On March 25, 2003, President Bush requested $74.8 billion in the FY2003 Emergency Supplemental for ongoing military operations in Iraq, postwar occupation, reconstruction and relief in Iraq, international assistance to countries contributing to the war in Iraq or the global war on terrorism, the cost of the continued U.S. presence in Afghanistan, and additional homeland security. On April 12, 2003, the House and Senate passed the conference version of the FY2003 supplemental ( H.R. 1559 / H.Rept. 108-76 / P.L. 108-11 ). It includes $78.49 billion, $3.7 billion more than requested by the President. Additions made by Congress include $3.1 billion for assistance to the airlines, $749 million more for homeland security programs, and $369 million in food aid for Iraq and other countries. The Administration asked Congress to approve funding that would be lodged in several large emergency funds where agencies could determine the actual allocation of funds to particular purposes or specific countries. The conference version distributes most of these funds to regular appropriations accounts and generally requires additional notifications to Congress of transfers in cases where the Administration is given additional flexibility. The largest fund proposed was $59.9 billion for the DOD's Defense Emergency Response Fund that would cover the costs associated with the war in Iraq, the continued U.S. presence in Afghanistan, enhanced security at U.S. military bases, and postwar occupation in Iraq. The conference includes $15.7 billion in a new Iraq Freedom Fund but distributes the remaining funds to specific accounts. Congress further provides $2.475 billion for an Iraq Relief and Reconstruction that will fall under the authorities of regular foreign assistance programs usually managed by the State Department and the U.S. Agency for International Development (USAID). H.R. 1559 , however, extends considerable flexibility to the President, allowing him to directly apportion funds to several federal agencies, including the Defense Department. The FY2003 Emergency Supplemental also includes $4.7 billion in international assistance for about 22 countries which have contributed in some fashion to the war in Iraq or the global war on terrorism. This includes substantial increases in current aid levels for Israel, Egypt, Jordan, Afghanistan, Pakistan, and Turkey. Israel, Egypt and Turkey would also receive U.S. government guaranteed loans. The Administration also requested that substantial appropriations be provided en bloc for homeland security, including $2 billion for the Department of Homeland Security (DHS) for grants to states and enhancements of security, and $500 million for a DHS Counterterrorism Fund for investigations and operations. The conference provides $749 million more for homeland security but allocates funds to specific appropriation accounts.
<font size="+1">List of Tables</font>
On March 25, 2003, President Bush requested $74.8 billion in the FY2003 Emergency Supplemental for ongoing military operations in Iraq, postwar occupation, reconstruction and relief in Iraq, international assistance to countries contributing to the war in Iraq or the global war on terrorism, the cost of the continued U.S. presence in Afghanistan, and additional homeland security.
On April 12, 2003, the House and Senate passed the conference version of the FY2003 supplemental (H.R. 1559/H.Rept. 108-76/P.L. 108-11). It includes $78.49 billion, $3.7 billion more than requested by the President. Additions made by Congress include $3.1 billion for assistance to the airlines, $749 million more for homeland security programs, and $369 million in food aid for Iraq and other countries.
The Administration asked Congress to approve funding that would be lodged in several large emergency funds where agencies could determine the actual allocation of funds to particular purposes or specific countries. The conference version distributes most of these funds to regular appropriations accounts and generally requires additional notifications to Congress of transfers in cases where the Administration is given additional flexibility.
The largest fund proposed was $59.9 billion for the DOD's Defense Emergency Response Fund that would cover the costs associated with the war in Iraq, the continued U.S. presence in Afghanistan, enhanced security at U.S. military bases, and postwar occupation in Iraq. The conference includes $15.7 billion in a new Iraq Freedom Fund but distributes the remaining funds to specific accounts.
Congress further provides $2.475 billion for an Iraq Relief and Reconstruction that will fall under the authorities of regular foreign assistance programs usually managed by the State Department and the U.S. Agency for International Development (USAID). H.R. 1559, however, extends considerable flexibility to the President, allowing him to directly apportion funds to several federal agencies, including the Defense Department. The FY2003 Emergency Supplemental also includes $4.7 billion in international assistance for about 22 countries which have contributed in some fashion to the war in Iraq or the global war on terrorism. This includes substantial increases in current aid levels for Israel, Egypt, Jordan, Afghanistan, Pakistan, and Turkey. Israel, Egypt and Turkey would also receive U.S. government guaranteed loans.
The Administration also requested that substantial appropriations be provided en bloc for homeland security, including $2 billion for the Department of Homeland Security (DHS) for grants to states and enhancements of security, and $500 million for a DHS Counterterrorism Fund for investigations and operations. The conference provides $749 million more for homeland security but allocates funds to specific appropriation accounts.
On April 12, the House and Senate approved the conference version of the FY2003 Supplemental (H.R. 1559/H.Rept. 108-76) providing $78.49 billion to cover the costs of military operations in Iraq, relief and reconstruction of Iraq, ongoing U.S. costs in Afghanistan, additional aid to coalition partners and nations cooperating in the global war on terrorism, and homeland security. This total is $3.74 billion more than the request and roughly $500 million more than the $77.93 billion passed by the House and the $77.95 billion passed by the Senate. The conference version includes a $3.1 billion airline industry relief package that was not requested by the President. (1) President Bush signed the legislation on April 18 (P.L. 108-11).
Reflecting Congressional priorities, the conference version of the bill includes additional funding for homeland security programs, such as customs and border protection and baggage and passenger screening. H.R. 1559 further includes $700 million for protecting high-threat urban areas, up substantially from $50 million requested by the Administration. The Emergency Supplemental also provides $2.23 billion for first responders, about 10% higher than requested.
On international assistance issues, the conference version generally provides amounts proposed, but adds $369 million for food aid for Iraq and elsewhere, and drops $150 million for a Presidential crisis fund. The $2.475 billion Iraq Relief and Reconstruction Fund will follow the authorities of regular foreign aid programs that are usually managed by the Department of State and the U.S. Agency for International Development (USAID). Nevertheless, Congress agreed to the President's request for broad discretion in the allocation of Iraq reconstruction money that allows direct apportionment to several Federal agencies, including DOD.
For defense spending, H.R. 1559, as enacted, funds the $62.6 billion requested by the Administration but appropriates all but $15.7 billion in regular appropriations accounts rather than providing $59.9 billion, as requested, in the Defense Emergency Response Fund to be spent at DOD's discretion. Instead, Congress appropriated $15.7 billion in a new Iraq Freedom Fund, where DOD will have spending flexibility as long as it stays within several ceilings and floors and provides 5-day advance notifications of transfers. Congress also increased combat pay and separation allowances for U.S. forces, costing an estimated $650 million.
Within days of the initiation of U.S. military operations in Iraq, President Bush sent Congress a $74.75 billion supplemental package largely divided into three parts -- defense, Iraq reconstruction and foreign aid, and homeland security, as shown in Table 1.
|Dept of Defense||$62.587||$62.464||$62.558||$62.583|
|Iraq reconstruction and international assistance||$7.791||$7.983||$8.451||$8.179|
|Aviation industry relief - direct appropriationsa||--||$3.170||$1.475||$2.396|
|Aviation industry relief - fees & benefits costsa||--||$0.000||[$1.030]||[$0.695]|
|TOTAL, Supplemental without Aviation fee and benefits costsb||$74.753||$77.923||$77.949||$78.490|
|TOTAL, Supplemental including Aviation fee and benefits costs||$74.753||$77.923||$78.979||$79.185|
Sources: House and Senate Appropriations Committees and Congressional Budget Office.
a The aviation industry relief initiative, as structured in S. 762, as passed the Senate, provided a combination of direct appropriations for grants to the airlines and changes in fees and unemployment benefits for airline workers that do not require direct appropriations. The enacted version of H.R. 1559 follows the Senate framework of direct appropriations and other items, although at different levels. Amounts shown in brackets for the Senate and enacted levels represent CBO estimates of the costs of fee changes and unemployment benefits.
b Includes only direct appropriations and excludes the non-appropriated costs of the airline industry package shown in brackets.
Congressional Action on Administration Request. As passed on April 3 in both bodies, the bills were at (Senate) or just below (House) the request for defense. Both bills increased appropriations for Iraq reconstruction and other foreign aid -- the House slightly, to $7.98 billion, and the Senate more significantly, to $8.45 billion, mainly due to a $600 million amendment for additional food aid for Iraq. For homeland security, the House measure was slightly below the President's request, mainly because of the denial of funding for the White House's proposed emergency fund, while the Senate increased homeland security by about $770 million to $5.14 billion. H.R. 1559 provided $3.2 billion for airline industry relief while S. 762 included an estimated $3.5 billion. (2)
As requested, the conference version of the bill provides $62.58 billion for defense but, as recommended by appropriators in both houses, the enacted legislation reduces the flexibility in using those funds that was requested by the Administration. As passed, H.R. 1559 appropriates most of the funds to regular appropriations accounts. However, it also sets up a new $15.7 billion Iraq Freedom Fund to give DOD additional flexibility. Within the new fund established for Iraqi Relief and Reconstruction, the conference bill appropriates funds to the President, giving him the flexibility to allocate those funds to various agencies, including the Department of Defense. In response to Administration concerns, the conference version eliminated restrictions that would have prevented DOD from administering any of these funds. The enacted appropriation, however, provides that the funds are to be designated as bilateral economic assistance and spent consistent with the Foreign Assistance Act of 1961. (3)
For homeland security, the conference version provides $5.12 billion, $749 million more than requested. For airline relief, the final bill provides for a $3.1 billion package, including direct appropriations, authority to extend by 26 weeks unemployment compensation for displaced workers, and a temporary suspension of certain passenger and air carrier security fees from June 1 to September 30, 2003. (4)
While details of each of these components are discussed below, one overriding theme that was apparent throughout the supplemental package was the President's desire for the maximum degree of flexibility in managing and allocating these resources. Under the proposal, most of the funds would be have been placed in emergency response funds which the President, the Secretaries of Defense, Justice, and Homeland Security could draw upon. Purposes for which the resources would be used were justified in general terms, but extensive discretion would have been allotted to executive officials. Among the proposed emergency funds were:
Administration officials argued that such flexibility was needed due to constantly changing circumstances in and around Iraq and uncertainty over the duration and magnitude of the military campaign, the demands posed for near-term humanitarian relief, and longer-term reconstruction of the country, and the ongoing "global war on terrorism."
In the enacted legislation, reflecting both House and Senate action, funds are generally directed for more specific purposes than proposed by the White House. The Iraqi Relief and Reconstruction Fund is the exception where Congress gives the President flexibility to allocate funds to five federal agencies, including the Department of Defense. Previous versions of the supplemental appropriation, as passed by the House and the Senate, would have limited the President's ability to apportion the funds directly to DOD, and required that Fund be managed by the State Department and the U.S. Agency for International Development (USAID).
For defense, the conference version allocates much of the $59.9 billion requested by the Department of Defense in the Defense Emergency Response Fund to regular appropriations accounts, reserving $15.7 billion in a new Iraq Freedom Response Fund to be allocated by the President subject to various ceilings and floors set in the bill.
H.R. 1559 substitutes the President's request for two Department of Homeland Security Funds totaling $3.5 billion with specific allocations for port security, state and local government law enforcement, and National Guard reimbursements, checked baggage explosive detection systems at airports, among others. The conference report also allocates most of these funds to specific accounts.
The enacted supplemental also distributes nearly all of the $500 million proposed Justice Department Counterterrorism Fund among several activities, allocating a portion for FEMA disaster relief. H.R. 1559 further requires advance notification of how the money will be spent and directs the Administration to reimburse foreign aid accounts that have previously been drawn upon to fund pre-conflict needs in Iraq.
Amendments During Floor Debate. During floor debate, lawmakers considered amendments affecting each of the three main areas of the President's supplemental request. Defense-related proposals that were adopted included:
The Senate also rejected an amendment by Senator Landrieu that would have added
$1.05 billion for National Guard and Reserves procurement (tabled 52-47).
House and Senate amendments regarding Iraq reconstruction and international assistance focused generally on efforts to add humanitarian resources for Iraq, cut aid to Turkey and Colombia, and restrict eligibility of reconstruction contractors. The Senate approved an amendment by Senator Kohl adding $600 million for PL480 title II food assistance programs, including a requirement that $155 million be used to reimburse food accounts from which resources had been previously taken for Iraq. H.R. 1559 provides $250 million for these same purposes. The enacted bill provides $369 million for food assistance. The House defeated three amendments cutting international assistance:
On aid contracting and related issues, the House approved (voice vote) a proposal by Congressman Kennedy (MN) that prohibits the use of funds for Iraq reconstruction to purchase goods or services produced by France, Germany, Russia, or Syria, although U.S. subsidiaries of companies organized in those countries would be eligible. Two Senate amendments related to this issue were withdrawn:
H.R. 1559, as enacted, however, deleted the House-passed Kennedy amendment.
Most amendments considered in both houses focused on increased spending for homeland security purposes. The Senate adopted a modified proposal by Senator Bayh adding $105 million for grants to States for smallpox and other bioterrorism inoculation programs. Originally, the amendment would have provided $340 million. The conference version of H.R. 1559 includes $100 million for such inoculation programs. The Senate further agreed to an amendment by Senator Specter (65-32) adding $200 million to the Office for Domestic Preparedness (ODP) and rearranging ODP funds so that resources for high-threat urban areas would grow from $100 million, as reported in S. 762, to $600 million. H.R. 1559, as approved, raises this total to $700 million. The Senate also adopted an omnibus amendment by Senator Stevens that included provisions increasing homeland security by about $150 million, mainly for DOE nuclear security programs. Conferees generally supported these DOE activities. But the House and Senate rejected several other efforts to add to the President's request for homeland security:
The Senate also rejected an amendment by Senators Byrd and Hollings that would not have increased homeland security spending, but would have allocated resources to specific accounts rather than leaving the Secretary of Homeland Security with broad discretion.
The Administration generally supported actions by the House and Senate, but raised objections in a few areas, largely related to executive flexibility matters. The White House suggested that Senate language allocating defense funds to specific accounts might "slow timely and effecting funding of urgent needs." The Administration raised the same concern regarding House text that allocated homeland security resources to specific activities rather than placing the money in a central fund. This, the White House claimed, would "hinder" the Homeland Department's Secretary from applying the funds to the most critical threats. The executive further expressed concerns about the House bill which directed that Iraq Relief and Reconstruction Fund resources be managed by the State Department and the U.S. Agency for International Development (USAID), removing Presidential flexibility over involving multiple agencies in reconstruction operations. Finally, the White House considered the airline industry relief packages in both bills "excessive." (6)
Details concerning each of the supplemental's major components are discussed below.
The Administration requested $62.6 billion for the Department of Defense (DOD) for the cost of the war in Iraq, continued U.S. operations in Afghanistan and the global war on terrorism, and enhanced security at military bases in the United States. The DOD FY2003 supplemental request funded the deployment and redeployment of U.S. forces and equipment to the Persian Gulf and the prosecution of a short, intense conflict. In addition, the request included funding for an occupation force in Iraq for the remainder of FY2003, repair and re-stocking of military equipment and munitions, as well funds to conduct firefighting and restore and repair Iraqi oil fields, and a small amount of funding for humanitarian assistance. (7)
Although DOD did not specify the amount, its request also included funds to cover the cost of U.S. forces in Afghanistan (Operation Enduring Freedom) as well as the cost of enhanced security in the United States (Operation Noble Eagle) for the remainder of the fiscal year. (8) DOD received $6.1 billion to cover its expenses for these missions in the first part of the year in the FY2003 Consolidated Appropriations Resolution (P.L. 108-7/H.J.Res. 2). (9) DOD has estimated expenses for the remainder of the FY2003 to be about $6 to $8 billion. (10)
Citing the "unpredictable nature of the U.S. conflict in Iraq," the Department of Defense requested that $59.9 billion, 96% of its total, be appropriated to the Defense Emergency Response Fund (DERF), a transfer account, where DOD could exercise discretion in spending the money for purposes that it considers appropriate and move funds into the relevant appropriation accounts. (11) Although DOD's proposed language required quarterly reports to Congress about the allocation of actual expenditures, some Members of Congress expressed concerns about the extent of flexibility that DOD would have in allocating almost $60 billion. In response to these concerns, the enacted version of the supplemental appropriated 75% of the funding in the supplemental to specific accounts and added various reporting requirements.
To give DOD flexibility to develop and exploit cooperative military relationships with other nations in the global war on terrorism, the Defense Department requested $1.4 billion for military and logistical support to Pakistan, Jordan, and other "key cooperating nations" in the war on terrorism, $150 million to support indigenous or irregular foreign military forces and $50 million to support the regular forces of foreign nations working with the United States in the global war on terrorism. Some of these proposals were controversial and Congress rejected DOD's request for indigenous forces and reduced and limited the request for regular forces but agreed to provide the $1.4 billion for military and logistical support with additional reporting requirements.
The request also proposed to raise current statutory limits on the amount of funds to be used at the discretion of the Secretary of Defense and combatant commanders for unanticipated military requirements including support for foreign military forces. DOD again cited the war in Iraq and the global war on terrorism as the rationale for these changes. The request also proposed a major increase from $2 billion to about $9 billion in the total amount of funding that DOD could transfer between appropriations after notifying the appropriations committees. (12) The enacted version raises the statutory limits and gives DOD additional transfer authority but at levels lower than requested.
In remarks at the Pentagon, President Bush characterized the FY2003 supplemental as urgent, and DOD officials called for quick passage to ensure that DOD does not face shortages in operating expenses. DOD characterized $30.3 billion of its $62.6 billion request as costs incurred for the buildup phase of the Iraqi war including expenses such as transportation of equipment and personnel, or as committed costs, such as those for the return of troops and equipment theater of operations. (13) In the enacted version of the supplemental, Congress appropriated these costs in regular appropriations accounts rather than providing them in the Defense Emergency Response Fund as requested by DOD.
The major issues that arose during Congressional consideration of the supplemental and that are discussed below included the following.
There was little debate about the total amount requested by DOD for FY2003 although Congressional action adjusts the mix of funds requested by the Administration and reduces DOD's flexibility (see Tables 2, 2a, and 2b and discussion below). Further details about the Administration's request are in the section entitled DOD's Funding Request by Appropriation Account.
The conference version of H.R. 1559/P.L. 108-11 addressed the issue of flexibility by reducing the extent and type of funding flexibility for DOD. Congress did establish a new Iraq Freedom Fund Account with $15.7 billion in funding where DOD would have discretion over about $10 billion to $11 billion of those funds (see Table 2 below). The enacted version also allows the Administration to give DOD a large new role in postwar reconstruction and relief activities (see section on Defining DOD's Postwar Role and Key Issues in Iraq Reconstruction and International Assistance below).
There was little controversy about the total funding level requested for DOD and the enacted version generally provides amounts consistent with DOD's request (see Table 2b below).
Balancing Flexibility with Congressional Oversight. The conference version of the bill blends the approaches used by the two houses to reduce DOD's flexibility in funding. The conference adopted the Senate's recommendation to appropriate most of DOD's funds in regular appropriations accounts and the House's proposal to set up a new flexible general fund for expenses incurred later in the war. (See section on Previous Action by the House and Senate for further details.)
|Funding Level/Amount of Flexibility||Request
Defense Emergency Response Fund (DERF)a
|House: Combat, Stability Operations, and Reconstitution Costsb||Senate:
|Enacted: Iraq Freedom Fundc|
|In billions of dollars|
|Regular Appropriations or transfer ceilingsd||$2.7||$37.0||$51.5||$46.9|
|As Percent of Total Funding|
Sources: Department of Defense, FY2003 Supplemental Request for Military Operations in Iraq
and the Global War on terrorism, March 25, 2003; see
http://www.defenselink.mil/comptroller/defbudget/fy2004/DoD_Justification-FY03_Iraqi_Freedom_Supplemental.pdf. House and Senate version of H.R. 1559, H.Rept. 108-56, .S.Rept. 108-33, and Conference Report, H.Rept. 108-76.
a Within the DERF, DOD can transfer funds to specific appropriations accounts at its discretion.
b Within its new Operation Iraqi Freedom Response Fund, the House created this new fund where DOD would have flexibility to transfer funds to specific appropriations accounts as long as certain ceilings and floors established in the bill were met (see Table 2a below).
c The enacted version of H.R. 1559 gives DOD flexibility to transfer funds within the new Iraq Freedom Response Fund as long as certain ceilings and floors established in the bill are met (see table 2a below).
d In addition to appropriations to regular accounts, the House bill set transfer ceilings which limited DOD's flexibility within the new Iraqi Freedom Response Fund except for the $$25.4 billion in the Combat, Stability Ops, and Reconstitution Fund.
Restrictions Within The New Iraq Freedom Fund. To give DOD more specific spending guidance, the conference version of the bill appropriates 75% or $46.9 billion of DOD's total request of $62.6 billion to regular appropriation accounts. The remaining $15.7 billion was placed in a new Iraq Freedom Fund account where DOD can spend the monies for combat, stability operations, reconstituting forces, replacing munitions and equipment, and other costs as long as DOD stays within several ceilings and floors that are set within the bill. Any funds not needed for the Iraqi conflict are to be returned to the Iraq Freedom Fund.
If DOD met the floors and spent up to the ceilings, these restrictions would affect $5.2 billion of the $15.7 billion in the fund (see Table 2a below).
|Floor for classified programs||1.770|
|Floor for increased fuel costs in Defense Working Capital Fund||1.100|
|Ceiling for coalition support||1.400|
|Ceiling for Natural Resource Risk Remediation Fund||0.489|
|Ceiling for RDT&E||0.058|
|Ceiling for Transfer to Coast Guard Operations||0.400|
|Ceiling for Counter terrorism training for foreign military forces||0.025|
|Total of Ceilings and Floors||5.242|
|Total: Iraq Freedom Fund||15.679|
Source: Conference Report on FY2003 Supplemental, H.Rept. 108-76.
a CRS calculation assuming that DOD spent up to the ceiling amounts set in P.L. 108-11; if DOD spent less than the ceiling amounts, the unallocated total would be greater.
If DOD met the floors and spent up to the ceiling levels, DOD would be still able to transfer at least $10.4 billion from the fund to various appropriation accounts at their discretion. That funding flexibility could be larger if DOD spent below the ceilings. In a recent press conference, DOD Comptroller Dov Zakheim stated that DOD would have "unfettered flexibility" for about $10.5 billion to $11 billion. (15) DOD is still, however, required to notify Congress 5 days in advance of transferring funds and to submit quarterly reports on transfers beginning on July 1, 2003. (16) Except for funding for the Coast Guard and counter-terrorism training, the ceilings and floors follow DOD's request (see Table 2b below).
Comparison of Funding Levels. Because DOD will have flexibility to allocate over $10 billion of the funding in the FY2003 supplemental, the final distribution of funding is not yet available. Based on DOD's initial request and Congressional action, Table 2b below shows the Administration's request, House and Senate action and the enacted version of funding for the Department of Defense. Congress provided $62.58 billion, the same as the amount requested and close to the amounts provided by the House and the Senate. The slightly lower level in the House reflects smaller amounts for military construction. The House recommended $62.46 billion and the Senate Appropriations Committee (SAC) recommended $62.55 billion.
Based on the illustrative breakdowns of expense that appear to be included in DOD's request, it appears that the enacted supplemental generally adopts DOD's projections for various types of expenses. The enacted version, however, includes over $3 billion more than DOD proposed for military personnel, reflecting discussions with the services, and possibly concerns about whether DOD's request assumed adequate troop levels for occupation (see Table 2b). Since DOD did not include the assumptions underlying its cost estimates in terms of troop levels or the duration of the war, comparisons and assessments are difficult.
|Amount Appropriated or
|Defense Emergency Response Fund (DERF)a||59.863||0||11.019||0|
|Operation Iraqi Freedom Response Fundb||0||59.683||0||0|
|Combat, Stability Operations and Reconstitution Fundb||0||[25.436]b||0||0|
|Iraq Freedom Fundc||0||0||0||15.679|
|Floor for Classified||[1.717]a||[1.817]b||NS||[1.772]c|
|Ceiling for Coalition Support||[1.400]d||[1.400]b||[1.400]d||[1.400]c|
|Floor for Defense Working Capital Fund||[.430]a||[1.100]||[.550]e||[1.100]c|
|Ceiling for Natural Resources Risk Remediation Fund||[.489]e||[.489]b||[.489]e||[.489]c|
|Ceiling for RDT&E||[.058]a||[.102]b||||[.058]c|
|Ceiling for Counter-terrorism training||[.050]a||||||[.025]c|
|Ceiling for Transfer to Coast Guard Operations||||[.400]b||||[0.400]c|
|Military Personnel, Army||[6.321]a||[6.975]b||7.725||7.700|
|Military Personnel, Navy||[1.384]a||[1.984]b||1.784||1.600|
|Military Personnel, Marine Corps||[1.355]a||[1.835]b||1.255||1.200|
|Military Personnel, Air Force||[1.335]a||[1.835]b||2.835||2.800|
|Reserve Personnel, Army||a||[.003]b||.006||.003|
|National Guard Personnel, Army||a||[.093]b||.110||.100|
|Operation and Maintenance, Army||[20.790]a||[10.482]b||16.143||16.000|
|Operation and Maintenance, Navy||[6.411]a||[3.940]b||5.297||5.100|
|Operation and Maintenance, Marine Corps||[3.744]a||[1.384]b||1.753||1.650|
|Operation and Maintenance, Air Force||[9.970]a||[3.668]b||7.209||7.100|
|Operation and Maintenance, Defensewidec||1.400||1.400||4.008c||1.200e|
|Operation and Maintenance, Army Reserve||[.003]a||b||0||.003|
|Operation and Maintenance, Navy Reserve||a||b||.015||.007|
|Operation and Maintenance, Marine Corps Reserve||a||b||.050||.020|
|Operation and Maintenance, Army Nat'l Gd||a||[.053]b||.088||.075|
|Operation and Maintenance, Air National Guard||a||b||.020||.020|
|Natural Resource Risk Remediation Fund||0.489||[.489]b||.489||[.489]f|
|Aircraft Procurement, Army||NS||[.004]bg||.004||.004|
|Missile Procurement, Army||NS||[.003]bg||.003||.003|
|Proc. of Weapons and Tracked Combat Vehicles, Army||NS||[.053]bg||.053||.053|
|Procurement of Ammunition, Army||NS||[.448]bg||.448||.448|
|Other Procurement, Army||NS||[.242]bg||.242||.242|
|Other Procurement, Air Force||NS||[.114]bg||.114||.114|
|RDT&E, Air Force||[.010]a||b||0||0|
|Defense Working Capital Fund||.430||1.100||.550||[1.100]f|
|Drug Interdiction and Counter Drug Activities||.034||.034||.034||.034|
|Reimbursement for Afghan Drawdownh||.165||.165||.165||.165|
|Military Construction, Navy||.048||.048||.048||.048|
|Military Construction, Air Force||.129||.051||.127||.153|
|Family Housing O&M, Air Force||0||.002||.002||.002|
|Defense Cooperation Account||.028||.028||0||.028|
Notes: [ ] Square brackets identify allocations of funds within appropriated amounts. Total includes appropriated amounts.
NS = Not specified.
Source: Department of Defense, FY2003 Supplemental Request for Military Operations in Iraq and
the Global War on terrorism, March 25, 2003; see
http://www.defenselink.mil/comptroller/defbudget/fy2004/DoD_Justification-FY03_Iraqi_Freedom_Supplemental.pdf. House and Senate version of H.R. 1559, H.Rept. 108-56, .S.Rept. 108-33, and Conference Report, H.Rept. 108-76.
a DOD requested $59.7 billion in the Defense Emergency Response Fund (DERF) and included proposed allocations; CRS calculated the distributions to accounts using DOD materials.
b House bill set up a new Operation Iraqi Freedom Fund and then recommended various allocations to individual accounts, and set ceilings and floors including $25.4 billion for the Combat, Stability Operations and Reconstitution Costs account where DOD would have considerable flexibility.
c Conference bill sets up a new Iraq Freedom Fund, and designates ceilings and floors within that fund affecting about $5 billion with the remainder to be allocated at DOD's discretion.
d Funding for military and logistical support or coalition support for "key cooperating nations" in the war on terrorism was included in O&M Defense wide in request and House and Senate version but was included in Iraq Freedom Fund in enacted .
e Funded in a direct appropriation, see below.
f Conference bill sets a ceiling within Iraq Freedom Fund of $489 million for Natural Resources Risk Remediation Fund and a floor of $1.1 billion for fuel purchases through the Working Capital Fund.
g House version provided that an additional $4.2 billion may be spent on procurement from $25.4 billion placed in the Combat Stability Operations, and Force Reconstitution fund within the Operation Iraqi Freedom Fund where DOD generally has flexibility.
h Funded through O&M appropriations accounts.
i May not add to total due to rounding.
Additional Transfer Authority and Reporting Requirements. In addition to setting up the new Iraq Freedom Fund, Congress gives additional flexibility by allowing DOD to transfer up to $2 billion of the funds in the supplemental to different appropriation accounts as long as normal notification procedures are followed. Although this ceiling on transfers is less than the $9 billion requested by the Administration, it is proportionately six times greater than the transfer limit set in the FY2003 DOD Appropriations Act (P.L. 107-248). (17)
To increase the information available for oversight, Congress also requires that DOD submit to the defense committees a financial analysis on FY2003 spending that covers not only the FY2003 supplemental but also the regular FY2003 appropriations, and the additional funding received by DOD in the FY2003 Consolidated Appropriations Resolution. (18)
Increasing Flexibility In Use of Military Construction Funds. DOD requested $128 million for Air Force and $48 million for Navy military construction of several projects in Guantanamo Bay, and the Persian Gulf, including an $85 million project called Millennium Village for headquarters, billeting and other support facilities for some 2,000 military and civilian personnel at a classified location. (19)
Although the conference version lists the particular projects to be funded within the $201 million appropriated, the enacted version gives more flexibility than normal by permitting DOD to transfer up to $150 million to the contingency construction account and then allocate funds from there to individual projects as long as the defense committees are given notifications seven days in advance and cost estimates and documentation 15 days after obligating funds. The enacted bill provides $110 million for Millennium Village. (20)
Flexibility to Fund Foreign Militaries in the Global War on Terrorism Increases. Another area of controversy was DOD's request for additional flexibility in reimbursing foreign military forces who cooperate with the U.S. in combating terrorism. The conference version of the FY2003 Supplemental gives DOD some but not all of the flexibility requested.
Coalition Support. Although Congress allows DOD to spend up to the $1.4 billion requested by the Administration to reimburse foreign military forces of "key cooperating nations" for their military and logistical support in the global war on terrorism, P.L. 108-11 also requires that DOD notify Congress 15 days in advance of payments and provide a financial plan for the expenditure of these funds by July 1, 2003. If DOD does not provide the financial plan, any unobligated funds for coalition support will revert to the Treasury. As the Administration proposed, DOD must get the concurrence of the Secretary of State and consult with the Office of Management and Budget about these transfers. (21) The $1.4 billion provided is substantially more than the $490 million DOD already received in the two previous supplemental, giving DOD additional funding to use to work out cooperative relationships with foreign militaries.
In addition, Congress caps DOD's total spending for coalition support at $1.4 billion in the FY2003 supplemental plus the $490 million previously appropriated for these purposes in earlier supplementals (P.L. 107-206 and P.L. 107-117). (22) According to the DOD request, some of these funds are to reimburse Pakistan for patrolling its borders to search for terrorists, and some for Jordan, other nations, and could be used within Iraq. DOD's plans may become clearer when it submits its financial plan to Congress on July 1, 2003. (23) Appropriating funds to reimburse DOD for military equipment already provided to Afghanistan from its stocks was not controversial because these actions were endorsed in previous legislation. (24)
DOD Support of Regular and Irregular Foreign Military Forces. Another tool that DOD requested to help establish cooperative relationships with foreign military forces was $150 million in funding for support of irregular or indigenous forces. A controversial proposal, this request was rejected by both houses and not included in the final version.
In response to DOD's request for $50 million to support regular foreign military forces, the enacted supplemental permits DOD to spend up to $25 million, and restricts the funding to counter-terrorism training. In addition, DOD is required not only to get concurrence from the State Department but also to notify the Congressional defense committees 15 days in advance. (25) (For House and Senate provisions, see section, "Previous Congressional Action," below.)
Discretionary Funds for the Commanders in Chief and the Secretary of Defense. In the enacted supplemental, Congress agrees to DOD's request to double from $25 million to $50 million the amount available for combatant commanders in the CINC (Commanders-in-Chief) Initiative Fund to use for training, contingencies, operations, joint exercises, military education and training, activities that could help cement relationships with foreign military forces. Within that $50 million for , P.L. 108-11 also increases current spending limits for different types of purchases. The limits change as follows:
Congress also expands the funding available for the Secretary of Defense for "emergencies and extraordinary expenses," from the current $34.5 million limit to $50 million, less than the doubling requested. According to DOD's justification materials, these funds could be used for "joint warfighting capabilities in support of military operations in Iraq and the global war on terrorism," activities that could involve initiatives in support of either U.S. or foreign militaries. (27)
Increasing Compensation for War Duty. In the enacted supplemental, Congress increases imminent danger pay and family separation allowances for those forces deployed for the Iraqi conflict, an increase in compensation that was not proposed by DOD. Based on the Stevens-Durbin amendment that was unanimously adopted in the Senate (S.Amdt. 436 as modified), combat pay increases 50% from $150 a month to $225 a month, and family separation allowances increases 150% from $100 a month to $250 month, retroactively to the beginning of FY2003.
These increases are intended to provide additional compensation for military personnel, including activated reservists, for their service in the Iraq war. Senator Durbin, who originally proposed higher levels, emphasized that these levels have not been adjusted since 1991 after the first Gulf War in 1991. The levels adopted represent a compromise between higher levels originally proposed by Senator Durbin and those offered by Senator Stevens. (28)
These higher levels could offset some of the difficulties experienced by activated reservists serving longer than anticipated tours, an issue of concern to Congress. (29) Cost estimates for this change range from $650 million to $825 million for FY2003. Although this change is only in effect for FY2003, the armed services committees are likely to address the issue of making the change permanent in the context of the FY2004 budget. DOD will cover the cost within the supplemental. (30)
Defining DOD's Postwar Role: Natural Resources Risk Remediation Account and Other Reconstruction. DOD requested funding for repair of Iraq's oil wells in a new Natural Resources Risk Remediation Account and also requested flexibility to use any foreign contributions either to this new fund or to the Defense Cooperation Account that was set up during the first Gulf War. (Funds in the Defense Cooperation Account can be transferred to the new account). In the enacted version, Congress agrees to provide the $489.3 million for a new Natural Resources Risk Remediation Account to repair and rebuild Iraq's oil wells and facilities.
Before spending these funds, DOD is to use any foreign contributions to this fund or from the Defense Cooperation Account. DOD would not need to return to Congress for specific appropriation of any foreign contributions, a reversal of the requirement in current law. That requirement was adopted after the first Gulf War to ensure Congressional monitoring of foreign contributions. (31) The scope of foreign contributions to Iraqi reconstruction is currently unclear.
In addition to the amounts requested for the new account, the Administration requested $2.4 billion for Iraq Relief and Reconstruction Fund with the President having discretion about who would manage these funds (see section "Reconstruction Efforts" below). From Administration actions, it appears that DOD may play a major role in managing these funds.
Established by the President in January 2003 as the "nerve center" of U.S. postwar activities, the new Office of Reconstruction and Humanitarian Assistance was placed within the Department of Defense and is headed by Lt. General Jay M. Garner (ret.) who reports to General Tom Franks, the Commander of the U.S. Central Command and the Secretary of Defense. (32) Although responsibilities for reconstruction activities remain unclear, the role of the State Department and USAID appears to be less than in the past.
Short and Long-Term Costs and Effects of the War. During a recent press conference, DOD Comptroller Dov Zakheim suggested that the $62.6 billion for DOD would be adequate to fund DOD's costs for the war in FY2003. Based on the estimates provided at that press conference, the cost of the Iraq war for DOD could range from $57.3 billion to $65.0 billion, with the midpoint of $60.2 billion (see Table 3 below). (33)
The adequacy of the supplemental may depend on how many U.S. troops need to be kept in Iraq now that hostilities have ended. Assessing the adequacy of the supplemental for the remainder of the year (or the potential cost in FY2004) is difficult because DOD has not provided its assumptions about troop levels. That may become possible when DOD submits reports of its expenditures for the war, as well as a financial plan covering all of FY2003. (34) Recently, the Pentagon suggested that the U.S. may need to keep 125,000 troops in Iraq for the next year. (35)
|Category||FY2003 - Lower Range||FY2003 - Higher Range|
|Spent thus far - thru March 2003||19.0||21.0|
|Return of troops and equipment||5.0||7.0|
|Monthly personnel and personnel support costs @ range of $3.5 billion to $4.0 billion per montha||21.0||24.0|
|Support of coalition allies b||1.4||1.4|
|Afghanistan and Global War on Terrorism @$1.1 billion to $1.2 billion per monthc||7.7||8.4|
|Congressional changes to DOD's Request|
|Increase in combat pay and family separation allowancesd||0.7||0.8|
|Additional fuel allocatione||0.7||0.7|
|Additional military personnel allocationf||0.0||1.7|
Note: CRS calculations based on DOD Press Transcript, Dov Zakheim, OSD/Comptroller, April 16, 2003; see http://www.defenselink.mil/transcripts/2003/tr20030416-0111.html.
a Covers personnel and personnel support costs for second half of FY2003; first half is covered in category, "Spent Thus Far."
b Provides military and logistical support to Pakistan, Jordan and other "key cooperating" nations in the global war on terrorism.
c DOD estimates cost of Afghanistan and global war on terrorism runs about $1.1 billion to $1.2 billion per month; CRS assumes the last seven months of costs are covered in the FY2003 supplemental with the previous months funded in the $6 billion received by DOD in the FY2003 Consolidated Appropriations Resolution (P.L. 108-7)
d DOD and Senator Steven's estimates of effect of Congressional action to increase imminent danger pay and family separation allowances for deployed troops for FY2003 in P.L. 108-7.
e Congress set a floor of $1.1 billion for fuel costs due to higher prices compared to the $430 million assumed by DOD in its request.
f Congress allocated $1.7 billion more for military personnel than DOD included in its request (see H.Rept. 108-56, p. 10); however, if DOD's estimates are correct and the funding is not needed, DOD can transfer the funds elsewhere.
For the long-term, the chief cost issue is likely to be the number of troops who remain in Iraq. According to a recent study, if U.S. troop levels declined from a level of 75,000 in the first year to 25,000 by the third year, the five-year cost of that occupation force would be $45 billion. (36) Unlike the experience in Bosnia and Kosovo, it is unlikely that the U.S. will share these costs with other countries. (37)
Some observers have also suggested that keeping significant numbers of troops in Iraq could also affect the readiness of U.S. forces by putting strains on U.S. forces, both actives and reserves. Those effects are, however, difficult to measure and could be offset, to some extent, by the elimination of patrolling of Iraqi airspace in Operations Northern Watch and Southern Watch, missions that have been carried on for the past ten years.
The sections below give details on previous action in the House and Senate.
During floor debate, the Senate added an amendment that increased imminent danger pay from $150 to $225 per month and increased family separation allowances from $100 to $250 per month, changes that were retained in the conference version. The Senate also adopted the Allard amendment (S.Amdt. 451) establishing a seven-member panel to review and report to the Secretary of Defense and the armed services committees within 90 days about the effectiveness of policy and actions taken at the Air Force Academy in response to allegations about sexual assaults. (38) This amendment was included in the final version.
A more controversial Senate amendment -- adopted by the Senate but dropped during conference -- was the Stevens amendment "to make certain improvements" (S.Amdt. 522), including a provision that would prohibit any funding in the bill going to airlift contracts to any firm that is not U.S. controlled. (39) A sense of the senate amendment offered by Senator Hollings (S.Amdt. 479) that would require the President to submit a proposal to raise revenues to pay for the cost of the FY2003 supplemental was rejected (79 to 18). (40)
Both the House and the Senate supported the funding requested by the Administration but provided different ways to increase Congressional oversight about the allocation of those funds (see discussion below).
House and Senate Markup of Department of Defense Request. During markup, the House Appropriations Committee recommended appropriations of $62.464 billion and the Senate Appropriations Committee (SAC) recommended $62.559 billion, both close to the $62.587 billion requested by the Administration. Both committees, however, devised different ways to restrict funds to specific accounts rather than providing the bulk of the funds in the Defense Emergency Response Fund as requested by the Administration. In some cases, the appropriators also added notification requirements before obligation of funds or reporting requirements after funds are spent (see below).
Compared to the Administration's request for flexibility for $59.9 billion, the House version gave flexibility in the use of $25.4 billion as long as DOD stayed within certain ceilings while the Senate distributed all but $11.0 billion of the funds in the DERF to specific appropriation accounts. At the same time, the House version required a seven-day advance notification for transfers from the new fund while the Senate permitted DOD to allocate those funds with quarterly after-the-fact reporting as proposed by the Administration.
Under the HAC's transfer limits, DOD could spend less than or equal to the ceilings for specific appropriation accounts outlined in the bill. (See Table 2b above). (41) The House appropriators allocated $1.7 billion more than the Administration requested for Military Personnel accounts based on their belief that the services would need additional amounts to cover such expenses as imminent danger pay, family separation allowances and the cost of mobilizing reservists. (42)
Within the new Operation Iraqi Freedom Response Fund, the HAC set aside $25.4 billion that would be available for "Combat, Stability Operations, and Force Reconstitution costs," a new category included in the bill, and required 7-day advance notification to Congress of DOD's transfers of these funds to individual appropriation accounts. This category appeared to cover costs that would occur later in the war or during an occupation phase.
Within this $25.4 billion category, the House appropriators:
Since the total funding for all the ceilings and floors in the bill was $30.7 billion, over $5 billion more than the $25.4 billion reserved for Combat, Stability Operations, and Force Reconstitution Costs, DOD would have had to fund some accounts below the ceilings.
Senate Appropriations Committee (SAC) Limits. The Senate Appropriators reduced the Administration's $59.9 billion request for the Defense Emergency Response Fund to $11 billion, transferring the remaining $51.2 billion to other specific appropriations accounts. Based on discussions with DOD, the SAC transferred funds that DOD characterized as incurred costs, for example for deployment of troops and equipment or setting up base camps (see Table 2 and Table 2a below) as well as other funds where expenses could be more predictable. (44)
Both House and Senate appropriators provided amounts requested by the Administration for counter drug activities in Colombia ($34 million) and for reimbursement for drawdown in its funds and stocks for the Afghan Army.
For procurement, the Administration's request can only be broken out at the service level rather than by individual accounts. The House and Senate bills appear to distribute some of the $3.7 billion requested by the Administration for munitions and equipment replenishment in Procurement, Defensewide to individual services.
Support of Foreign Military Forces. Both the House and the Senate appropriators agreed to the Administration's request that $1.4 billion be made available for military and logistical support to Pakistan, Jordan or other "key cooperating nations," in the war on terrorism but each house proposed different restrictions. In addition to quarterly reporting on the use of funds, the HAC required a 7-day notification in advance and required that DOD provide a report within 30 days of enactment about their plans for using the funds or the funds would revert to the Treasury. The SAC required a 15-day advance notification for use of these funds.
Neither the House nor the Senate approved the Administration's request that the Secretary of the Defense be allowed to spend $150 million to support irregular or indigenous forces. In response to the Administration's request that the Secretary of Defense, with the concurrence of the Secretary of State, be allowed to spend $50 million to support the regular forces of other nations who cooperate in the war on terrorism, the Senate approved the requested new authority with advance notification but the House did not include any provision for this funding.
As requested, appropriators in both houses gave the combatant commanders and the Secretary of Defense flexibility to use certain funds at their discretion. Both the HAC and the SAC recommended that the combatant commanders (CINCs) be allowed to double from $25 million to $50 million the amount that they could spend from the CINC Initiative Fund that could be used to support either U.S. or foreign military forces. The HAC and the SAC also agreed with the Administration's request to increase the amount available to the Secretary of Defense to spend at his discretion for emergency and extraordinary expenses; the House increased the ceiling from $34.5 million to $69.0 million as requested and the Senate agreed to raise the amount to $45.0 million.
Use of Defense Cooperation Account and Natural Resources Risk Remediation Account. In response to DOD's request to be able to use immediately any foreign contributions to the Defense Cooperation Account, originally set up to receive donations from foreign nations in the first Gulf War, both the HAC and the SAC set conditions on use of any contributions. The HAC required prior approval of any transfers from the fund to an appropriation account. The SAC retained current statute, which requires that contributions be appropriated in subsequent appropriations acts before DOD can use the funds.
Both the HAC and the SAC approved the $489 million for the new Natural Resources Risk Remediation Account to cover the cost of firefighting and repair of Iraqi oil wells (see below). For use of foreign contributions, the SAC agreed to allow DOD to use any contributions without restrictions. The HAC, however, required prior approval of any transfers of contributions.
Request for Higher Total on Transfers. In response to the Administration's request that the total amount that DOD can transfer annually between appropriations accounts be raised from $2 billion to almost $9 billion, the HAC retained the current ceiling and the SAC capped transfers at $3.5 billion per year.
To maximize flexibility, the Defense Department's FY2003 supplemental requested almost all of its $62.6 billion in funding in the Defense Emergency Response Fund (DERF) transfer account.
Proposals to Maximize Flexibility. Although most of DOD's funding in the FY2002 supplemental for Afghanistan and enhanced security was also provided in the DERF transfer account - based on the same rationale that DOD needed flexibility in its efforts to combat terrorism after September 11th attacks -- the $11 billion in funding was substantially smaller than the current request. DOD also requested various changes to existing law to increase its flexibility to provide aid to foreign militaries and to transfer funds between accounts.
It is not clear, however, how these caps (or floors) could be enforced because the categories were not defined.
According to DOD, the $59.9 billion in the DERF appropriation account was intended to cover costs incurred in the war with Iraq -- deployment of forces and equipment and re-deployment costs when they return, DOD's estimated costs of a "short but extremely intense" war, repair and replenishment of equipment and munitions damaged or used during the war, mobilization of reserve forces, and some RDT&E, as well as other expenses for the war on terrorism. (45) As in the FY2002 supplemental, DOD provided illustrative allocations of DERF funds but these allocations were not binding (see Table 2c above).
Funds for Coalition Support. Continuing a practice begun in the FY2002 supplemental, DOD is requested $1.4 billion in the Operation and Maintenance, Defense wide account to fund coalition support. According to DOD, that support would include payments of $1.3 billion to Pakistan, Jordan and countries providing logistical support to the U.S. in Afghanistan, and payments of $.1 billion for logistical support to those supporting military operations in Iraq. The proposed language did not bind DOD to any specific amounts for individual countries.
As in the FY2002 supplemental, the proposed language required that the Secretary of Defense consult with the Director of OMB, and receive concurrence from the Secretary of State before providing funds to allies. The current proposal did not, however, include the 15-day notification to congressional committees before making payments that was included in the FY2002 supplemental. (46)
New Natural Resource Remediation Fund. DOD requested $489.3 million for a new transfer fund, the Natural Resource Remediation Fund for emergency fire fighting, repairing damage to oil facilities and infrastructure and preserving distribution capability, and ensuring availability of fuel to the Iraqi people. The fund was also to also receive foreign contributions. Some observers were concerned about the nature and extent of DOD's role, including the potential for "mission creep," the expansion of DOD's role beyond its traditional missions.
DOD also proposed that any contributions to the Defense Cooperation Account, set up after the first Gulf War for foreign contributions would be considered to have been approved in the FY2003 Supplemental Appropriations Act. This proposal to give DOD discretion in advance to use foreign contributions was not consistent with the practice in the past when Congress approved the transfer of allied contributions to specific accounts.
Proposed Changes to Current Law To Increase DOD Flexibility. DOD requested several changes to current law to increase DOD's management flexibility contending that such changes are necessary to allow DOD to adapt quickly to the demands of the war on terrorism. Several controversial proposals included:
Providing Aid to Regular and Irregular Foreign Forces. The supplemental request also included a general provision that would have allowed DOD to use up to $150 million of funding in the supplemental to support indigenous forces assisting U.S. operations in support of the global war on terrorism. The provision was intended to "clarify DOD's authority to promote military cooperation in the global war on terrorism." (47) (See additional discussion in section on Foreign Operations.)
Within the DERF account, DOD also proposed that up to $50 million could be used to support the regular military forces of foreign nations to further the "global war on terrorism" as long as the Secretary of State concurred with the Secretary of Defense in providing funds. According to DOD, this new provision would have enabled DOD to provide aid to foreign forces "rapidly, in response to emerging, unanticipated emergency requirements." (48)
The request also raised the total amount available to the combatant commanders in the Commanders In Chiefs (CINC) Initiative Fund from $25 million to $50 million. This fund is available to combatant commanders for a wide variety of activities including not only training and selected operations of U.S. military personnel but also education, training and personnel expenses of foreign defense personnel in cooperative programs. (49)
To increase DOD's flexibility in carrying out these purposes, the supplemental request also proposed raising the limits that currently apply:
All these proposals would have given DOD additional authority to reimburse foreign military forces for expenses, including procurement, personnel costs, and exercises. Although the Secretary of Defense would need the concurrence of the Secretary of State in order to spend the additional $200 million in funding -- $50 million for regular foreign forces and $150 million for irregular forces -- the request did not provide a mechanism for congressional oversight of these activities before they occur. The Administration's proposal did include after-the-fact reporting, on a quarterly basis, for both types of reimbursement. (51) The final version rejects DOD's request for $150 million for irregular forces and reduced the request for regular forces to $25 million.
Requested Change in Ceiling on Transfers. DOD proposed a large increase in the annual ceiling set on the total amount of funds that can be transferred between appropriation accounts after enactment from $2 billion to about $9 billion. (52) DOD reprograms or shifts funds between appropriation accounts after enactment to reflect changes in priorities. DOD stated that this additional flexibility, along with a lifting of the midyear deadline on reprogramming requests, would help DOD to respond to "emerging requirements, particularly in Iraq." (53) In the enacted bill, Congress provides $2 billion in transfer authority for funds in the FY2003 supplemental.
Allocation of DOD Funding by Phase of Operations. DOD provided a breakout of the $62.6 billion according to several phases of operations as shown in Table 4 below. In its justification material and recent press statements, DOD characterized the $30.3 billion of expenses for "coercive diplomacy" as incurred expenses.
"Coercive Diplomacy". Almost half of the $30.3 billion was for personnel expenses including activation of reservists, and special pay for active-duty military in combat and support of those personnel for both the Iraqi conflict, Afghanistan, and enhanced security in the United States. Another $7 billion was for the deployment and re-deployment of personnel to and from the theater.
Major Conflict. DOD's estimate of the cost of the war itself appeared to assume a short, intense conflict of about a month. Using plans for deployments and military operations developed by the combatant commanders, DOD estimated these costs relying on a model developed in the mid-1990s for contingency operations. (54) Assumptions about these plans underlay DOD's estimates of costs.
Transitional and Stability. DOD included its postwar operational costs in this category, including funding to repair Iraqi oil facilities, and "Lower Intensity Operations" that may include the operational costs of an occupation force. The initial size and possible phase down of this force was not specified.
Although DOD included little funding in its request for the postwar phases of the Iraqi War, a controversy developed about the Administration's plans to transfer funds to DOD from reconstruction funds requested for the Executive Office of the President (see section on Reconstruction Efforts below).
|Phase of Operations||FY2003||FY2003 Subtotals|
|Coercive Diplomacy Subtotal||30.3|
|Transportation To & From Theater Of Operations||7.1|
|Consumables used to datec||2.3|
|Major Conflict Subtotal||13.1|
|Spare Parts, Logistics support, Consumables||4.7|
|Transportation Within Theater||1.6|
|Military Personnel (included above)||NA|
|Transitional and Stability Subtotal||12.0|
|Natural Resources Remediation Fundf||1.2|
|Lower Intensity Operationsg||11.4|
|Weapons of Mass Destruction Containment||NA|
|Depot Maintenance and Other Reconstitution||3.7|
Sources: Under Secretary of Defense (Comptroller), Briefing to the Congressional Oversight
Committees, FY2003 Emergency Supplemental: Military Operations in Iraq and the Global War on
Terrorism, March 25, 2003; see
a Includes additional pay for active-duty military personnel in combat (e.g. hazardous duty pay), cost of activating reservists, and personnel support.
b Specific definition not provided; includes setting up overseas bases.
c Consumables include paying higher prices for fuel than anticipated, expended munitions, and food and medical supplies.
d Includes request of $1.4 billion for payments to Pakistan, Jordan, and "other key cooperating nations" for logistical and military support in the war on terrorism in Afghanistan; also includes $0.1 billion for Free Iraqi Forces and $0.2 billion for the Afghan Army.
e "Other" includes enhancements to White House and other communications systems, improvements to the Navy base at Guantanamo Bay housing prisoners from Afghanistan, logistics support, other projects and replenishment of equipment.
f DOD is requesting $489 million for emergency firefighting, repair of damage to Iraqi oil fields, and providing fuel to the Iraqi people.e
g May be operational costs of occupation force.
h Includes replacement of expended munitions and equipment, and depot maintenance for equipment.
Allocation of DOD Funding by Major Type of Expense. Although DOD's justification materials included illustrative allocations of expenses to be covered in the DERF account by appropriation account, these allocations were not binding, and could be changed in response to the course of the war in Iraq or changes in DOD priorities. Table 5 shows these potential allocations.
Personnel and Personnel Support. Personnel costs accounted for much of the total cost of the war in Iraq, continued expenses in Afghanistan, and enhanced security in the United States. They reflected both increases in overall strength levels of active-duty military and activation of reservists. The expense breakdown below did not, however, show either the number of reservists that DOD plans to activate over the rest of the fiscal year or the allocation of personnel among the different missions funded in the supplemental or the types of tasks that these personnel carry out.
Starting in January 2003, DOD rapidly increased the number of reservists being called up for the Iraqi war. Before the buildup, about 50,000 to 55,000 reservists were on active-duty to provide support for operations in Afghanistan or enhanced security in the United States, a decrease from the 80,000 called up in the months after the September 11th attacks. The current level of activated reservists is over 200,000, according to the Defense Department. DOD's estimates of cost in Table 5 are built on assumptions about the number of reservists needed during the war with Iraq and for the occupation force that would remain afterwards but those numbers are not provided in its justification material.
Military Operation Support. According to various sources, DOD anticipated a short, intense war of about one month, which would be roughly consistent with the $14 billion in operating support shown below. (This estimate was considerably higher than a recent CBO estimate of $10 billion based on current force levels.) (55) DOD's estimated cost of $100 million reflected its expectation that its role in funding humanitarian assistance would be limited.
Procurement. DOD did not specify the mix of munitions or equipment which it expected would need to be replaced. Although there was clearly considerable uncertainty about replacement costs, the $3.7 billion estimate was predicated on assumptions about likely loss rates.
|Purpose/Type of Expense||FY2003||FY2003 Subtotals|
|Military Personnel Expenses Subtotal||10.398|
|Active-Duty Military Personnel Special Pays||2.000|
|Higher Active-Duty Levels||1.450|
|Cost of Mobilizing Reservists||6.948|
|Personnel Support (O&M funded) Subtotal||5.240|
|Active-Duty Personnel Support||3.365|
|Mobilized reserve Support||1.541|
|Defense Health Program||0.302|
|Other personnel costs||0.032|
|Military Operation Support (O&M Funded) Subtotal||37.760|
|Command, Control, Communications and Intelligence||3.177|
|Guantanamo Bay Improvements||0.010|
|Working Capital Fund: For Higher Oil Prices||0.430|
|Military Construction Subtotal||0.177|
|Military Construction, Navy||0.048|
|Military Construction, Air Force||0.129|
|Natural Resource Risk Remediation Fund||0.489|
|Operation and Maintenance, Army||0.035|
|Operation and Maintenance, Navy||0.075|
|Operation and Maintenance, Air Force||0.055|
|Operation and Maintenance, Defense-wide||1.400|
|Drug Interdiction and Counter-Drug Activities||0.034|
Source: Department of Defense, FY2003 Supplemental Request for Military Operations in Iraq and
the Global War on Terrorism, March 25, 2003;
The President's supplemental proposal included $7.79 billion for near-term Iraq reconstruction and relief, additional aid to coalition partners and other states cooperating in the global war on terrorism, and related State Department and USAID administrative expenses. Most of the funds -- $7.6 billion -- fell under the jurisdiction of Foreign Operations appropriations programs. By comparison, the supplemental request totaled a little less than half of the $16.2 billion appropriated previously by Congress for FY2003 Foreign Operations activities.
The proposal, as detailed below in Table 5, was roughly divided into two components: Iraq relief and reconstruction (about $2.85 billion) (56) and aid to coalition partners and other nations engaged in the war on terrorism (about $4.7 billion).
Under the Administration's plan, the bulk of Iraqi reconstruction funds would be deposited in a special Iraq Relief and Reconstruction Fund, which would be managed by the White House. Out of this $2.44 billion Fund, resources would be drawn and transferred to implementing agencies to pay the costs of immediate humanitarian relief and reconstruction activities over a 12-month period following the end of hostilities.
Normally, it would be presumed that transfers for reconstruction and post-conflict aid would be made to USAID, the State Department, and other traditional foreign assistance management agencies. But with plans for the Defense Department to oversee the governing of Iraq immediately after the end of hostilities, the White House wanted to have maximum flexibility over the distribution of resources so the President could transfer some or all of the funding to DOD. The proposal stimulated immediate controversy with a number of critics, including Members of Congress, arguing that aid programs should remain under the policy direction of the State Department and under the authorities of a broad and longstanding body of foreign aid laws. They pointed out that during other recent reconstruction initiatives in Bosnia and Kosovo, resources and policy decisions flowed through the Secretary of State. Others argued that groups which would play a significant role in post-war rehabilitation efforts -- non-governmental organizations (NGOs), foreign donors, and international organizations -- would be reluctant to take direction and funding from the U.S. military. This, they contended, would hamper relief activities. (57)
Furthermore, the placement of reconstruction funding in a Presidential account appeared to grant the White House significant discretion in responding to changing and unanticipated demands, unencumbered by specific programmatic allocations. The Administration said only that $543 million would cover humanitarian expenses, $1.7 billion would be set aside for reconstruction needs, and up to $200 million would be available to reimburse foreign aid accounts from which funds were drawn prior to conflict.
According to Administration documents, reconstruction funds would focus initially on the most urgent needs to restore minimal services to the Iraqi population. Emphasis would be placed on rebuilding water and sanitation capacity, restoring public health facilities, refurbishing seaports and airports in order to move humanitarian supplies into the country, reestablishing a food distribution system, and generating emergency electricity. Following this early stage, the White House plan called reconstructing broad economic and institutional capacity. This second phase would target the restoration of roads, schools, hospitals, markets, irrigation systems, and electrical generation, together with the construction of a framework within which to operate education, economic, agriculture, and good governance institutions.
Apart from the Relief and Reconstruction Fund, the Administration also sought $200 million to replenish refugee, disaster, and other economic aid accounts that had already financed the costs of food and other commodities. A portion of these funds would also bolster the size of humanitarian accounts so that future "borrowings" from other aid sources to meet the needs in Iraq would be minimized. The State Department and USAID further requested appropriations to establish safe and secure temporary facilities in Iraq and to eventually build an embassy and aid mission in Baghdad.
Congressional Action on Iraq Reconstruction. As cleared by Congress, H.R. 1559 appropriates $2.475 billion for the Relief and Reconstruction Fund, slightly higher requested. The President will be able to apportion Fund resources directly to five federal agencies: the Departments of Defense, State, Health and Human Services, and Treasury, and USAID. In previous congressional debate, the House and Senate had each expressed their expectations that these funds would be channeled to the Secretary of State, and in most instances, further directed to USAID. The report accompanying S. 762 specifically noted that the funds were not expected to be transferred to the Secretary of Defense. Nevertheless, the White House continued to argue for greater flexibility and authority to place reconstruction resources under DOD auspices, and ultimately conference committee members agreed. The enacted legislation, however, specifies that the Iraq Fund will fall under the authorities of the Foreign Assistance Act of 1961 and that Congress will be notified five days in advance of any obligation of amounts from the Fund. Further, these advance notifications will be reviewed under the same terms as regular foreign aid notifications to the Appropriation Committees, a process through which Members may place "holds" on the obligation of resources pending further consultation. H.R. 1559, as approved, also strengthens congressional oversight of the Fund by requiring two reports within the first 45 days of enactment regarding how the Fund will be organized and other issues such as reconstruction and government-creation strategies, coordination with other donors, and overall costs. Beginning in mid-July 2003, H.R. 1559 requires quarterly status reports on Fund operations.
|Iraq Relief and Reconstruction:|
|Iraq Relief and Reconstruction Fund||$2,443.3||$2,483.3||$2,468.3||$2,475.0|
Reconstruction priorities for public health, water and sanitation, seaports/airports, food-distribution networks, and electricity. Post-conflict emphasis on education, governance, economic institutions, agriculture, and infrastructure repair.
|Humanitarian aid, refugee and displaced persons relief, demining||$543.0||--||--||--|
|Reimbursement to USAID's Development, Child Survival and ESF aid accounts previously drawn upon to provide food commodities.||$200.0||fully reimbursea||$260.0||fully reimburse|
|Reimbursement to USAID's International Disaster Assistance account for previously drawn upon resources for food distribution, mainly through the UN WFP, and for immediate reconstruction.||$80.0||$160.0||$112.5||$143.8|
|Reimbursement to USAID's Child Survival/Health account for previously drawn upon resources for water and sanitation reconstruction.||$40.0||$40.0||$90.0||$90.0|
|Reimbursement to USAID's Economic Support Fund account for previously drawn upon resources for emergency relief and non-health reconstruction.||$40.0||--||$40.0||$40.0|
|Reimbursement of PL480 food assistance, including the Bill Emerson Humanitarian Trust||--||$319.0||$600.0||$369.0|
|Replenishment of the Emergency Refugee and Migration Aid (ERMA) fund to restore $17.9 million that has been drawn down for Middle East contingencies and to have funds available for needs worldwide.||$50.0||$80.0||$75.0||$80.0|
|Peacekeeping funds for coalition partners engaged in post-conflict Iraq||$200.0||$115.0||$150.0||$100.0|
|Subtotal, Iraq Reconstruction||$2,853.3||$3,197.3||$3,535.8||$3,297.8|
|Assistance to Coalition Partners & Cooperating States in War on Terrorism|
|Israel military grant.||$1,000.0||$1,000.0||$1,000.0||$1,000.0|
|Israel economic loan guarantees. Israel will pay all fees associated with the cost of $9 billion in loan guarantees.||[$9,000.0]b||[$9,000.0]b||[$9,000.0]b||[$9,000.0]b|
|Egypt economic grant, a portion of which can be used for up to $2 billion in loan guarantees.||$300.0||$300.0||$300.0||$300.0|
|Jordan economic and military grants.c||$1,106.0||$1,106.0||$1,106.0||$1,106.0|
|Palestinian economic grant.||$50.0||NS||NS||NS|
|Turkey economic grant, a portion of which can be used for up to $8.5 billion in direct loans.||$1,000.0||$1,000.0||$1,000.0||$1,000.0|
|Philippines economic and military grant.||$30.0||NS||$80.0||$60.0|
|Pakistan military grant and law enforcement aid.c||$200.0||$200.0||d||$200.0|
|Djibouti economic and military grants.||$30.0||NS||NS||NSe|
|Oman military grant.||$62.0||NS||NS||NSe|
|Bahrain military grant.||$90.0||NS||NS||NSe|
|Colombia military and counter-narcotics grants to support unified campaign against drugs and terrorism.f||$71.0||NS||NS||NSe|
|Afghanistan economic, military, anti-terrorism, and demining grants.||$325.0||$325.0||d||$365.0|
|Middle East Partnership Initiative and Muslim World Outreach.h||$200.0||$105.0||d||NSg|
|Central Europe military grants.i||$84.1||NS||d||NSi|
|US Emergency Fund for Complex Foreign Crises -- aid to support contingencies for coalition countries .||$150.0||$0.0||$150.0||$0.0|
|Subtotal, Aid to Coalition Partners & Cooperating States||$4,698.1||$4,488.1||$4,604.0||$4,518.1|
|State Department Administration & Other Activities|
|State Department Diplomatic and Consular Affairs||$101.4||$106.4||$93.4||$98.4|
Task Force Surge Support operations.
|Baghdad embassy reopening; enacted amount includes diplomatic security||$17.9||$17.9||$17.9||$35.8|
|Machine Readable Visa fee shortfalls||$35.0||$35.0||$30.0||$32.0|
|Worldwide emergency response||--||$30.6||--||--|
|State Department embassy construction||$20.0||$71.5||$82.0||$149.5|
Temporary facilities in Iraq.
|Non-official facilities frequented by U.S. citizens overseas||--||--||$10.0||$10.0|
|Facilities and security in Rome, Italy||--||--||--||$78.0|
|USAID mission in Iraq, and, as enacted, IG monitoring of the Iraq Fund, and USAID security needs in Pakistan, Afghanistan, and Indonesia.||$22.0||$23.0||$23.6||$24.5|
|Potential emergency evacuations of US government employees, families, and private American citizens.||$65.7||$65.7||$40.0||$50.0|
|Radio broadcasting to Iraq and Middle East Television Network||$30.5||$30.5||$62.5||$30.5|
|Iraq War Crimes Tribunal and investigations into war crimes allegations||--||--||$10.0||$10.0|
|Subtotal, State Department & Other||$239.6||$297.1||$311.5||$362.9|
|TOTAL, Iraq Reconstruction, International Aid, & Related Activities||$7,791.0||$7,982.5||$8,451.3||$8,178.8|
NS = Not specified.
a The House Appropriations Committee stated that up to $495 million in reimbursements was included in H.R. 1559.
b No appropriation required.
c DOD funds ($1.3 billion) were requested and enacted for Jordan, Pakistan, and other "key cooperating states" providing logistical and military support to U.S. military operations in Iraq and in the global war on terrorism.
d Request "supported" in Senate bill.
e Although the enacted supplemental does not set a specific level for this country, the Administration has allocated the full amount requested.
f DOD funds ($34 million) were also requested and enacted for drug interdiction and counter-drug activities in Colombia.
g Due to Congressional reductions in overall ESF funding and increases for Afghanistan and the Philippines, the Administrations allocated $100 million for MEPI.
h House bill funded an Islamic Partnership and Outreach Program.
i The Administration requested funds for 10 Central European nations but has altered the list of recipients and the allocation of military grants following enactment of the supplemental, as follows: Poland ($15 million requested and allocated); Hungary ($15 million requested; $8 million allocated); Czech Republic ($15 million requested and allocated); Estonia ($2.5 million requested, $2.75 million allocated); Latvia ($2.5 requested, $2.75 million allocated); Slovakia ($6 million requested, $6.5 million allocated); Romania ($15 million requested and allocated); Slovenia ($5 million requested, $0 allocated ); Lithuania ($3.5 million requested, $4 million allocated); Bulgaria ($5 million requested, $10 million allocated); Albania $0 requested, $3 million allocated); Macedonia ($0 requested, $1 allocated); and Ukraine ($0 requested, $1.5 million allocated).
The enacted bill further directs higher and more specific amounts that should be used to replenish several foreign aid accounts that had been drawn upon in order to preposition food and medicine stocks in the region and for other pre-conflict humanitarian purposes. The conference agreement directs "full and prompt" reimbursement of USAID and State Department accounts from the Iraq Fund. The supplemental provides $143.8 million for international disaster assistance, $112.5 million of which will restore funds diverted previously for Iraq. The remaining balance will augment USAID disaster relief resources to respond to foreign contingencies that may arise through the end of FY2003. Similarly, Congress increased the State Department's refugee reserve account from the $50 million requested to $80 million in order to address needs in the Persian Gulf region as well as other global requirements. H.R. 1559 also includes $369 million to reimburse food aid accounts from which commodities for Iraq were drawn. This includes $69 million to replenish stocks in the Bill Emerson Humanitarian Trust. The House had added $250 million additional food aid while the Senate, by way of an amendment by Senator Kohl, had recommended $600 million. In total, the enacted legislation provides roughly $920 million for reimbursing these foreign aid accounts, more than double the Administration's $410 million request.
International Assistance. The supplemental appropriation proposal would have provided about $4.7 billion in additional aid to 23 countries and regional programs that are contributing to the war in Iraq and cooperating in the global fight against terrorism. Table 6 provides a complete list of proposed recipients. Among the largest and most complex aid packages would be:
The Administration further requested $150 million to initiate a U.S. Emergency Fund for Complex Emergencies, a contingency account that would allow the President to address quickly unforseen needs of coalition partners. The Fund, which would be managed by the White House, had originally been proposed for an FY2004 startup of $100 million.
Congressional Action on International Assistance. H.R. 1559, as approved, includes $4.52 billion in additional aid to countries and regional programs, about $180 million less than requested. Nearly all of this reduction, however, comes from Congress' decision not to fund the President's $150 million emergency account for complex crises. In most other cases, the Administration will be able to allocate these foreign aid resources has it had intended. Congress earmarked funding at the requested levels for Israel, Egypt, Jordan, and Pakistan, while adding resources for Afghanistan and the Philippines (see Table 6). Turkey may receive "not to exceed" $1 billion, aid that is conditioned on a requirement for the Secretary of State to certify that Turkey is cooperating with the United States in Operation Iraqi Freedom, including the facilitation of moving humanitarian aid into Iraq, and has not unilaterally deployed forces in northern Iraq. The restriction on Turkey's aid package, the size of which could grow to $8.5 billion if the loan option is implemented, combines text in House and Senate-passed bills. Earlier, the House had defeated two amendments that would have eliminated aid to Turkey or reduced it by $207 million.
For Israeli loan guarantees, the enacted supplemental includes the full $9 billion proposal, but adds conditions not included in the proposal. Loans may be issued in $3 billion allotments in each of FY2003 to FY2005, a provision that will allow the President to reduce disbursements in the second and third years Israel violate any of the loan conditions. One such condition added by Congress prohibits loan resources from supporting any activity in geographic areas that were not administered by Israel prior to June 5, 1967. This is similar to a condition attached to the 1992 $10 billion loan guaranty package for Israel, some of which was not disbursed because of continued Israeli settlement activity in the West Bank area.
* Up to this amount. Loans would not require additional appropriations since economic grants would be used to pay for loan fees.
a Amount is earmarked or recommended in the enacted supplemental appropriation.
b The enacted supplemental appropriation provides $167 million.
c The enacted supplement appropriation includes $30 million for Philippine economic aid.
d Following enacted of the supplemental, the Administration has modified its plans to allocate funds for this recipient. See footnote "i" in Table 6, above, for the allocated amounts.
Although most of the President's request for international assistance is supported in the enacted emergency supplemental, the Administration had to reduce economic assistance in one instance. Congress cut Economic Support Fund appropriations by $20 million, but because earmarks and additions for Afghanistan, the Philippines, and $10 million to investigate possible Iraqi leadership war crimes, executive officials had $100 million less than requested in economic assistance for countries not protected by legislative directives. Non-earmarked programs included $50 million for the Palestinians, $25 million for Djibouti, and $200 million for the Middle East Partnership Initiative. The Administration chose to fully allocate amounts for the Palestinians and Djibouti, but cut resources for the Middle East Partnership Initiative (including Muslim Outreach) to $100 million, half of the level requested.
The State Department also chose to modify its distribution of military aid grants to several Central Europe states. Most significantly, the executive branch decided to add funds (not requested) for Albania, Macedonia, and Ukraine, and increase amounts above the requested levels for Estonia, Latvia, Lithuania, and Bulgaria. As off-sets, the State Department cut funds for Hungary and eliminated the $5 million request for Slovenia. See footnote "i" in Table 6 above for specific amounts allocated to each recipient.
The proposed supplemental raised a number of issues and concerns, including those focusing on the extent of executive flexibility sought by the President, how much more Iraq reconstruction might cost and whether these demands would erode funding for other foreign aid priorities, whether the purposes and amounts of country assistance were appropriate, and whether DOD's request for authority and funds to aid indigenous forces was consistent with traditional U.S. military assistance programs managed by the State Department.
Executive Flexibility and Congressional Oversight. Throughout the supplemental request, in both the defense and Iraq reconstruction/international assistance sections, the President sought authorities that would maximize flexibility in responding to fluid and rapidly changing demands. Among the most significant authorities affecting the use of foreign aid funds were:
As noted above, the enacted supplemental establishes the Relief and Reconstruction Fund proposed by the President, but with added oversight mechanisms put in place. While the President may apportion resources directly to DOD, as well as the Departments of State, Treasury, Health and Human Resources, and USAID, the Iraq Fund falls under the authority of existing foreign aid laws. H.R. 1559 also adds several reporting requirements, as mentioned above, and requires notification 5 days in advance of any Fund obligations. The enacted supplemental further deletes appropriations for the President's emergency fund for foreign crises and limits to $100 million the amount that can be transferred among the various aid accounts.
Costs of Iraq Reconstruction and the Impact on Other Aid Programs. Like the costs of military operations, it is nearly impossible to estimate what the longer-term expenses of humanitarian relief and reconstruction in Iraq will be. The Administration's $3.5 billion included in the supplemental request represented a general projection of needs over the next 12 months. But State Department activity justifications cautioned that the timetable was tentative, dependent largely on the extent of damage that resulted from the conflict and how future assessments might alter aid priorities. Some believed that reconstruction needs beyond this initial allotment would be met largely through proceeds from the sale of Iraqi oil and the release of frozen assets. The international aid community is currently discussing how post-conflict relief efforts will proceed, but there is a great deal of uncertainty over the Administration's intentions and the actual final outcome. How soon and in what amounts Iraq might gain access to borrowing from the International Financial Institutions will also be a factor in how much additional resources will be needed or expected from the United States. (59)
In the meantime USAID and the State Department have been drawing resources for Iraq from emergency refugee and disaster relief accounts, and from other economic aid programs that had been intended for other countries and purposes. As of March 25, USAID had utilized an estimated $506 million, including drawdowns from the Child Survival and Health (CS/H), Development Assistance (DA), and Economic Support Fund (ESF) accounts. For Child Survival and Development programs, amounts diverted to Iraq contingency activities represented nearly 8% of FY2003 appropriations. The supplemental request included about $410 million for either replenishing CH/H, DA, and ESF accounts, or increasing disaster and refugee resources so that future "borrowings" might be avoided and adequate funds would be available for contingencies that might arise later in the year in other regions. But the supplemental did not appear to fully cover USAID transfers already made for Iraq programs. Moreover, the supplemental provided "up to $200 million may be used" out of the Relief and Reconstruction Fund to repay these accounts. This discretionary language left the final decision up to the White House as to whether these funds would be available for the purposes and programs for which they were originally intended.
The conference agreement on H.R. 1559 adds substantial amounts, as noted above, for replenishing foreign aid accounts from which money has been drawn for Iraq operations. The enacted supplemental provides over $900 million to restore funds for several programs, including the addition of $369 million in food assistance that had not been requested.
Country Assistance. The Administration asked not only for funds to assist coalition partners and nations that face significant economic and political risks due to the Iraq conflict, but also to augment support for a broader set of countries cooperating in the global war on terrorism. Some questioned whether a supplemental appropriation intended to provide resources specifically related to the Iraq situation should include nearly $700 million for this latter group, especially since Congress approved in mid-February FY2003 money for this purpose (P.L. 108-7). Among the countries covered by the request, but which are outside the conflict in Iraq were:
Afghanistan -- The Administration proposed $325 million to "meet immediate shortfalls" in Afghanistan's FY2003 program, including resources for the Kabul-Kandahr-Herat road, budget support for the Afghan government, President Karzai's protective detail, demining, and military training and equipment costs. Although the Administration did not submit an official FY2003 Afghan aid request, Congress increased assistance to over $300 million.
Beyond this list, some questioned the Administration's $1 billion request for Turkey that could be converted into as much as $8.5 billion in loans. The United States had negotiated with the Turkish government for months over allowing the deployment of U.S. forces in Turkey for military operations for a second front in norther Iraq. Reportedly, the United States offered a $6 billion aid package that could be leveraged into $26 billion in combined grants and loans. On March 1, however, the Turkish parliament rejected the U.S. request to base troops for operations in Iraq and the United States withdrew the aid offer. Turkey's government has subsequently granted U.S. overflight rights for the Iraq campaign. The Administration justifies the $1 billion request on the basis of Turkey's role as an ally and frontline state in the war on terrorism, and for the significant political and economic risks faced by Ankara due to the Iraq conflict.
As noted above, the enacted supplemental, for the most part, supports the President's foreign aid allocations for requested countries. Conditions are added to funds for Turkey but amendments to eliminate or reduce the $1 billion package failed in the House. H.R. 1559, as approved, however, will require the Administration to make some economic aid reductions for some countries and programs not earmarked, possibly including those for the Palestinians, Djibouti, Turkey, or the Middle East Partnership Initiative.
DOD Authorities to Provide Military Aid. Under sections relating to Defense Department funds and authorities, the supplemental proposed two items that drew particular congressional attention. The key issue was whether they infringed on congressional oversight and the State Department's traditional role in directing foreign aid policy and resource allocations. They were both similar to proposals made last year in the FY2002 supplemental that focused on the war on terrorism and were closely scrutinized by Congress.
The first would provide $1.4 billion for the Defense Department, "notwithstanding any provision of law," to pay Jordan, Pakistan, and other nations that have provided logistical and military-related support to U.S. military operations in Iraq or in the global war on terrorism. In the past, Defense officials argue, competing demands on regular military aid resources have delayed reimbursement to key friends that provide services to American forces. Congress approved funding in the FY2002 supplemental for this purpose, but included a 15-day prior notification requirement that is not part of the FY2003 supplemental draft legislation.
The more controversial authority concerned DOD's request for $150 million to support "indigenous forces" assisting U.S. military operations, including those aimed at the global war on terrorism. Decisions to draw on these funds would be made by the Secretary of Defense, with the concurrence of the Secretary of State. The Defense Department defines indigenous forces as "irregular forces and resistance movements" and notes that such forces "generally conduct military and para-military operations in enemy-held or hostile territory and conduct direct offensive low-intensity, cover, or clandestine operations." (60) Although it was unclear from the budget justification and bill text exactly what groups and under what scenarios the Administration would utilize these resources, a senior Administration official suggested that the intent was to have resources available for groups in Iraq. Deputy Secretary Richard Armitage testified on March 27 that because of the uncertainty of the war's duration, it might be necessary to transfer additional arms and equipment for Kurdish and other forces, and that the $150 million would provide a "hedge" in case of a more prolonged conflict. (61) In last year's supplemental appropriation debate, DOD had asked for $30 million to support indigenous forces, funds that would be exclusively under the control of the Secretary of Defense. Congress rejected the proposal, however. The House Appropriations Committee observed in deleting the request that the Secretary of State's primary responsibility over U.S. military assistance programs is well established and that the Administration has the necessary authorities under existing foreign aid laws to undertake the requested activities. (62)
H.R. 1559, as enacted, provides the $1.4 billion for nations supporting U.S. military operations in the global war on terrorism but does not authorize the $150 million for aid to indigenous forces.
The smallest component of the supplemental proposal covered additional resources for homeland security. Some critics of Administration homeland security policy, including some Members of Congress, believe that key domestic preparedness measures have been under-funded and argue for additional resources. In some cases, as discussed elsewhere in this report, Members offered amendments increasing amounts for homeland security. Details of congressional action on homeland security funding matters are included in Table 8.
|Dept Homeland Security: Counterterrorism Fund||$1,500.0||a||$1,135.0||$150.0|
|Dept of Homeland Security:|
|Customs and Border Protection||--||$428.0||--||$333.0|
|Immigration and Customs||--||$185.0||--||$170.0|
|Transportation Security Administration||--||$390.0||--||$665.0|
|Federal Law Enforcement Training Center||--||$2.0||--||$2.0|
|Office of Domestic Preparedness||--||$2,200.0||$2,200.0||$2,230.0|
|Emergency Preparedness & Response||--||$45.0||--||$45.0|
|FEMA Disaster Relief||--||--||$109.5||$54.8|
|Information Analysis & Infrastructure Protection||--||$10.0||--||$0.0|
|Total Department of Homeland Security||$2,000.0||$3,521.0||$2,889.5||$3,760.8|
|Dept of Justice:|
|Salaries and Expenses||--||$5.0||--||$5.0|
|Interagency Law Enforcement Support||--||--||$72.0||$0.0|
|State & Local Law Enforcement Assistance||--||--||$91.0||$0.0|
|Community Oriented Policing Services||--||--||$114.5||$54.8|
|Total, Department of Justice||$500.0||$497.5||$395.5||$497.5|
|US Court of Appeals||--||$1.0||--||$1.0|
|US Court of International Trade||--||$0.1||--||$0.1|
|Exec Office of President: Emergency Fund||$250.0||--||--||$0.0|
|Legislative Branch Emergency Response Fund:|
|Salaries and Expenses||--||$11.0||--||$11.0|
|Architect of the Capitol||--||--||$34.4||$23.8|
|Architect of the Capitol, Capitol Police Buildings||--||$63.8||$40.1||$40.1|
|Office of Compliance||--||$0.1||$0.1||$0.1|
|Library of Congress||--||$5.5||$5.5||$5.5|
|Congressional Research Service||--||$1.9||$1.9||$1.9|
|General Accounting Office||--||$4.9||$4.8||$4.8|
|Total Legislative Branch Emergency Fund||$125.0||$125.0||$125.0||$125.0|
|Dept of Transportation, Maritime Administration||--||--||$50.0||$25.0|
|Dept of Agriculture Research Service||--||--||$98.0||$110.0|
|Corps of Engineers, infrastructure security||--||--||$29.0||$39.0|
|Dept of Interior, Bureau of Reclamation||--||--||$25.0||$25.0|
|Dept of Energy, nuclear facility security||--||--||$11.0||$11.0|
|Dept of Energy, Natl Nuclear Security Admin||--||--||$61.0||$67.0|
|Dept of Energy, Defense Nuclear Proliferation||--||--||$150.0||$148.0|
|Dept of Energy, Defense Environment Rest.||--||--||$6.0||$6.0|
|Dept of Energy, Other Defense Activities||--||--||$18.0||$4.0|
|HHS, Public Health and Social Services||--||$94.0||--||$100.0|
|HHS, compensation for smallpox volunteers||--||$50.0||$35.0||$42.0|
|HHS, grants to States for smallpox inoculation||--||--||$105.0||$0.0|
|National Commission on Terrorist Attacks||--||--||$11.0||$11.0|
|TOTAL, Homeland Security||$4,375.0||$4,290.1||$5,144.0||$5,123.9|
a Included under Dept. of Homeland Security items below.
The Bush Administration's request for FY2003 supplemental appropriations included $2 billion for the ODP. These funds would be distributed to state and local governments "... to support federally-coordinated terrorism prevention and security enhancements at this time of heightened threat, and terrorism preparedness for first responders." (64) The Department of Homeland Security projected that $1.5 billion would go to the ODP formula grant program, $450 million to critical infrastructure security grants, and $50 million to high threat urban areas. (65) The Administration's request for $450 million for critical infrastructure security grants contained at least one significant change to the current structure of federal first responder programs. The request proposed allowing recipients to use these funds for personnel overtime expenses, an activity not currently authorized in existing terrorism preparedness programs.
In S. 762, the Senate Appropriations Committee recommended $2 billion for ODP of which $1.42 billion would have gone to the formula grant program, $450 million to critical infrastructure security, $100 million to high threat urban areas, and $30 million to technical assistance. (68) The full Senate passed an amendment, however, that added an additional $200 million and allocated more funding to high threat urban areas. (69) The Senate also added additional funding to FEMA and the Community-Oriented Policing Services program (Justice Department) for interoperable communications. S. 762, as passed by the Senate, provided a total of $2.2 billion for ODP programs, matching the House amount. The Senate-passed bill provided:
The enacted supplemental (P.L. 108-11) provides $2.23 billion for ODP, which is $230 more than the Administration request. In addition, the conference provided roughly $109.5 million for interoperable communications programs. Total supplemental funding for first responder preparedness comes to roughly $2.34 billion, which, when added to the FY2003 regular appropriation of $2.045 billion, comes to a FY2003 grant total of $4.385 billion. Specifically, the conference agreement provides the following amounts:
A number of observers have argued that the current level of federal assistance for first responders is insufficient and should be increased above current funding levels. Other observers, however, point to evidence of slow state and local utilization of federal grants as an indication that additional funding at this time is not necessary. (71) Still others have suggested that ODP's distribution formula should be adjusted to increase assistance to areas perceived to be high-risk. (72) The conference agreement addressed a number of these concerns. It instructed ODP to distribute formula grant funds to states within 60 days of enactment, and further instructed states to distribute 80% of funds to localities within 45 days of receipt. Similar requirements for distribution were applied to the other ODP assistance programs. Conferees also adopted several reporting requirements in the Senate bill (S. 762). These include reports on risk assessments of high-threat urban areas, cost of securing such areas, appropriation federal share of security costs, and proposals for new distribution formulas. (73) Conferees also required reports on overtime accountability and a listing of all federal terrorism preparedness grant programs administered by DHS. (74)
The Administration's FY2003 supplemental request included $500 million to reimburse Department of Justice organizations for the following purposes: (1) to reestablish operational capabilities that were lost or weakened as a result of a terrorist attack; and (2) to pursue counterterrorism investigations, including the payment of rewards. The request for this account includes language that would authorize the use of such funding to reimburse any federal agency for costs related to detaining a terrorist suspect as well.
For the Department of Homeland Security's Counterterrorism Fund, the Administration's FY2003 supplemental request included $1.5 billion to reimburse any homeland security organization for counterterrorism investigations and operations, including operations in support of the Department of Defense. Among other things, such operations could include (1) increasing border and maritime security; (2) enhancing elements of the strategic national stockpile; (3) providing increased port security for military outloads; and (4) deploying various biological attack detection technologies, related countermeasures, and response assets.
Congressional Action. As reported by the Senate Appropriations Committee, S. 762 provided $500 million, as requested, for the Department of Justice's Counterterrorism Fund. However, as part of an omnibus amendment proposed by Senator Stevens, the Senate voted to re-allocate these funds among several Department of Justice programs, including FBI salaries and construction, state and local law enforcement assistance, Community Oriented Policing Services, and interagency law enforcement support. The Stevens amendment also took $109.5 million of the President's request for the Counterterrorism Fund and made it available for additional FEMA disaster relief operations. The House measure appropriated $50 million for the Fund, and an additional $450 million for several other Justice Department programs, including $399 million for the FBI. For Homeland Security Counterterrorism Fund, the Senate recommended $1.135 billion after shifting $580 million for the Coast Guard to a separate account, but including $215 million for the President's Emergency Response Fund. The President had proposed resources for the emergency fund under a separate line-item.
As enacted, H.R. 1559 combines approaches taken in the House and Senate bills of allocating most of the proposed $500 million DOJ Counterterrorism Fund to specific accounts. The FBI receives $367 million, close to the House recommendation, but Senate proposals for over $160 million for state and local law enforcement and interagency law enforcement support were deleted. Similar to the Senate bill, the conference agreement provides additional funds for FEMA, although the $55 million appropriation is less than half the amount recommended in S. 762.
Beyond the additional resources for the Departments of Justice and Homeland Security to bolster their counterterrorism capabilities, the White House asked for a $250 million fund that could be drawn upon to meet any emerging terrorist related threat across the entire federal government. Among any authorized activity, this highly flexible fund could be used to assist first responders and health care workers who have suffered adverse reactions from voluntary smallpox vaccinations.
The Administration also proposed a $125 million emergency fund for the legislative branch to meet emerging terrorist-prevention needs.
Congressional Action. House and Senate bills split on the issue of a White House emergency response fund. S. 762 provided $215 million within Department of Homeland Security funds, while the House did not include any resources for this purpose. As enacted, H.R. 1559 does not provide funding for a White House emergency response fund but includes $150 million for the Department of Homeland Security's Counterterrorism Fund. These resources can be used to reimburse any Homeland Security organization for terrorism-related expenses. The conference appropriation further includes $125 million for additional legislative branch security requirements, with specific allocations spread over a number of accounts, as illustrated in Table 8.
The onset of the war in Iraq has dramatically effected the airline industry. Air travel in the short term has dropped approximately 10% according to the Air Transport Association (ATA). More worrisome for the airlines, advance bookings for the months ahead appear to be dropping approximately 30%. All of this is happening against the backdrop of the events of September 11th, which also had a huge negative impact on the industry. The airlines lost record amounts of money in 2002, following what had been the previous record loss in 2001.
Among major airlines, only Southwest was profitable in 2002, and Southwest is the only major carrier believed to have a chance at profitability in 2003. The industry's second largest airline, United, is operating in receivership and the possibility exists that other carriers could find themselves in this position in the near future. There is, therefore, considerable concern that the airline industry is likely to go through a period of major structural change.
After September 11, Congress and the Bush Administration moved swiftly to provide the airline industry with $15 billion in federal financial support (Air Transportation Safety and System Stabilization Act (Stabilization Act), P.L. 107-42). The first $5 billion provided direct aid to pay for industry losses associated with the results of the September 11th attacks. The vast majority of these funds have already been distributed to the airlines (a listing of airlines receiving funds is available from the Department of Transportation (DOT), http://ostpxweb.dot.gov/aviation/). A second source of funding, access to $10 billion in government backed loans, required approval by the newly created Air Transportation Stabilization Board (ATSB). Thirteen airlines applied for the loan program. The majority received some form of assistance, but the largest single applicant, United, was denied a loan. Of the $10 billion authorized by this program only about $1.5 billion has been committed.
In the FY2003 Emergency Supplemental, Congress again proposed providing some short term relief to the airline industry. The House-approved package totaled $3.2 billion in direct assistance while the Senate proposed $3.5 billion, as estimated by CBO. Both bills had the same intent, but there were significant differences in how aid would be provided. Both the House and the Senate measures included significant funding for security costs. In addition, S. 762 would provide a tax holiday for collections of the existing $2.50 per flight segment security fee charged to airline passengers. The Senate measure would also extend to the end of 2004 war risk insurance provisions in existing legislation that expire at the end of this year. In addition, the Senate bill provided additional unemployment insurance to displaced airline industry employees. Both bills had provisions that would limit airline industry executive compensation.
The enacted emergency supplemental includes a relief package estimated by CBO as totaling $3.1 billion for FY2003. Conferees adopted the Senate approach of direct appropriations plus authority to temporarily suspend fees, and extend unemployment and war risk insurance. As calculated by CBO, the airline industry relief package breaks out as follows for FY2003:
1. (back)See Congressional Record, April 12, 2003, p. H3400 for tables showing total costs. These totals include only direct appropriations for airline industry relief and do not include the cost of suspending airline security service fees and extending unemployment benefits to eligible airline employees. These elements do not require an appropriation but will result in the loss of revenue from fee collections and higher unemployment benefit costs. As estimated by CBO, the inclusion of these additional airline-related costs push the supplemental total up to $79.19 billion, as enacted, and $78.98 billion as passed by the Senate.
7. (back)Department of Defense, FY 2003
Supplemental Request for Military Operation in Iraq and the
Global War on Terrorism, March 25, 2003; see
8. (back)Department of Defense, FY 2003
Supplemental Request for Military Operation in Iraq and the
Global War on Terrorism, March 25, 2003; see
http://www.defenselink.mil/comptroller/defbudget/fy2004/DoD_Justification-FY03_Iraqi_Freedom_Supplemental.pdf and Senior Defense Official, Background Briefing on Budget Supplemental, March 24, 2003; see
11. (back)Department of Defense, FY 2003
Supplemental Request for Military Operation in Iraq and the
Global War on Terrorism, March 25, 2003, p.7; see
12. (back)See OMB, Transmittal to Speaker of the House, J. Dennis Hastert, FY2003 Supplemental Appropriations Request, March 25, 2003, general provisions; see estimate no. 4 on OMB web site: http://www.whitehouse.gov/omb/budget/amendments/supplemental_3_25_03.pdf
14. (back)For information about historical precedents for funding flexibility during war, see CRS General Distribution Memo, "Prior Administration Requests for Funding Flexibility in Financing Military Operations," April 3, 2003 by [author name scrubbed], available on request from author or [author name scrubbed].
15. (back)DOD, Transcript of Under Secretary of Defense (Comptroller) Briefing, April 16, 2003, p. 1. See http://www.defenselink.mil/transcripts/2003/tr20030416-0111.html.
17. (back)The $2 billion transfer limit allows DOD to transfer up to 4.3% of the $46.9 billion in the supplemental that is appropriated to regular accounts; transfer out of the Iraq Freedom Fund are not subject to this limit. The limit on reprogrammings or transfers between appropriations accounts in the FY2003 bill is less than 1% (.007%). See also DOD, Transcript of Under Secretary of Defense (Comptroller) Briefing, April 16, 2003, p. 3; http://www.defenselink.mil/transcripts/2003/tr20030416-0111.html.
19. (back)Department of Defense, FY2003
Supplemental Request for Military Operations in Iraq and the
Global War on terrorism, March 25, 2003, p. 17; see
http://www.defenselink.mil/comptroller/defbudget/fy2004/DoD_Justification-FY03_Iraqi_Freedom_Supplemental.pdf, and OMB, Transmittal to Speaker of the House, J. Dennis Hastert, FY2003 Supplemental Appropriations Request, March 25, 2003, general provisions; see estimate no. 4 on OMB web site:
22. (back)Conference Report on FY2003 Supplemental, H.Rept. 108-76, p. 11 and CRS Report RL31406, Supplemental Appropriations for FY2002: Combating Terrorism and Other Issues, p. 69 and H.Rept. 107-350, p. 426.
23. (back)DOD, Transcript of Under
Secretary of Defense (Comptroller) Briefing, April 16, 2003, p. 5; See
http://www.defenselink.mil/transcripts/2003/tr20030416-0111.html. See also Department of
Defense, FY2003 Supplemental Request for Military Operations in Iraq and the Global War on
Terrorism, March 25, 2003; see
27. (back)See Section 1305 in H.Rept. 108-76,
p. 9 and Department of Defense, FY2003 Supplemental
Request for Military Operations in Iraq and the Global War on terrorism, March 25, 2003; see
30. (back)Estimate cited by Senator Stevens in
the Congressional Record, April 2, 2003, p. S4662 and p.
S4676, and higher DOD estimate cited by DOD Comptroller in Transcript of Under Secretary of
Defense (Comptroller) Briefing, April 16, 2003, p. 5; See
31. (back)CRS, General Distribution Memo, "Prior Administration Requests for Funding Flexibility in Financing Military Operations, April 3, 2003 by [author name scrubbed]; available from author or Amy Belasco.
33. (back)CRS calculations based on DOD,
Transcript of Under Secretary of Defense (Comptroller)
Briefing, April 16, 2003, p. 5; See
On Finalizing $80 Billion 'War' Supplemental
45. (back)Department of Defense, FY 2003
Supplemental Request for Military Operation in Iraq and the
Global War on Terrorism, March 25, 2003, p. 2;
46. (back)See Conference Report on FY2002 Supplemental for Further Recovery From and response to Terrorist Attacks, H.Rept. 107-593, p. 17, and See OMB, Transmittal to Speaker of the House, J. Dennis Hastert, FY2003 Supplemental Appropriations Request, March 25, 2003, Operation and Maintenance, Defense-wide; Estimate no. 4 on OMB web site: http://www.whitehouse.gov/omb/budget/amendments/supplemental_3_25_03.pdf.
47. (back)Department of Defense, FY 2003
Supplemental Request for Military Operation in Iraq and the
Global War on Terrorism, March 25, 2003, p. 31-p.32;
48. (back)Department of Defense, FY 2003
Supplemental Request for Military Operation in Iraq and the
Global War on Terrorism, March 25, 2003, p. 23-p.24;
49. (back)Title X, U.S. Code, Section 166. See Department of Defense, FY 2003 Supplemental Request for Military Operation in Iraq and the Global War on Terrorism, March 25, 2003, p. 29 for proposed change.
50. (back)Title X, U.S. Code, Section 166a. See Department of Defense, FY 2003 Supplemental Request for Military Operation in Iraq and the Global War on Terrorism, March 25, 2003, p. 29 for proposed change.
51. (back)See OMB, Transmittal to Speaker of the House, J. Dennis Hastert, FY2003 Supplemental Appropriations Request, March 25, 2003, provisions on the DERF and general provisions; see http://www.whitehouse.gov/omb/budget/amendments/supplemental_3_25_03.pdf
53. (back)See OMB, Transmittal to Speaker of the House, J. Dennis Hastert, FY2003 Supplemental Appropriations Request, March 25, 2003, general provisions; see estimate no. 4 on OMB website, http://www.whitehouse.gov/omb/budget/amendments/supplemental_3_25_03.pdf.
55. (back)CBO revised its estimates based on
current deployments, see CBO, An Analysis of the President's
Budgetary Proposals for Fiscal Year 2004, March 2003, p. 4; see
http://www.cbo.gov. CBO's methodology uses cost factors of the services.
57. (back)See, for example, U.S. Bureaucratic Battle Over Postwar Aid to Iraq Heats Up, Agence France-Presse, April 2, 2003; and Congress: Powell Should Control Postwar Spending, USA Today, April 4, 2003, p. A.06.
59. (back) For more discussion of these issues see CRS Report RL31814(pdf), Humanitarian Issues in Post-War Iraq: An Overview for Congress; CRS Report RL31759, Reconstruction Assistance in Afghanistan: Goals, Priorities, and Issues for Congress; and CRS Report RL31833, Iraq: Recent Developments in Humanitarian and Reconstruction Assistance.
60. (back)U.S. Office of Management and
Budget, FY2003 Request for Supplemental Appropriations,
March 25, 2003, no pagination. Available on the OMB Web site at
67. (back)House Appropriations Committee, "Full Committee Unanimously Reports Wartime Supplemental," press release, April 1, 2003. See the House Appropriations Committee Web site http://www.house.gov/appropriations/news/108_1/04warsuppsum.htm, visited April 3, 2003.
69. (back)S.Amdt. 515 to S. 762, enacted April 3, 2003. The Senate also considered, but did not pass, at least one amendment to provide an additional $2.33 billion for first responder preparedness (S. 514 to S. 762).
70. (back)House Appropriations Committee, "Highlights of Wartime Supplemental Conference report," press release, April 12, 2003. Available at: http://www.house.gov/appropriations/news/108_1/04warsuppconf.htm, visited April 14, 2003.
Return to CONTENTS section of this Long Report.