005;
[http://www.defenselink.mil/news/Jul2005/d20050721secstab.pdf].
11 See for example, State Dept. 2207 Reports to Congress, July 2005, executive summary
[http://www.state.gov/documents/organization/48891.pdf].
CRS-6
Monthly Average Costs For FY2001 Through FY2005
The only figures showing average monthly spending rates are based on
obligations, which reflect contracts signed to provide goods or services and pay to
military and civilian personnel as reported by the Defense Finance Accounting
Service. Although such averages give a snapshot of spending rates at particular
points in time — and are often used to make rough estimates of future spending —
monthly obligations may be volatile because they go up and down depending on
when particular contracts are signed.
In June 2005, for example DOD’s monthly obligations spiked to $12.8 billion
from $3.0 billion in the previous month because of a burst of new procurement
contracts that tapped funds just enacted in P.L.109-13, a war-related FY2005
supplemental.12 Reflecting this jump, the cumulative average for FY2005 jumped
from $6.4 billion as of May to $7.1 billion as of June.
Based on the $7.1 billion monthly average for October 2004 through June — the
latest data available — obligations for the year would be estimated at $85.2 billion
for all three missions. On the other hand, if we predicted the annual total using the
$6.4 billion average through May 2005, the total would be $76.8 billion. Taking into
account, the three-fold increase in procurement monies in the FY2005 supplemental
compared to the previous year, total monthly obligations are likely to be closer to $7
billion in future months (see Table 2 ).
12 Tony Capaccio, “U.S. Military Spending in Iraq Topped $11 Billion in June, a Record,”
Bloomberg, Sept. 6, 2005.
CRS-7
Table 2. DOD’s Obligations by Mission, FY2001-FY2005
(in billions of dollars)
Average Monthly Obligationsa
Cum.
Mission & Type
Obligations
FY2005 thru
of Spending
FY2002
FY2003
FY2004
thru 6/30/05
6/30/05
Iraq
Operationsb
NA
4.3
4.4
4.6
NA
Investmentc
NA
0.1
0.6
1.3
NA
Total
NA
4.4
5.0
5.9
159.7
Afghanistan
Operationsb
NA
1.3
1.1
1.0
NA
Investmentc
NA
0.0
0.0
0.0
NA
Total
NA
1.3
1.1
1.0
55.6
Enhanced Security & Other
Operationsb
NA
0.5
0.3
0.2
NA
Investmentc
NA
0.0
0.0
0.0
NA
Total
NA
0.5
0.3
0.2
23.7
All Missions
Operationsb
NA
6.1
5.8
5.8
NA
Investmentc
NA
0.2
0.6
1.3
NA
Total
NA
6.3
6.4
7.1
238.9
Notes: NA = Not available. Numbers may not add due to rounding.
a. Reflects monthly obligations during each fiscal year from all available funds as reported by the
Defense Finance Accounting Service plus CRS estimates for intelligence obligations.
b. Includes funds appropriated for military personnel, operation and maintenance and working capital.
c. Includes funds appropriated for procurement, RDT&E, and military construction.
Of the $239 billion in defense obligations through June 2005 for all three
missions, about $159 billion is for Iraq, $56 billion is for Afghanistan, and about $24
billion for enhanced security (see Table 2). Using the latest figures, average monthly
obligations are now running about $7.1 billion, or about 11% higher than the
previous year. The latest monthly average costs for FY2005 are about:
! $5.9 billion for Iraq or 19% higher than last year;
! $1.0 billion for Afghanistan or 8% lower than last year; and
! $170 million for enhanced base security, or 47% lower than last
year.
Since FY2003, the monthly average cost of operations in Iraq — including the
cost of deploying, supporting and mounting military operations and “recapitalizing”
the force — has increased from about $4.4 billion to $7.1 billion, a 33% increase.
This increase reflects increases in military operations and support costs, higher
personnel levels and more investment spending.
For the first five months of FY2005, the average number of military personnel
in Iraq and Kuwait (which serves as the staging area for Iraq) was about 201,000 or
CRS-8
about 23,000 above last year’s average and about 66,000 above average levels in
FY2003.13
Investment obligations — for buying upgraded systems, equipping additional
modular units and replacing lost equipment — has increased by six-fold since
FY2003 reflecting the lag time for procurement contracts as well as the growth in
DOD’s supplemental procurement request in FY2005.14
Compared to FY2004, Afghanistan’s monthly military personnel costs this year
are 14% higher but operating costs are 21% lower. For the first half of FY2005, the
number of U.S. military personnel deployed to Afghanistan is over 20,000 troops,
over 20% higher than the previous year.
Average monthly obligations for enhanced security have dropped off rapidly
from about $500 million in FY2003 to $170 million in FY2005, the first year when
these security expenses for defense installations are being funded in the services’
regular budgets rather than through supplemental appropriations.
Trends in War-related Spending Since 9/11
Since the 9/11 terrorist attacks, annual funding for the defense and foreign and
diplomatic operations for Iraq and Afghanistan and enhanced base security increased
from about $31 billion in the first year to $108 billion in FY2005.15 Initially, funding
was dedicated primarily to operations in Afghanistan and enhanced security at DOD
bases. With the Iraq invasion, the total jumped to about $80 billion in FY2003
(including the $7.1 billion in regular FY2003 funds) with most of the funds for
military operations.16
In the next year, FY2004, total funding rose to $92 billion with about $71 billion
dedicated to military operations and $22 billion slated for reconstruction. Military
spending accounted for 75% and foreign operations for 25% that year. Despite the
13 Data from the Defense Manpower Data Summary, Military Personnel by Country in
Central Command, September 2001 - February 2005. Kuwait had 4,500 military personnel
in September 2001 and about 10,000 by November 2002, which increased rapidly with the
buildup for the invasion of Iraq. These totals probably include about 5,000 to 10,000
headquarters military personnel in Kuwait.
14 Procurement contracts generally are signed in the second year after funds are provided;
thus obligations in FY2005 include contracts funded in previous years.
15 This total excludes funding for disaster assistance to New York City, aid to the airlines,
bioterrorism, and other assistance; see Table 2 in CRS Report RL31187, Combating
Terrorism: 2001 Congressional Debate on Emergency Supplemental Allocations by Amy
Belasco and Larry Nowels. See CRS Report RL31829, Supplemental Appropriations
FY2003: Iraq Conflict, Afghanistan, Global War on Terrorism, and Homeland Security by
Amy Belasco and Larry Nowels.
16 In terms of spending, both the FY2001 and FY2002 supplementals were obligated in
FY2002 because the terrorist attacks occurred at the end of FY2001. About $3 billion of the
FY2003 total was for foreign operations activities (see Table 1).
CRS-9
end of major combat operations, the cost of military operations did not fall in
FY2004 because of disorder following the invasion and insurgent attacks.
In FY2005, appropriations totaled about $108 billion, split between about $103
billion for DOD and $5 billion for foreign operations activities. The further jump in
defense costs reflects not only higher costs for both military operations and support
costs but also DOD’s request for about $17 billion to upgrade equipment and equip
the Army’s new modular units, and $7 billion to train Afghan and Iraqi security
forces.17 The total for F2006 will depend on the amount in a supplemental in
addition to the $50 billion in bridge funding just provided in the FY2006 Continuing
Resolution, H.J.Res. 68 /P.L. 109-77.
Defense Funding by Mission and By Year
To allocate budget authority by mission, CRS used DOD’S DFAS reports of
obligations, distributed by the fiscal year when budget authority (BA) was
appropriated (see Table 3). These figures differ from those in Table 2 which
measure spending at particular points in time and include BA from several fiscal
years.18 These figures may not match budget authority figures in Table 1 because
in some years, DOD obligated more funds than appropriated presumably by drawing
on peacetime funds.19
Of the almost $312 billion in funding for FY2001 through FY2005, $281 billion
or 90% is for DOD, and $31 billion or 10% is for foreign operations activities
including reconstruction, new embassies in Iraq and Afghanistan and other aid. Most
of the funds over the past four years are for Iraq — 70% for DOD and 80% for
foreign operations.
17 DOD received about $102.7 billion in P.L.109-87, its FY2005 regular appropriations in
the bridge supplemental and funds for enhanced security, and P.L.109-13, the FY2005
Supplemental; of those funds, about $2 billion was obligated to meet needs in FY2004.
18 BA appropriated in one fiscal year may be available for obligation for one or more years
depending on the type of expense; for example, monies for military pay and benefits and
operating costs generally must be obligated in the first year whereas funds to buy equipment,
generally may be obligated within two years. Thus obligations in any year include BA that
was appropriated in several years (see Table 5).
19 DFAS reports generally identify the funding source for obligations, (i.e., the fiscal year
appropriations) so CRS could tally obligations for each fiscal year. GAO’s new report
includes examples when BA and obligations do not match; see GAO-05-767, Global War
on Terrorism: DOD Should Consider All Funds Requested for the War When Determining
Needs and Covering Expenses, September 2005.
CRS-10
Table 3 . Budget Authority for Iraq, Afghanistan, and DOD
Enhanced Security, FY2001-FY2005
(CRS estimates in billions of dollars based on obligationsa)
Total
By Mission and Source of
FY2001/
FY2001-
Funds
FY2002b FY2002 FY2003 FY2004 FY2005 FY2005
Iraq
Department of Defense
2.5c
0.0
48.0
59.1
80.5
190.1
Foreign Aid &
Diplomatic Opsd
0.0
0.0
3.0
19.6
2.0
24.5
Total: Iraq
2.5
0.0
51.0
78.7
82.4
214.6
Afghanistan
Department of Defense
8.8
8.4
16.3
13.0
20.0
66.5
Foreign Aid &
0.3
0.5
0.7
2.2
2.8
6.5
Diplomatic Opsd
Total: Afghanistan
9.1
9.0
17.0
15.1
22.8
73.0
Enhanced Base Securitye
Department of Defense
7.0
5.0
6.5
3.7
2.0
24.2
Total: Enhanced Securitye
7.0
5.0
6.5
3.7
2.0
24.2
Total
Department of Defense
18.3
13.4
70.8
75.7
102.5
280.7
Foreign Operationsd
0.3
0.5
3.7
21.7
4.8
31.0
Total: All Missions
18.6
14.0
74.5
97.5
107.3
311.7
Sources: Foreign operations figures prepared with the help of CRS analyst Larry Nowels from CRS
Report RL31311, CRS Report RL32311, CRS Report RL31406, CRS Report RL32783 and CRS
Report RL30058.
Notes: Numbers may not add due to rounding
a. CRS calculations of allocations of budget authority and transfers from appropriated funds in each
fiscal year based on Defense Finance Accounting Service reports of contractual obligations thru June
2005 and estimates of unobligated funds; see DOD’s, FY2005 Supp. Request, Feb.2005;
[http://www.dod.mil/comptroller/defbudget/fy2006/fy2005_supp.pdf]. DOD has not provided a
breakdown for each year. CRS treats $25 billion in Title IX, FY2005 DOD appropriations Act as
FY2005 funds because all but $1.8 billion are likely to pay for FY2005 costs; these funds are formally
scored by OMB and CBO as FY2004 because they could be used in that year. CRS allocates
intelligence funds by mission, which are not tracked by DOD.
b. Includes funds provided in P.L.107-38, the first emergency supplemental after 9/11, and funds
allocated in P.L.107-117, the FY2002 DOD appropriations.
c. Includes $2.5 billion obligated for Iraq using funds prior to FY2003 according to a DOD table.
d. Foreign operations figures include monies for reconstruction, development and humanitarian aid,
embassy operations, counter narcotics, initial training of the Afghan and Iraqi army, foreign military
sales credits, and Economic Support Funds.
e. Known as Operation Noble Eagle, these funds provide higher security at DOD bases, support
combat air patrol, and rebuilt the Pentagon.
For the period FY2001 through FY2005, DOD received funding that totaled
almost $280 billion including about
! $190 billion or 68% for Iraq;
! $67 billion or 23% for Afghanistan; and
! $24 billion or 9% for enhanced base security (Operation Noble
Eagle).
CRS-11
FY2002: Afghanistan, Enhanced Security, and Iraq Preparations.
During FY2002, DOD received over $31.7 billion in the first two supplementals that
were passed in the first year after the terrorist attacks. The first supplemental
provided funds to “respond to the terrorist attacks,” of September 11th, including
“support of national security,” and the second supplemental provided funds “to
continue the global war on terrorism and to ensure the readiness of U.S. military
forces to support this and other missions in the months ahead.”20 About $17 billion
of these funds were to carry out the war and occupation of Afghanistan and another
$12 billion to enhance security at defense installations, conduct 24 hour combat air
patrol over New York and Washington, D.C., and reconstruct the Pentagon.21
In addition, DOD used about $2.5 billion from funds appropriated in either the
FY2001 and FY2002 supplementals for Afghanistan and the general war on terror
for activities designed to prepare for the Iraqi war. This information is from a DOD
table that lists monthly obligations for Iraq from the FY2003 and FY2004
supplementals and includes a footnote that an additional $2.5 billion for Iraq was
available from “prior year funds” (presumably P.L. 107-38, P.L. 107-117 or P.L. 107-
206, the previous two supplementals). CRS could not obtain details on this
spending.22
Controversy about using funds from supplementals before FY2003 to prepare
for the Iraq war erupted in the spring of 2004 with publication of the book Plan of
Attack, by Bob Woodward. In that book, Woodward alleged that President Bush
approved some 30 projects costing an estimated $700 million to upgrade facilities
and prepare for the Iraq war in the Central Command region that includes Iraq in the
summer of 2002 before passage of Joint Resolution 107-243, which authorized the
use of military force against Iraq.23
In testimony, Deputy Secretary of Defense Wolfowitz stated that DOD gave
Central Command $178 million to fund communications equipment, fuel supplies,
humanitarian rations and improvements to headquarters, “to strengthen our
capabilities in the region or support ongoing operational requirements . . . [but that]
No funding was made available for those things that had Iraq as the exclusive
20 See P.L. 107-38 and Department of Defense, FY2002 Supplemental Request to Continue
t h e G l o b a l W a r o n T e r r o r i s m , M a r c h 2 0 0 2 , p . 2 ;
[http://www.dod.mil/comptroller/defbudget/fy2003/fy2002_supp.pdf].
21 For more information, see CRS Report RL31187, Combating Terrorism: 2001
Congressional Debate on Emergency Supplemental Allocations, by Amy Belasco and Larry
Nowels and CRS Report RL31829, Supplemental Appropriations FY2003: Iraq Conflict,
Afghanistan, Global War on Terrorism, and Homeland Security, by Amy Belasco and Larry
Nowels.
22 The $2.5 billion for Iraq from prior year funds is from a DOD table on monthly
obligations for Iraq as of September 2004. CRS assumed that the $2.5 billion came from
initial funds appropriated to the Defense Emergency Response Fund.
23 Bob Woodward, Plan of Attack,(New York: Simon & Schuster Paperbacks, 2004), pp.
136-137. See also “Bush Began to Plan War three Months After 9/11,” Washington Post,
Apr. 19, 2004; and “Pentagon Funded Mideast Plans in Secret Prior to Iraq-War Vote," Wall
Street Journal, Apr. 22, 2004.
CRS-12
purpose.”24 Deputy Secretary Wolfowitz argued that after the joint resolution of
force was passed on October 25, 2002, “some $800 million was made available . . .
to support Iraq preparatory tasks.”25
Based on press reports and statements from members, it appears that at the time,
there was little if any knowledge by Congressional appropriators about the amount
or use of these funds to prepare for the Iraq war.26 Most of the funds provided to
DOD in the first and second supplementals were appropriated to the Defense
Emergency Response Fund (DERF) which gave DOD broad discretion to allocate
funds and required limited reporting to Congress. In its reports to Congress, DOD
allocated large amounts of funding among general categories such as “Increased
Situational Awareness,” (intelligence-related activities) and “Increased Worldwide
Posture” (operational and readiness activities) rather than by mission or specific
purpose.27
Although DOD has well-established rules for notifying Congress about transfers
of funds, it is not clear that these rules would have covered funding provided in these
general categories. Even in the case of funds provided in regular appropriation
accounts, DOD would not necessarily have been required to inform Congress that
funds were being used for Iraq rather than Afghanistan because funding is not
appropriated by mission. Thus if funding was used for operating costs, it could
arguably be used for any mission as DOD sees fit.
FY2003: Iraq War Dominates. In FY2003, DOD’s costs spiked from $30
billion to about $71 billion with almost $50 billion dedicated to the Iraq war and
occupation. Funding for Afghanistan dropped from $17 billion in FY2002, the
previous year, to about $14 billion in FY2003. Funding for enhanced base security
and other costs halved from $12 billion to $6.5 billion reflecting the end of one-time
costs like Pentagon reconstruction ($1.3 billion), the scaling back of combat air patrol
(initially about $1.3 billion), and presumably lower investment in base security (such
as jersey barriers and sensor devices) as well as a decrease in the number of
mobilized reserve personnel doing security duty.
FY2004: Iraq Operations Continue, Others Decline. In FY2004, total
funds for DOD increased from $70.4 billion to $74.4 billion, reflecting a full year of
operations in Iraq and lower costs for Afghanistan. Iraq costs rose by 16% from
about $49.8 billion to almost $57.9 billion while Afghan costs fell by 10% from
$14.4 billion to $12.9 billion. The cost of enhanced security was again almost
24 Testimony of Deputy Secretary of Defense Paul Wolfowitz before the Senate Armed
Services Committee, Apr. 20,2004, transcript, pp. 30- 31.
25 Ibid, p. 31.
26 “Pentagon Funded Mideast Plans in Secret Prior to Iraq-War Vote,” Wall Street Journal,
Apr. 22, 2004; “Approps Delve into Woodward’s Claim on Iraq-afghan Cash,” CQ Today,
Apr. 22, 2004 ; “Democrats Want to Know How Administration Used Anti-Terrorism
Money,” CQ Today, Apr. 21, 2204.
27 See, for example, OMB, Report on the Expenditure of Emergency Response Funds,
February 2003; [http://www.whitehouse.gov/omb/legislative/erfreports/erf2_2003.pdf].
CRS-13
halved, dropping from $6.5 billion in FY2003 to $3.7 billion in FY2004.
Despite the end of “major combat operations,” after the invasion in 2003,
DOD’s operating support costs were higher than in the previous year reflecting a full
year’s cost in Iraq, increases in the number of deployed personnel, and a more than
doubling in DOD’s base support costs, which went from $3.9 billion to $9.4 billion
as DOD set up more permanent support facilities for troops. Monthly personnel costs
in FY2004 were considerably higher in Iraq and about the same level in
Afghanistan.28
FY2005: Iraq Insurgency Intensifies, Procurement Costs Grow. In
FY2005, the cost of war-related operations is likely to jump again to over $100
billion, reflecting the continued intensity of U.S. military operations in the face of
insurgent attacks, $7 billion to train Afghan and Iraqi forces (funded by State in the
previous year), and a trebling of investment funds from the previous year.
Investment funds are slated to increase from $6.4 billion in FY2004 to $19.1 billion
in FY2005 and are, according to DOD, to “reset” and “recapitalize” the force. That
includes equipping new, smaller modular units, upgrading equipment for deploying
units, and carrying our $1 billion in military construction projects in theater.29
CRS estimates that Iraq will cost about $80 billion and Afghanistan $20 billion
assuming that investment monies are split proportionately between the two missions.
Since funding for enhanced base security is no longer included in supplemental
appropriations, DOD is providing about $2.1 billion in its regular FY2005
appropriations or roughly half of the amount in FY2004.
FY2006: $50 billion in Bridge Funding, Total Unknown. In H.J.Res.
68 /P.L. 109-77, DOD received $50 billion in “bridge” funding to cover the first six
months of FY2006 or until the Administration submits a FY2006 supplemental. The
Administration did submit this request but not object to Congressional action adding
funds to the regular FY2006 DOD appropriations bill, H.R. 2863.
Foreign Operations Activities Funding To Date
Of the $31 billion provided for foreign aid and diplomatic operations through
FY2005, some $24.5 billion or about 80% is for Iraq and $6.5 billion or 20% for
Afghanistan (see Table 4). Funding for reconstruction makes up one-half of the
funds for Afghanistan and two-thirds of the funds for Afghanistan (see Table 4).
The next largest category is training of security forces, which accounts for 21% of
28 Defense Finance Accounting Service, Consolidated Department of Defense Terrorist
Response Cost Report, Sept. 30, 2003, p. 62 and Sept. 30, 2004 (FY2004 Supplemental
Appropriation), p. 50.
29 See Table 3 in CRS Report RL32090, FY2004 Supplemental Appropriations for Iraq,
Afghanistan, and the Global War on Terrorism: Military Operations & Reconstruction
Assistance, by Stephen Daggett, Larry Nowels et al. and Table 1 in CRS Report RL32783,
FY2005 Supplemental Appropriations for Iraq and Afghanistan, Tsunami relief, and Other
Activities,by Amy Belasco and Larry Nowels for figures for procurement, RDT&E, and
military construction, which together make up investment.
CRS-14
Iraq’s total and 18% of Afghanistan’s total.
In the case of Iraq, constructing and operating its embassy accounts for another
9%, and in the case of Afghanistan 1%. Other foreign assistance activities — ranging
from counter narcotics to governance — make up 2% of Iraq’s total and 23% of
Afghanistan’s total. Funding operating expenses of the Coalition Provisional
Authority in Iraq accounts for the remainder.
Table 4. Allocation of Foreign and Diplomatic Funds, FY2001-
FY2005
(in billions of dollars and as percent of total)
Iraq
Afghanistan
Activity
Percent of
Percent of
Funding
Funding
Total
Total
Reconstructiona
$15.9
65%
$2.8
49%
Training Security Forces
$5.0
21%
$1.0
18%
New Embassies
$2.1
9%
$.1
1%
Coalition Provisional
$1.0
4%
NA
NA
Authority, operating expenses
Foreign Aid programsb
$.4
2%
$1.3
23%
Economic Support Fund &
$0
0%
$.6
11%
Military Aid
Total
$24.4
100%
$5.7
100%
Sources: CRS reports summarizing public laws and Congressional reports.
Notes: Numbers may not add due to rounding.
a. Excludes training of security forces.
b. Foreign aid include counter narcotics, anti-terrorism, law enforcement, disaster assistance and
other programs.
To get a complete picture of the funding for training security forces and
operating expenses for the Coalition Provisional Authority, funds from both DOD
and State need to be counted. In the FY2005 supplemental, DOD received $5.7
billion to train Iraq security forces bringing the total provided thus far to train
Authority was originally funded in DOD and later transferred to the State
Department in FY2003.30
30 For more information, see CRS Report RL31833, Iraq: Recent Developments in
Reconstruction Activities, by Curt Tarnoff.
CRS-15
Assessing and Predicting War-Related Costs
Tracking DOD’s war-related funding is difficult because of gaps and
inconsistencies that sometimes make it problematic to reconstruct costs by
mission over time. There is also no consistent record of DOD’s initial plans
against which to measure later costs. These problems are exacerbated by the fact
that DOD generally mixes peacetime and wartime funds in the same accounts, and
does not use standard budget categories.
For the same reason, DOD has only spotty data on war-related outlays — or
actual spending at specific points in time — which would help DOD to predict
costs without the vagaries of monthly obligations where costs go up and down
depending on when particular contracts are signed. DOD’s main tool for tracking
war-related funding is the monthly report of obligations from the Defense
Finance Account Service, which uses a set of expense categories that do not
match standard appropriation accounts, and which rely on the military services to
allocate costs, an area of concern for GAO.31
Effects of Limitations in DOD’s Reporting
These limitations in DOD cost reporting are not simply a matter of record
keeping because costs in previous years are used as benchmarks to estimate future
costs. Congress also has limited information from DOD about the cost drivers for
operations in Iraq and Afghanistan, which makes it more difficult to assess DOD’s
requests for additional funds, to estimate long-term costs, to take war-related
expenses into account when reviewing DOD’s peacetime budget, and to estimate
effects on the federal deficit.
In addition to DFAS reports, DOD also uses a cost model to build its
requests for the incremental costs associated with war-related operations (e.g.,
transportation costs, special duty pay, operational costs). DOD has not been
willing to share the assumptions used in its model for projecting costs, such as
personnel levels, deployment plans, or the basis for support costs. Without that
information, it is difficult to estimate, for example, how costs would change as
U.S. force levels fall or how average costs decrease over time as fixed costs are
covered.
The model also does not capture savings on the peacetime side from
exercises or personnel moves or depot maintenance that are deferred because
forces are deployed, which means that DOD’s requests have generally overstated
the additional cost of war-related operations. Recently, DOD has made some
adjustments in its supplemental requests to reflect some of these savings.
31 GAO found that there were gaps in DOD’s financial regulations directing the services to
report incremental obligations for operations to DFAS; see vol. 12, chap. 23, “Contingency
Operations.” See [http://www.defenselink.mil/comptroller/fmr/]; Obligations reflect the
amount of DOD contracts to spend rather than outlays, the actual amounts spent.
CRS-16
Comparing DOD Plans and Obligations
A comparison of DOD initial plans or forecasts with obligations incurred shows
how accurately DOD has anticipated war-related costs (see Table 5). Figures for
DOD’s plans are from various DOD sources while obligations data are from the
DFAS reports. Overall, DOD’s obligations exceeded its plan by $9.7 billion or about
3.5% of the $269.7 billion planned, which, at first blush, appears to be a fairly
accurate record particularly given all the uncertainties of military operations. In the
case of some individual years and missions, however, the gap widens.
The differences between plans and obligations for the funds provided
immediately after the 9/11 attacks (P.L. 107-38 and P.L. 107-117) may not be very
revealing because funds were allocated as operations proceeded. For the second
supplemental, passed after the Afghan war was over, obligations for Afghanistan
proved to be lower than expected — coming in at $8.4 billion, about one-third less
then the $12.5 billion planned (see Table 5). This unexpected surplus may have
made it easier for DOD to shift funds to prepare for the war in Iraq. On the other
hand, DOD greatly underestimated the amounts that were ultimately spent on
enhanced security at defense bases, which were expected to be $1.5 billion and
turned out to be $5.0 billion (see Table 5).
Table 5. DOD’s Plans vs. Obligations By Mission, FY2001-
FY2005
(in billions of dollars)
Mission/Funding FY2001 &
FY2002
FY2005
Total
FY2003 FY2004
Source
FY2002
Supp
estimates
FY01-05
Iraq
Plan
0.0
0.0
49.2
51.1
82.5
182.9
Obligations
2.5
0.0
49.8
57.9
80.5
190.6
Obs vs. Plan
2.5
0.0
.6
6.7
-2.0
7.7
Afghanistan
Plan
12.4
12.5
17.0
11.0
17.1
70.0
Obligations
8.8
8.4
14.4
12.9
20.0
64.5
Obs vs. Plan
-3.6
-4.1
-2.6
1.9
2.9
-5.4
Enhanced Security & Othera
Plan
4.6
1.5
6.5
2.2
2.1
16.8
Obligations
7.0
5.0
6.5
3.7
2.1
24.2
Obs vs. Plan
2.4
3.5
0
1.5
0.0
7.4
Total
Plan
17.0
14.0
72.6
64.4
101.7
269.7
Obligations
18.3
13.4
70.6
74.4
102.6
279.4
Obs vs. Plan
1.4
-0.6
-2.0
10.0
0.9
9.7
Sources: CRS calculations based on DOD data, congressional reports and DOD briefings.
Notes: Figures for plans reflect DOD obligation forecasts, budget requests, and estimates for
FY2005 in Sec. 9012 report required by P.L. 108-287. CRS allocated $17.5 billion in intelligence
funding for FY2001-FY2005 between Afghanistan and counter terrorism and Iraq; DOD does not
track this funding. Obligations data is from monthly reports of the Defense Finance and
Accounting Service and other DOD documents.
a. Known as Operation Noble Eagle, includes higher security at DOD bases, combat air patrol in
the U.S., and rebuilding of the Pentagon.
CRS-17
In FY2003, the second year of operations in Afghanistan, DOD continued
to overestimate the cost of Afghanistan, which prompted Congress to rescind
funds provided in the FY2003 supplemental.32 The estimate for the first year of
Iraq operations proved to be quite accurate.
The most problematic year, however, was FY2004 when obligations
exceeded the plan by about $10 billion or 15% with costs running higher than
expected in Afghanistan (by $1.9 billion), Iraq (by $6.7 billion) and enhanced
security ($1.5 billion). Beginning in the spring of 2004, concerns were raised that
the Army was likely to run short of funds for 2004. To meet these unanticipated
expenses, up to $10 billion in funds were transferred from peacetime accounts In
addition, by May 5, 2005, in response to Congressional pressures, the
Administration submitted the first “bridge” supplemental request, which provided
funds that were available to cover the remainder of the Army’s shortfall in
FY2004.33
In FY2005, DOD’s forecast is $900 million below the plan because it does
not include a Congressional add of $900 million. Although DOD has sufficient
funds overall for this fiscal year, the Army is having difficulty in meeting higher-
than-anticipated operating costs because their funding is the same amount as was
obligated in FY2004 and monthly obligations are running higher this year. DOD
has again transferred from other accounts to cover these costs, and requested that
these funds be restored at a later date.
Future War Costs
The Administration has argued that it cannot provide Congress with
estimates of future funding for Iraq and Afghanistan because “it is impossible to
estimate the costs of military operations over fiscal years 2006 to 2011 with any
degree of precision.” Although the statute requires a written certification that a
waiver of this requirement was necessary because of national security, the
Administration did not provide one.34
The Administration did not request any funds for military operations in
FY2006 although it has not objected to the Congressional decision to include $50
32 Congress rescinded $3.5 billion in P.L. 108-87, which is larger than the $2 billion
difference in Table 3; DOD presumably transferred other funds to make up the difference.
33 House Armed Services Committee, Testimony by General Myers, Iraq’s Transition to
Sovereignty, Apr. 21, 2004, p. 19; Federal News Service; "DOD to Submit $25B
Supplemental,” Congress Daily, May 5, 2004, “DOD to Offer Omnibus reprogramming of
Up to $2.5 Billion in FY’04,” Defense Daily, June 3, 2004; CRS Report RL32381,
Adequacy of Army’s FY2004 Funding for Iraq, by Amy Belasco; U.S. Government
Accountability Office, Fiscal Year 2004 Costs for the Global War on Terrorism Will Exceed
Supplemental, Requiring DOD to Shift Funds from other Uses, GAO-04-915, July 23, 2004.
34 Sec. 9012, P.L. 108-287 report to Congress, “Letter from Director of OMB Joshua B.
Bolten to Speaker of the House J. Dennis Hastert,” May 13, 2005. See Sec. 9012, P.L. 108-
287 for requirements for a waiver.
CRS-18
billion in a “bridge supplemental” in the FY2006 DOD appropriations bill to cover
the first six months of war costs. The House-passed version of H.R. 2863, the
FY2006 DOD Appropriations bill, includes $45.2 billion and the Senate-reported
version includes $50 billion but more funding will be needed to cover the rest of
FY2006. H.J.Res. 68 /P.L.109 -77, a FY2006 Continuing Resolution signed by the
President on September 30, 2005, includes $50 billion for DOD’s war costs.
CBO’s Estimate of Future War Costs. In February 2005, CBO
estimated that operations in Iraq and Afghanistan could cost about $260 billion
between FY2006 and FY2010 assuming a gradual draw down that would begin in
FY2007. That estimate includes
! $85 billion for FY2006, about $15 billion below the FY2005 level;
! $65 billion in FY2007;
! $50 billion in FY2008;
! $35 billion in FY2009; and
! $25 billion in FY2010.
In this estimate, force levels drop gradually from the current level of about 300,000
— including all forces deployed, training or backfilling in or in support of Iraq,
Afghanistan, and enhanced security missions — to 74,000.35 Figures that are
typically reported by the press or DOD witnesses include only troops deployed in-
country.
If Congress appropriates about $85 billion for DOD’s cost for Iraq and
Afghanistan in FY2006 (including both a bridge and regular supplemental), then
DOD funding would total about $365.4 billion. Combining the CBO estimate with
funding provided to date through FY2005 would bring total DOD costs through 2010
to about $540 billion.
The CBO estimate for FY2006 appears to be roughly consistent with current
obligations reports which suggest operating costs could total about $70 billion,
assuming the latest monthly average of about $5.8 billion (see Table 2). If
investment costs are about $15 billion, assuming $5.0 billion for new modular units
and $10 billion for more new equipment, DOD’s FY2006 war costs could reach
about $85 billion as CBO estimated.
Factors Driving War Costs. There has been much disagreement about
the likely duration of U.S. involvement in Iraq and Afghanistan. The size of the
FY2006 supplemental will depend not only on the number of troops deployed and the
intensity of operations but also the scope of investment in new and upgraded
equipment and future military construction plans. Although some military
spokesmen suggested recently that force levels in Iraq could fall as early as next year,
35 U.S. Congressional Budget Office, Estimate of War Spending, FY2005-FY2015, Feb. 1,
2005, [http://www.cbo.gov/ftpdocs/60xx/doc6067/02-01-WarSpending.pdf].
CRS-19
Chair of the Joint Chiefs of Staff, General Myers has been cautious about cuts in
troops in FY2006.36
Even if troop cuts in FY2006 are modest, there could be some savings and
troop cuts in FY2007 are said to be likely. DOD could use its current costs to
provide Congress with estimates of costs based on various troop levels at particular
points in time. Other costs, such as large amounts of investment monies and
continued training of Afghan and Iraq security forces, could keep future
supplementals high. Of the $17 billion received by DOD for procurement in the
FY2005 Supplemental, $1.3 billion was for replacing lost equipment with the
remainder for buying upgraded and additional equipment for deploying units and for
the new smaller modular units that are being created by the Army, some of which
may deploy to Iraq.37
The next supplemental is considered also likely to include another $5 billion
to equip additional modular units, which DOD witnesses contend should be financed
by a supplemental because the new units would extend the time between
deployments and thus reduce stress on troops. A recently-published RAND study
found, however, that the Army’s modularity initiative would do little to increase the
time at home between deployments for the heavy units that are currently most needed
for wartime operations.38 Requests for equipment for additional modular units are
to be included in the regular budget starting in FY2007.39
Some have suggested that DOD may face large war-related costs for depot
maintenance because of wartime operating tempo. While many Army systems, like
the 37,000 light trucks in theater, are being operated at higher rates than peacetime,
wartime usage rates are still modest compared to civilian levels according to a recent
DOD study. For example, trucks are being driven 500 miles a month in Iraq, about
three times the peacetime rate, but not a high rate by civilian standards. At the same
time, maintenance in theater is at high levels to keep equipment in good order, which
may help equipment to last longer despite harsh conditions. That study also suggests
that future depot maintenance could run about $600 million to $900 million and
replacing prepositioned equipment used in Iraq and Afghanistan could require about
$4 to $5 billion.40 To some extent, maintenance costs that are funded now will
reduce costs later.
36 “Top General Downplays Troop Cuts,” Washington Times, Aug. 27, 2005.
37 Department of Defense, FY2005 Supplemental Request for Operation Iraqi Freedom
(OIF), Operation Enduring Freedom (OEF), and Operation Unified Assistance, Feb. 2005,
p. 23, [http://www.dod.mil/comptroller/defbudget/fy2006/fy2005_supp.pdf].
38 Stretched Thin: Army Forces for Sustained Operations, RAND, fig. 2.2, pp. 23-24, May
15, 2005.
39 See Program Decision Memorandum 753, Dec. 23, 2004, p. 2.
40 Office of the Secretary of Defense, Report to the Congress, Ground Force Equipment
Repair, Replacement, and Recapitalization Requirements Resulting from Sustained Combat
Operations, April 2005, pp. 3, 7, 21.
Potential Foreign Operations Costs in FY2006. The Administration
included some but not all likely foreign operations costs for Iraq and Afghanistan in
its regular FY2006 appropriation requests. The FY2006 budget requests $920
million for Afghanistan for reconstruction, law enforcement and counter narcotics
and $414 million for Iraq for democracy, governance, and reconstruction, but did not
include funds to operate the new embassies.41
Operating costs for the new embassies are anticipated to be about $1.2 for
Iraq and about $60 million for Afghanistan in FY2006.42 The State Department
estimates that it will need about $850 million more for both embassies in FY2006
after using other available funds. Total foreign and diplomatic operations costs for
those two countries could total about $2.2 billion in FY2006, with about $1.2 billion
going to Iraq and $1.0 billion to Afghanistan.43
These estimates do not include additional reconstruction monies for Iraq. Of
the $21 billion received thus far, State has obligated about $16.8 billion or an average
of about $800 million a month over the past year. If that rate continues, the
remaining $4 billion would be obligated by March of 2006. With limited funds from
other donors, the Administration could face pressure to include additional
reconstruction monies in a FY2006 supplemental.
Potential Total War Funding For FY2006. Based on the $50 billion in
the continuing resolution for FY2006, funding for Iraq, Afghanistan, and enhanced
base security since the 9/11 attacks would total about $361 billion. If these funds are
split in a fashion similar to FY2006, funding to date would total about $255 billion
for Iraq, $83 billion for Afghanistan, and $24 billion for enhanced base security.
If we assume CBO’s estimate of $85 billion for DOD for all of FY2006, plus
about $2.2 billion for State/USAID, and $2 billion in DOD’s regular bill for base
security, then funding from the 9/11 attacks through FY2006 would total about $401
billion. Using past experience as a guide, that total could include $284 billion for
Iraq, $91 billion for Afghanistan and $26 billion for enhanced base security. Using
CBO’s long-term estimates, total war costs for both DOD and State could total about
$570 billion from the 9/11 attacks through FY2010.
41 CRS Report RL32919, Foreign Operations (House)/State, Foreign Operations, and
Related Programs (Senate): FY2006 Appropriations, by Larry Nowels and Susan B.
Epstein.
42 State Department estimates are about $790 million for Iraq and $60 million for
Afghanistan; conversation with budget officials in September 2005.
43 Embassy operating costs included in the FY2005 supplemental were $690 million for Iraq
and $60 million Afghanistan.