The White House has released a new budget and the Economic Report of the President this month, both painting still rosy pictures about the economy in spite of the credit crunch and strong worries of recession that have colored the last few months.
The FY 2009 Budget proposal claimed to cover the full costs of the so-called "global war on terror" for 2008, but noted that the costs of continuing war spending in 2009 were left to be evaluated--ie, not included in the FY 2009 budget. Similarly, the AMT was dealt with in a one-year patch, with no attempt at genuine reform. The budget proposed a significant increase in military spending for various unspecified threats, use with allies, and to "transform the military." Id. at 17-18. With these massive military increases (even without any specified supplemental amounts for the wars in Iraq and Afghanistan), the budget proposal promised a future balanced budget through massive cuts to Medicare and other domestic programs while retaining the 2001-2003 tax cuts for the wealthy and ignoring the growing concerns of huge numbers of Americans who are faced with considerable economic insecurity.
The Economic Report begins with a statement lauding "the past 6 years of economic expansion" in which "the American economy has proven its strength and resilence" based on "sophisticated capital markets, flexible labor markets, low taxes, and open trade and investment policies." If you look at the table of contents here you will not see one that is labeled "the costs of war and war-related activities" or "the amount we are spending on the military."
The gap in information in these two documents about the supplemental war budgets has been filled, at least to some extent, by the Congressional Budget Office (CBO) in a report requested by Congress, Analysis of the Growth in Funding for Operations in Iraq, Afghanistan, and Elsewhere in the War on Terrorism, Feb. 14, 2008. The report finds that a cumulative total of $752 billion will have been spent on the wars by the end of FY 2008 (assuming the Congress funds the administration's request as they stand).
The report is especially interesting for what it shows about the lack of transparency in this funding and the gradual expansion of the requests by the military. This supplemental war funding before 2005 was used for mobilization of troops, transport of supplies and troops, and purchase of various consumables (spare parts, oil, etc.). But beginning in 2005, the military also requested funds as part of this process for use in "resetting" the military--i.e., for repair and replacement of equipment and even major overhauls or upgrades to equipment. In 2006, the military expanded the use of funds to include buying new equipment. In 2007, the expansion of use of funds continued; now, the military added new types of expenses to those that it wanted covered by these appropriations--not just the direct costs of the wars in Iraq and Afghanistan, but other costs as well. in other words, these funds began to cover not only the current wars but preparations for future activities in the military's "war" on terrorism. According to the CBO, these changes meant that procurement funding soared in 2007 and 2008, taking 35% of the requested funds. As a result, annual war funding levels have increased by 155% since 2004.
The review of this funding is hampered by the lack of information provided by the military. It customarily provided little information to support the supplemental war funding requests. Even when it provides information, much of it is aggregated in a category that is labeled "operating forces, additional activities." The CBO noted that it could not, therefore, identify fully the causes of the growth in appropriations.
We should be aware of this information as we consider requests for tax policies that would result in revenue reductions. We have spent $752 billion on six years of war. It will likely continue to cost enormous sums, handled through short-term emergency appropriations rather than as part of the ongoing budget process. Any demand for making the 2001-2003 tax cuts permanent has to be evaluated in light of these expenditures and the likely increasing demand for military funding to "reset" lost equipment and retool for other activities.
We need to think about priorities in a way that we have not done in the past six years, when we have cut taxes while going to war, resulting in massive increases in borrowing. What should we do in the next few years to meet our security needs while satisfying domestic requirements? Making the 2001-2003 tax cuts permanent does not seem to make sense in this context.
Recent Comments