War costs are a small part of budget deficits
WASHINGTON — President Barack Obama insisted last week that U.S. cannot afford a lengthy nation-building effort in Afghanistan — but limiting U. S. involvement is unlikely to make much of a dent in the record federal debt.
Liberals complain the war has been a big contributor to the nation’s budget problems, insisting some way be found to pay for the buildup.
But the wars in Iraq and Afghanistan, though funded by deficit spending, are not the main reason why the national debt has more than doubled — from $3.339 trillion to $7.709 trillion — since the Sept. 11 attacks.
“It’s a small part of the deficit,” said Todd Harrison, fellow in defense budget studies at the Center for Strategic and Budgetary Assessments, a Washington research group.
That’s not to say the war costs don’t matter.
“Over the short term, we are certainly spending a large chunk of money of the wars, money that could be devoted to other priorities or for deficit reduction,” noted Josh Gordon, policy director at the Concord Coalition, a research group devoted to fiscal discipline.
But over the long term, he stressed, “Our fiscal challenges are substantially larger, and just ending the wars would not change those projections — because they all assume peacetime budgets.”
Obama said he would deploy 30,000 to 35,000 more troops to Afghanistan. An expected $30 billion to $40 billion price tag for that should boost the total cost of both wars past $1 trillion over the last nine years, according to the Congressional Budget Office.
That spending accounts for only about one-fifth of debt accumulated in that time.
National defense spending accounted for 20.7 percent of the federal budget last year. While that’s higher than peacetime lows of around 16 percent in the late 1990s, it’s less than the 26-28 percent annual shares between 1975 and 1992.
What’s driven the bulk of this decade’s deficit boom has been spending growth in programs such as Medicare and Social Security. Human resources consumed 63.8 percent of the budget last year, compared to only 49 percent as recently as 1990.
The antidote to high deficits, say independent experts, is making tough choices on domestic spending and taxes.
“The purpose of a budget is to set priorities and make tradeoffs,” said Susan Tanaka, director of citizen education and engagement at the Peterson Foundation, a New York-based fiscal watchdog group.
Since the U.S. invaded Afghanistan CBO estimates the U.S. has spent $943.8 billion through Sept. 30, 2009, to meet war and war-related needs, and could spend another $1.6 trillion over the next decade.
Other estimates put the cost higher; a 2008 study by Nobel Prize-winning economist Joseph Stiglitz and Harvard University professor Linda Bilmes dubbed the conflicts the “$3 trillion war.”
That figure appears consistent with current spending levels, assuming the U.S. continues to spend on the war and related activities through 2019.
Also adding to the cost is interest on war-related debt; that has totaled at least $100 billion. Interest on future debt and other indirect costs are difficult to calculate, such as the cost of replacing equipment and providing benefits and health care to military veterans and families.
The war cost will help boost a federal deficit that CBO estimates will reach $1.4 trillion this year, roughly the same as last year, and add to a total national debt that now tops $12 trillion when including debt held in government accounts. But Obama’s extra $30 billion is only a drop in the $1 trillion, $400 billion deficit bucket.
CBO sees huge deficits ahead. Its latest projections show even with stricter fiscal policies and a reviving economy, federal deficits are expected to total $7.1 trillion over the next decade, still reaching $722 billion in fiscal 2019 alone.
Those projections assume a continuation of current war policies. Should troop levels decline “significantly” over a three year period, as Obama hopes, the cost would drop to about $1.1 trillion over 10 years, or roughly $140 billion a year, which would still leave large deficits.