Order Code RL33110
The Cost of Iraq, Afghanistan, and Other Global
War on Terror Operations Since 9/ 11
Updated November 9, 2007
Amy Belasco
Specialist in National Defense
Foreign Affairs, Defense, and Trade Division
The Cost of Iraq, Afghanistan, and Other Global War on
Terror Operations Since 9/ 11
Summary
With enactment of the FY2007 supplemental on May 25, 2007, Congress has
approved a total of about $ 609 billion for military operations, base security,
reconstruction, foreign aid, embassy costs, and veterans’ health care for the three
operations initiated since the 9/ 11 attacks: Operation Enduring Freedom ( OEF)
Afghanistan and other counter terror operations; Operation Noble Eagle ( ONE),
providing enhanced security at military bases; and Operation Iraqi Freedom ( OIF).
The $ 609 billion total covers all war- related appropriations from FY2001
through enactment of the FY2007 Supplemental ( H. R. 2206/ P. L. 110- 28) that have
been provided in supplementals, regular appropriations, and the FY2007 Year- Long
Continuing Resolution ( H. J. Res. 20/ P. L. 110- 5). Of that total, CRS estimates that Iraq
will receive about $ 448 billion ( 74%), OEF about $ 127 billion ( 21%), and enhanced
base security about $ 28 billion ( 5%), with about $ 5 billion that CRS cannot allocate
( 1%). About 93% of the funds is for DOD, 7% for foreign aid programs and embassy
operations, and less than 1% for medical care for veterans.
The Administration has requested an additional $ 195 billion for war- related
activities for DOD, State/ AID and Department of Veterans’ Affairs ( VA) Medical in
FY2008 in regular and emergency requests including amendments submitted on July
31, 2007 for Mine Resistant Ambush Protected ( MRAP) vehicles and the additional
funds requested October 22, 2007. Of that $ 195 billion, Iraq would receive about
$ 158 billion and Afghanistan about $ 37 billion according to CRS estimates. If
Congress provides these funds, CRS estimates that Iraq would receive $ 607 billion
and Afghanistan about $ 164 billion since the 9/ 11 attacks.
In the first FY2008 Continuing Resolution ( H. J. Res. 52/ P. L. 110- 92) and the
recently- passed FY2008 DOD Appropriations Act ( H. R. 3222), DOD received a total
of $ 16.8 billion to cover purchase of MRAP vehicles, a heavy truck with a V- shaped
hull expected to be more effective in protecting against Improvised Explosive
Devices ( IEDs) than uparmored HMMWVs. These funds bring the total war funds
enacted thus far to $ 626 billion.
In October 2007, the Congressional Budget Office projected that war costs for
the next 10 years might total an additional $ 570 billion if troop levels fell to 30,000
by 2010, or $ 1.1 trillion if troop levels fell to 75,000 by about 2013. Under these
illustrative scenarios, CBO projects hat funding for Iraq, Afghanistan and the GWOT
could reach from about $ 1.2 trillion and $ 1.7 trillion for FY2001- FY2017.
For DOD, war appropriations continue to rise steeply with the FY2008 request
about 20% higher than the previous year and 60% higher than FY2006. Based on
obligations data for most of FY2007, CRS estimates that DOD’s average monthly
obligations for contracts and pay are running about $ 11.4 billion including about $ 9.6
billion for Iraq and $ 1.8 billion for Afghanistan. This report will be updated as
warranted.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Current Action on FY2008 War Funding and Timing of Supplemental . . . . 1
Financing Army War Costs Without a Supplemental . . . . . . . . . . . . . . 2
Other Funds Available to DOD for War Costs . . . . . . . . . . . . . . . . . . . 3
New DOD Figures and CRS Estimates of War Costs . . . . . . . . . . . . . . 3
Funding for Each Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Funding for Each Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FY2007 Supplemental and FY2008 War Cost Requests
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The “ Surge” in Troops and Naval Presence . . . . . . . . . . . . . . . . . . . . . . 8
FY2008 War Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Key War Cost Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Potential War Cost Issues for the 110th Congress . . . . . . . . . . . . . . . . . . . . . 9
Trends in War Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Estimates for Iraq and Afghanistan and Other Operations . . . . . . . . . . . . . 12
CBO Projections of Future Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Past Trends and Future Costs in Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Past Trends and Future Costs in Operation Enduring Freedom . . . . . . 15
Past Trends and Future Costs in Enhanced Security . . . . . . . . . . . . . . 15
DOD Spending Thus Far . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Changes in Average Monthly Obligations . . . . . . . . . . . . . . . . . . . . . . 17
Total Obligations to Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Difficulties in Explaining DOD’s War Costs . . . . . . . . . . . . . . . . . . . . . . . 18
Changes in Troop Strength . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Reliance on Reservists Falls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Changes in Military Personnel Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Changes in Operating Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Changes in Investment Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Special Funds and the Flexibility Issue . . . . . . . . . . . . . . . . . . . . . . . . 26
Average Cost Per Deployed Troop and Estimates of Future Costs . . . . . . . 28
Estimates of Future Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Major War Cost Issues in the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Transparency Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Gaps and Discrepancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Uncertainty About Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Congressional Options to Affect Military Operations . . . . . . . . . . . . . . . . . 33
The FY2007 Supplemental and the FY2008 War Request . . . . . . . . . . . . . 34
DOD Changes Definition of War Costs . . . . . . . . . . . . . . . . . . . . . . . . 35
Procurement Requests in the FY2007 Emergency Supplemental . . . . 36
Front Loading Reset Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Modularity as an Emergency Expense . . . . . . . . . . . . . . . . . . . . . . . . . 38
Growing the Force as a War Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Questions About War- Related Procurement Issues . . . . . . . . . . . . . . . 39
Potential Readiness Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Readiness of Afghan and Iraqi Security Forces . . . . . . . . . . . . . . . . . . 42
Improving War Cost Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
List of Figures
Figure 1. Active- Duty and Reserve Shares of OIF/ OEF Average Annual Troop
Levels, FY2003- Early FY2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
List of Tables
Table 1. Estimated War- Related Funding by Operation: FY2001- FY2008 . . . . . 6
Table 2. Estimated War- Related Funding by Agency: FY2001- FY2008 . . . . . . . 7
Table 3. Budget Authority for Iraq, Afghanistan, and Other Global War on Terror
( GWOT) Operations: FY2001- FY2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 4. DOD’s Obligations by Operation: FY2001- August 2007 . . . . . . . . . . . 17
Table 5. Average Troop Strength for Iraq, Afghanistan and other Counter- Terror
Operations and Enhanced Security in the United States . . . . . . . . . . . . . . . 21
Table 6. DOD’s War Budget Authority by Title: FY2004- FY2007 Enacted
Supplemental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Table 7. Average Annual Cost Per Deployed Troop: FY2003- FY2006 . . . . . . . 28
Table 8. Afghan and Iraq Security Forces Funding: FY2004- FY2008 Request . 43
Table A1. Defense Department, Foreign Operations Funding, and
VA Medical Funding for Iraq, Afghanistan and Other Global War on Terror
ActivitiesFY2001- FY2008 DOD Appropriations . . . . . . . . . . . . . . . . . . . . 45
The Cost of Iraq, Afghanistan, and Other
Global War on Terror Operations Since 9/ 11
Introduction
Since the terrorist attacks of September 11, 2001, the United States has initiated
three military operations:
! Operation Enduring Freedom ( OEF) covering Afghanistan and other
Global War on Terror ( GWOT) operations ranging from the
Philippines to Djibouti that began immediately after the 9/ 11 attacks
and continues;
! Operation Noble Eagle ( ONE) providing enhanced security for U. S.
military bases and other homeland security that was launched in
response to the attacks and continues at a modest level; and
! Operation Iraqi Freedom ( OIF) that began in the fall of 2002 with
the buildup of troops for the March 2003 invasion of Iraq and
continues with counter- insurgency and stability operations.
In the sixth year of operations since the 9/ 11 attacks, the cost of war is a major
concern including the total amount appropriated, the amount for each operation, average
monthly spending rates, and the scope and duration of future costs. For Congress to
assess Department of Defense ( DOD) war costs in FY2008, conduct oversight of past
war costs, and consider future alternatives for Iraq that range from the President’s
temporary increase in troop levels initiated this spring to a complete withdrawal,
Congress needs considerably better information on costs than has been provided in the
past.
For updates of action on the FY2008 Supplemental, see CRS Report RL339999,
Defense: FY2008 Authorization and Appropriations, by Pat Towell, Stephen Daggett and
Amy Belasco. For final action on the FY2007 Supplemental, see CRS Report RL33900,
FY2007 Supplemental Appropriations for Defense, Foreign Affairs, and Other Purposes,
by Stephen Daggett et. al.
Current Action on FY2008 War Funding and Timing of
Supplemental
Of the $ 195 billion that the Administration has requested for FY2008, Congress
has already provided $ 16.8 billion for Mine Resistant Ambush Protected ( MRAP)
vehicles, a heavy truck with a V- shaped hull expected to be more effective against
Improvised Explosive Devices ( IEDs) than uparmored HMMWVs ( see Table 1).
These funds were provided in the first FY2008 Continuing Resolution ( H. J. Res.
52/ P. L. 110- 92) and the FY2008 DOD Appropriations Act ( H. R. 3222) that was
CRS- 2
1 Sec. 153 of the new CR in H. R. 3222 provides an emergency designation exempting funds
from budget caps for any war- related obligations that have already occurred under the first
CR ( P. L. 110- 92) but that are not covered under DOD’s FY2008 Appropriations bill. This
actions recognizes GAO’s most recent decision that provides that obligations that have been
made under continuing resolutions are valid even if a later bill does not provide funding for
that activity.
passed on November 8, 2007. Once the President signs the bill, Congress will have
provided a total of $ 626 billion for the wars in Iraq, Afghanistan and enhanced
security ( see Table A1). Congress has not acted on the rest of the FY2008 request
for war funding though according to press reports, the House may act on a bridge
fund sometime next week.
Under the CR, once an agency receives its regular appropriation, that act
supercedes the funding provided in the Continuing Resolution ( Sec. 106, H. J. Res. 52,
P. L. 110- 92). Thus, DOD no longer has access to the $ 70 billion in bridge funds for
war included in last year’s appropriations Act ( Title IX, FY2007 DOD
Appropriations, P. L. 109- 289).
At the same time, however, DOD can use funds in its regular bill to finance war
costs while awaiting passage of a bridge fund or supplemental, a practice used in
previous years called “ cash- flowing.” This is possible because Congress has
appropriated funds for DOD’s baseline or regular budget and wartime funding in the
same accounts, and unless Congress passes specific language restricting the use of
these funds, the President can spend those monies for either war or peacetime
activities.
For example, military personnel funds which provide funds for salaries and
benefits can be used to pay housing allowances for soldiers at home or imminent
danger pay for soldiers deployed in Iraq. Although report language provides more
specific allocations, the statutory language only sets an overall limit for all military
personnel costs for each service. Similarly, the Army can and has financed its war
operating and support costs in the initial months of the fiscal year by temporarily
tapping regular appropriations that are slated to be used at the end of the fiscal year.
While this practice increases flexibility for both the Administration and
Congress, allowing DOD to temporarily fund war costs while awaiting passage of a
bridge fund or supplemental, it also places less restrictions on the use of DOD funds
and reduces visibility on war costs. Because funds are appropriated in the same
accounts, baseline and war funding are co- mingled. Congress could require that the
Administration set up separate accounts, which DOD has argued would be more
cumbersome to manage.
Financing Army War Costs Without a Supplemental. With passage of
the regular FY2008 DOD Appropriations bill, DOD no longer has access to the $ 70
billion provided as a bridge fund in last year’s appropriation. 1 DOD can, however,
case flow or finance war costs using funds in its regular appropriations. As in recent
years, Congress faces pressure to provide war funding quickly so that the Army —
the service facing the largest war costs — does not have to use this practice, which
they argue disrupts their baseline program. The Army has not, however, provided
CRS- 3
2 This assumes the DOD uses most of its $ 3.7 billion in transfer authority and temporarily
slows non- readiness related spending by about $ 3.6 billion as the Army planned to do last
year. CRS’s updated calculation, based on enacted level of H. R. 3222, is the same as
included in Statement of Amy Belasco, CRS, before the House Budget Committee, Hearing
on “ The Growing Cost of the Iraq War,” October 24, 2007;
[ http:// budget. house. gov/ hearings/ 2007/ 10.24Belasco_ testimony. pdf].
3 CRS, Statement of Amy Belasco before the House Budget Committee, “ The Rising Cost
of the Iraq War,” October 24, 2007;
[ http:// budget. house. gov/ hearings/ 2007/ 10.24Belasco_ testimony. pdf].
4 CRS Report Rl33999, See Table 2 in Defense: FY2008 Authorization and Appropriations
by Pat Towell, Stephen Daggett, and Amy Belasco.
evidence of any readiness problems arising from temporarily tapping regular
appropriations to finance war costs ( see section below on FY2007 experience).
Based on DOD data, CRS, like the Army, estimates that the Army could
continue to finance its war operating costs until mid- January 2008 by using funds
slated to be used at the end of the year to cover war costs in the initial months of the
fiscal year. If DOD transferred additional funds to the Army and the Army slowed
its non- readiness related regular spending, as occurred last spring, CRS estimates that
the Army could last about an additional month, or until mid to late- February 2008.2
Other Funds Available to DOD for War Costs. In addition to being able
to tap its regular appropriations to finance war costs, DOD also has about $ 45 billion
in investment funds — for procurement, Research, Development, Test & evaluation
( RDT& E), and military construction — from previous appropriations acts that have
not yet been obligated. 3 Because this funding is available for more than three to five
years, some of the funds are obligated beyond the first year as contracts are written
and processed.
Most of these funds are procurement monies, suggesting that unobligated war-related
procurement funds still available to be spent are about half of the $ 81 billion
in procurement funds provided to DOD in FY2007 for its regular appropriations. 4
These funds are available to purchase weapon systems and equipment appropriated
by Congress for war.
New DOD Figures and CRS Estimates of War Costs. Although DOD’s
October amendment shows a total of $ 553 billion in war- related appropriations, DOD
has not provided an allocation of the budget authority ( BA) for each of the three
operations — Iraq, Afghanistan, and enhanced security. Periodically, DOD reports
obligations to date for each operation ( as of November 2006).
DOD does periodically provide cumulative obligations — reflecting after- the-fact
spending — for Iraq, Afghanistan and enhanced security. As of August 2007,
that total is $ 470.6 billion including
! $ 360.7 billion for Iraq; and
! $ 82.3 billion for Operation Enduring Freedom; and
! $ 27.6 billion for Operation Noble Eagle ( enhanced security).
CRS- 4
5 Compiled by the Defense Finance Accounting Service ( DFAS) monthly, these reports are
entitled “ Supplemental and Cost of War Execution Reports.”
6 CRS calculations based on tracking of war costs.
7 In its FY2007 and FY2008 war requests, DOD does not allocate $ 6 billion to $ 9 billion for
intelligence, fuel for its baseline program, and other programs to either OIF or OEF; CRS
allocates most of these amounts since they are requested as war funds; see Table 1a.. in
DOD, FY2007 Emergency Supplemental Request for the Global war on Terror,
February 2007;
[ http:// www. dod. mil/ comptroller/ defbudget/ fy2008/ fy2007_ supplemental/ FY2007_ Emer
gency_ Supplemental_ Request_ for_ the_ GWOT. p] df; hereinafter,
FY2007 Supplemental, and in DOD, FY2008 Global War on Terror Request, February 2007,
p. 74;
[ http:// www. dod. mil/ comptroller/ defbudget/ fy2008/ fy2007_ supplemental/ FY2008_ Glob
al_ War_ On_ Terror_ Request. pdf] hereinafter, DOD, FY2008 GWOT Request; DOD, MRAP
amendment, July 31, 2007;
[ http:// www. defenselink. mil/ comptroller/ defbudget/ fy2008/ fy2007_ amendment/ FY2008
_ Global_ War_ On_ Terror_ Request/ FY_ 2007_ MRAP_ Budget_ Amendment-
_ DoD_ portion. pdf]; hereinafter, DOD, MRAP Amendment; and DOD, FY2008 Global War
on Terror Amendment, October 2007; hereinafter, DOD, October Amendment;
[ http:// www. defenselink. mil/ comptroller/ defbudget/ fy2008/ Supplemental/ FY2008_ Octo
ber_ Global_ War_ On_ Terror_ Amendment. pdf].
8 DOD, FY2008 GWOT Request, p. 74.
These figures reflect a DOD financial reporting system that allocates budget authority
by operation as funds are obligated, that is, when contracts are signed, orders are
placed, or personnel are paid. 5
This breakdown, however, does not cover about $ 86 billion including over $ 30
billion for classified programs, over $ 45 billion from previous years that remains to
be obligated primarily to upgrade or replace war- worn equipment as well as other
funds that DOD does not consider to be war- related or appears not to have tracked. 6
In the FY2007 Supplemental and FY2008 GWOT war requests, DOD now
provides estimated breakdowns by operation for most of the budget authority
requested before funds are obligated. 7 For example, DOD estimates that the annual
cost for Iraq would reach $ 123.7 billion in FY2007 and $ 110 billion in FY2008 if its
requests are approved. 8 Presumably, DOD could also allocate all funds that have
already been appropriated based on obligations to date and estimates of unobligated
funds, just as it has estimated the breakdown of its new requests.
In this report, CRS estimates the allocation of all funds appropriated to DOD for
war costs rather than only those obligated thus far. Such estimates give Congress a
better sense of the current status of funding available for each operation, and allow
comparisons between fiscal years. CRS calculations of war appropriations available
to DOD exceed DOD’s estimate by about $ 14 billion, probably because CRS
includes all funds appropriated to DOD for the Global War on Terror, as well as
CRS- 5
9 DOD does not appear to include about $ 7 billion appropriated in the FY2003 regular act
for GWOT or transfers of funds from DOD’s regular budget to GWOT after enactment that
are approved by the congressional defense committees. At the same time, DOD justification
material for its FY2007 and FY2008 war requests shows that budget authority for war fell
$ 2 billion short in FY2001 and $ 4 billion short in FY2004 — a gap presumably met by
transferring funds from its regular appropriations. CRS added $ 2 billion to its estimates to
reflect these funds. CBO’s estimates of war costs are about $ 4 billion lower than CRS
because it includes fewer transfers; see CBO, Letter to Senator Conrad, “ Estimated Funding
for Operations in Iraq and the Global War on Terror,” February 7;
[ http:// www. cbo. gov/ ftpdocs/ 77xx/ doc7793/ 02- 07- CostOfWar. pdf].
transfers from DOD’s regular funds to finance unanticipated costs. CRS and CBO
estimates or war funding are fairly close. 9
CRS uses previous spending trends as a guide to estimate the allocation of funds
still to be spent or unreported. CRS has also compiled the funds allocated to Iraq and
Afghanistan for foreign and diplomatic operations and for VA medical costs for
OIF/ OEF veterans ( see Table 1, Table 2, and Table 3).
Funding for Each Operation. According to CRS estimates, Congress has
appropriated about $ 609 billion in budget authority ( BA) through the FY2007
Supplemental for Iraq, Afghanistan and enhanced security for DOD, the State
Department and for medical costs paid by the Department of Veterans’ Affairs.
Based on these estimates, that total includes about
! $ 449 billion for Iraq ( 75%),
! $ 127 billion for Afghanistan and other counter terrorism operations
( 20%),
! $ 28 billion for enhanced security ( 5%), and
! $ 5 billion that CRS cannot allocate ( see Table 1 and Table 2).
The Administration has requested an additional $ 195.3 billion for FY2008 for
Iraq and Afghanistan in its regular baseline requests and emergency supplemental
requests submitted in February, July and October 2007. This total excludes
emergency requests for other than Iraq and Afghanistan. Table 1 below shows the
CRS allocations of the FY2008 requests based on DOD and other data:
! $ 158 billion for Iraq;
! $ 37 billion for Afghanistan; and
! $ 400 million for enhanced security.
Congress has already appropriated $ 16.8 billion of the FY2008 request for Mine
Resistant Ambush Protected ( MRAP) vehicles, a truck with a V- shaped hull expected
to be more effective against Improvised Explosive Devices ( IEDs) than uparmored
HMMWVs as part of the first Continuing Resolution ( Sec. 123, P. L. 110- 92) and the
recently- passed FY2008 DOD Appropriations Act ( H. R. 3222).
CRS- 6
Table 1. Estimated War- Related Funding by Operation:
FY2001- FY2008
( CRS estimates in billions of dollars of budget authority)
Operation &
Total
FY01
&
FY02
FY03a FY04b FY05b FY06 FY07 Enacted:
FY01- FY07
Supp. c
FY08
Req. d
Cum.:
FY01-
FY08
Req. d
Iraq 0.0 53.0 75.9 84.6 101.9 133.2 448.6 158.3 606.9
OEF 20.8 14.7 14.5 20.9 19.1 36.8 126.8 36.6 163.4
Enhanced
Security
13.0 8.0 3.7 2.1 0.8 .4 28.0 0.4 28.4
Unallocated 0.0 5.5 0.0 0.0 0.0 0 5.5 0.0 5.5
TOTAL 33.8 81.1 94.1 107.6 121.8 170.4 608.8 195.3 804.2
Annual
Change
NA 140% 16% 14% 14% 41% NA 15% NA
Change Since
FY03
NA NA 16% 33% 50% 110% NA 141% NA
Notes and Sources: NA= Not Applicable. Numbers may not add due to rounding. Revised CRS
estimates reflect Defense Finance Accounting Service, Cost of War Execution Reports through March
2007 and DOD estimates by operation in DOD, FY2007 Emergency Supplemental Request for the
Global War on Terror, February 2007, p. 93 and other data; [ http:// www. dod. mil/
comptroller/ defbudget/ fy2008/ fy2007_ supplemental/ FY2007_ Emergency_ Supplemental_ Request
_ for_ the_ GWOT. pdf]. See Table A1 for appropriations by public law and transfers. For a further
breakdown of agency spending by operation, see Table 3.
a. Includes $ 5.5 billion of $ 7.1 billion appropriated in DOD’s FY2003 Appropriations Act ( P. L. 107-
48) for the global war on terror that CRS cannot allocate and DOD cannot track.
b. Of the $ 25 billion provided in Title IX of the FY2005 DOD appropriations bill, CRS included $ 2
billion in FY2004 when it was obligated and the remaining $ 23 billion in FY2005. Because
Congress made the funds available in FY2004, CBO and OMB score all $ 25 billion in FY2004.
c. Includes funds in the FY2007 Supplemental ( H. R. 2206/ P. L. 110- 28), Title IX, P. L. 109- 289,
FY2007 DOD Appropriations Act ( H. R. 5631) designated for war and funds for other agencies
in H. J. Res 20, P. L. 110- 50, the year- long Continuing Resolution. VA Medical estimates reflect
VA FY2008 budget materials and CRS estimates. Amounts for foreign and diplomatic
operations reflects State Department figures.
d. In the FY2008 request, CRS includes an estimate for enhanced security ($ 390 million) funded in
DOD’s baseline, along with the cost of Iraq and Afghanistan to be consistent with previous
years.
Funding for Each Agency. Of the $ 609 billion enacted thus far, about $ 567
billion, the lion’s share or over 90% goes to the Department of Defense. DOD
regulations require that the services request incremental war costs, in other words,
costs that are in addition to regular military salaries, training and support activities,
and weapons procurement, RDT& E or military construction.
For military personnel, incremental costs cover hostile fire or other combat-related
special pays and the cost of activating reservists and paying them on a full-time
basis. For operations and maintenance, war costs cover the cost of transporting
troops and equipment to the war zone, conducting war operations, and supporting
deployed troops, as well as repairing and replacing equipment worn out by war
operations.
CRS- 7
10 This includes an estimate of the funding likely to be received by the State Department and
the VA under H. J. Res 20, P. L. 110- 5, the FY2007 Continuing Resolution. Those agencies
will have discretion to allocate funds for Iraq and Afghanistan needs. Foreign operations
activities are managed by both the State Department and USAID, which handles most U. S.
development assistance programs.
11 For additional information about the FY2007 Supplemental, see CRS Report RL33900,
FY2007 Supplemental Appropriations for Defense, Foreign Affairs, and Other
Purposes, by Stephen Daggett et. al.
Department of Defense Press Release, “ President Bush’s FY2008 Defense Submission,”
February 5, 2007.
12 See OMB, Fiscal Year 2007 Mid- Session Review, p. 6; [ http:// www. whitehouse
. gov/ omb/ budget/ fy2007/ pdf/ 07msr. pdf].
Table 2. Estimated War- Related Funding by Agency:
FY2001- FY2008
( CRS estimates in billions of dollars of budget authority)
by Agency
& Total
FY01
&
FY02
FY03 FY04 FY05 FY06 FY07 Total
Enacted
Thru FY07
Supp.
FY08
Req.
Cum.: FY01-
FY08
Request
DOD 33.0 77.4 72.4 102.6 117.2 164.4 567.0 188.5 755.6
State/ AID 0.8 3.7 21.7 4.8 4.3 5.0 40.3 6.0 46.3
VA 0.0 0.0 0.0 0.2 0.4 1.0 1.6 .8 2.3
TOTAL 33.8 81.1 94.1 107.6 121.8 170.4 608.9 195.3 804.2
Sources: Public laws, congressional appropriations reports, and CRS estimates; see also
Table 1 and Table 3.
Through FY2007, the State Department and USAID together have received
about $ 40 billion for reconstruction, embassy operations and construction, and
various foreign aid programs for Iraq and Afghanistan. The Veterans Administration
has received about $ 1.6 billion for medical care for veterans of these operations. 10
FY2007 Supplemental and FY2008 War Cost Requests
In FY2007, Congress provided $ 164 billion in DOD war funds in the FY2007
Supplemental on May 25, 2007 ( H. R. 2206/ P. L. 110- 28) and a bridge fund for Iraq
and Afghanistan that Congress included in DOD’s regular FY2007 appropriations act
( P. L. 109- 289) to cover the gap between the beginning of the fiscal year and passage
of the supplemental. 11 The FY2007 funding for DOD is more than 40% above
FY2006 and 50% higher than the $ 110 billion projected by OMB last summer. 12
As in previous years, Congress was under considerable pressure from DOD to
pass the FY2007 supplemental quickly in order to ensure that the Army would have
enough funds for both its wartime and peacetime operations. The FY2006
Supplemental was enacted in mid- June 2006, which the Army said would create
CRS- 8
13 Army Budget Office, “ OMA FY07 Spending Projections,” February 5, 2007.
14 Army Briefing, April 2007. See the section titled, “ Financing Army Operations Until
Passage of the Supplemental,” in CRS Report RL33900, for more details.
15 House Armed Services Committee, transcript of hearing on “ Fiscal 2008 Budget: Defense
Department,” February 7, 2007, p. 45.
16 DOD revised its request to include support troops after CBO estimated that additional
funds would be needed; see CBO, Cost Estimate for Troop Increase Proposed by the
president, 2- 1- 07 [ http:// www. cbo. gov/ ftpdocs/ 77xx/ doc7778/ TroopIncrease. pdf]. DOD,
FY2007 Supplemental, p. 83;
[ http:// www. dod. mil/ comptroller/ defbudget/ fy2008/ fy2007_ supplemental/ FY2007_
Emergency_ Supplemental_ Request_ for_ the_ GWOT. pdf]
disruptions. Initially, the Army claimed that the supplemental needed to be enacted
by the end of this April to avoid such problems. 13
While awaiting the supplemental, the Army adopted a series of restrictions to
slow non- war- related activities that would not affect readiness to conserve funding,
projecting that $ 3.6 billion could temporarily be saved and used to fund war needs.
Based on DOD data, CRS and the Army estimated that the Army had sufficient funds
to last through June 2007. The supplemental was enacted on May 25, 2007.14
The “ Surge” in Troops and Naval Presence. The FY2007 Supplemental
included funding for the President’s proposal announced on January 10, 2007 to
increase troops in Iraq by five combat brigades or about 21,500 personnel to establish
security in Baghdad and Anbar province and to heighten naval presence in the Gulf
by deploying an additional carrier and extending one Marine Expeditionary Group
“ as a gesture of support to our friends and allies in the area who were becoming very
worried about Iran’s aggressiveness” according to Secretary of Defense Gates. 15
Before funds were enacted, DOD tapped funds for other activities to cover the
cost of deploying the additional troops. Unless Congress enacts specific restrictions,
the President can use currently available DOD funds to conduct military operations
as he sees fit because funds for DOD are appropriated for particular types of expenses
( e. g., military personnel costs ) rather than designated for particular operations. With
enactment of the supplemental, DOD restored funds for other activities that were
temporarily tapped to fund the “ surge.”
As passed, the FY2007 Supplemental included about $ 5.6 billion to cover the
surge plus an additional $ 1 billion for support troops to cover the cost of additional
support troops16 DOD’s October amendment to its FY2008 supplemental includes
an additional $ 6.5 billion to continue the surge, with a return to pre- surge levels by
May or June of 2008.
FY2008 War Request. In February 2007, DOD submitted both a baseline
FY2008 budget request of $ 481.4 billion and a separate emergency request for war
costs for $ 141.7 billion for war costs. That request satisfies a requirement in the
FY2007 National Defense Authorization Act and reflects a long- simmering
CRS- 9
17 See Section 1008, P. L. 109- 364, FY2007 National Defense Authorization Act.
18 Office of Management and Budget, FY2008 Historical Tables, Table 5.1.
congressional concern about the limited visibility for war costs because funds are
provided primarily in supplementals. 17
On July 31, 2007, the Administration requested an additional war request for
$ 5.2 billion for Mine Resistant Ambush Protected vehicles, which Congress provided
in the first Continuing Resolution ( P. L. 110- 92). On October 22, 2007, the
Administration requested an additional $ 42.5 billion for DOD, primarily for more
procurement, as well as funding to cover the cost of the surge. For the years beyond
FY2008, the Administration includes a placeholder figure of $ 50 billion in FY2009
and no funds in later years. 18
Key War Cost Questions
This report is designed to answer the frequently asked questions below as well
as to address the major war cost issues likely to be faced in the 110th Congress.
! How much has Congress appropriated for each of the three missions
since the 9/ 11 attacks — Operation Iraqi Freedom ( Iraq), Operation
Enduring Freedom ( Afghanistan and other Global War on Terror
operations), and Operation Noble Eagle ( enhanced security for
defense bases) for defense, foreign operations, and related VA
medical care?
! How and why have average monthly DOD obligations changed over
time for each mission?
! What are potential future spending levels under various scenarios
ranging from an increase in troop levels to a withdrawal of forces?
! What is appropriately considered a war- related procurement cost —
replacements of war losses, replacements for “ stressed” equipment,
upgrades, and new requirements and how urgent are DOD’s
requirements?
This report provides CRS estimates of the amount appropriated for each of the three
missions to date, average obligations per month, and other measures of costs.
Potential War Cost Issues for the 110th Congress
In addition to debate about the surge or “ plus- up,” the 110th Congress may face
several other major war cost issues such as:
! how to ensure transparency in war costs;
! how to use congressional funding mechanisms to affect policy
options for Iraq;
CRS- 10
! how to decide which DOD costs qualify as emergency war costs and
which should be considered part of DOD’s regular baseline budget,
particularly for reconstitution or reset — the repair and replacement
of war- worn equipment;
! how to judge and respond to readiness problems that stem from war
operations; and
! how long can the Army finance war costs without a supplemental.
Grappling with these issues is more difficult because DOD has provided limited
information about prior war costs making trends difficult to decipher and
explanations unlikely to be available. GAO, CBO, and CRS have all raised concerns
about these problems in reports and testimony. There are also many unresolved
discrepancies and gaps in reported DOD figures.
War- related issues — primarily the effectiveness of the ongoing surge in troops
and future troop levels — were joined during consideration of the FY2007
supplemental request. ( See CRS Report RL33900, FY2007 Supplemental
Appropriations for Defense, Foreign Affairs, and Other Purposes, by Stephen
Daggett et al.) As in previous years, there continues to be pressure to enact
supplemental war funds quickly to minimize DOD’s need to finance war costs with
its baseline appropriations.
Trends in War Funding
The total cost for all three operations — Iraq, Afghanistan, and other GWOT
and enhanced security — has risen steeply since the 9/ 11 attacks primarily because
of higher DOD spending in Iraq. Annual war appropriations more than doubled from
about $ 34 billion in FY2001/ FY2002 to about $ 80 billion with the preparation for
and invasion of Iraq in FY2003 ( see Table 1 and Table 3). Based on passage of the
FY2007 Supplemental, annual DOD funding will more than double between FY2004
and FY2007.
Table 3 estimates the breakdown of war- related funds for each operation and
each agency by fiscal year. DOD’s funding covers not only operational costs but also
replacing and upgrading military equipment, converting units to new modular
configuration, training Afghan and Iraqi security forces, providing support to allies
and enhanced security at DOD bases. Such investment funding has grown steeply in
recent years ( see Table 5). Foreign and diplomatic operations cover the cost of
reconstruction, building and operating embassies in Iraq and Afghanistan and various
foreign aid programs.
CRS- 11
Table 3. Budget Authority for Iraq, Afghanistan, and Other
Global War on Terror ( GWOT) Operations:
FY2001- FY2008
( CRS estimates in billions of budget authority)
Operation and
Funding Source
FY
01 &
FY
02a
FY
02
FY
03
FY
04
FY
05
FY
06
FY
07
Cum.
Enact
ed
thru
FY07
Supp.
FY
08
Req.
Cum:
FY01-
FY08
Req.
OPERATION IRAQI FREEDOM ( OIF) b
Department of
Defense
0 0 50.0 56.4 82.5 98.4 129.1 416.4 153.8 570.2
Foreign Aid and
Diplomatic Opsc 0 0 3.0 19.5 2.0 3.2 3.2 30.8 3.8 34.6
VA medicald 0 0 0 0 0.2 0.4 0.9 1.5 0.7 2.1
Total: Iraq 0.0 0.0 53.0 75.9 84.7 101.9 133.2 448.6 158.3 606.9
OPERATION ENDURING FREEDOM ( OEF)/ Afghanistan and
GWOT
Department of
Defense 9.0 11.0 14.0 12.4 18.1 18.0 34.8 117.2 34.3 151.5
Foreign Aid and
Diplomatic Opsc
0.3 0.5 0.7 2.2 2.8 1.1 1.9 9.5 2.2 11.7
VA Medicald 0 0 0 0 0 0.0 0.1 0.1 1.0 0.2
Total: OEF 9.3 11.5 14.7 14.5 20.9 19.1 36.8 126.8 36.6 163.4
Enhanced Security ( Operation Noble Eagle)
Department of
Defense
7.0 6.0 8.0 3.7 2.1 0.8 0.4 28.0 0.4 28.4
Total: Enhanced
Securitye 7.0 6.0 8.0 3.7 2.1 0.8 0.4 28.0 0.4 28.4
DOD Unallocated 0.0 0.0 5.5 0.0 0.0 0.0 0.0 5.5 0.0 5.5
ALL MISSIONS
Department of
Defense
16.0 17.0 77.4 72.4 102.6 117.2 164.4 567.0 188.5 755.6
Foreign Aid and
Diplomatic
Operationsd
0.3 0.5 3.7 21.7 4.8 4.3 5.0 40.3 6.0 46.3
VA Medicald 0 0 0 0 0.2 0.4 1.0 1.6 0.8 2.3
Total: All Missions 16.3 17.5 81.1 94.1 107.6 121.8 170.4 608.9 195.3 804.2
Notes and Sources: Numbers may not add due to rounding. Because DOD has not provided a
breakdown by operation for all appropriations received, CRS estimates unobligated budget authority
using past trends as shown in DOD’s Defense Finance Accounting Service ( DFAS) reports,
Supplemental & Cost of War Execution Reports and other budget justification materials including
DOD, FY2007 Supp, February 2007, Table 1a.; [ http:// www. dod. mil/
comptroller/ defbudget/ fy2008/ fy2007_ supplemental/ FY2007_ Emergency_ Supplemental_ Request
_ for_ the_ GWOT. pdf]; DOD, FY2008 Supplemental Requests, February , July, and October 2007.
CRS budget authority ( BA) totals are higher than DOD figures because CRS includes all funding
provided in supplementals, bridge funds or baseline appropriations for Iraq and the Global war on
Terror as well as transfers from DOD’s baseline funds for GWOT requirements, and enhanced
security. CRS also splits the $ 25 billion provided in the FY2005 Title IX bridge between the $ 1.8
billion obligated in FY2004 and the remainder available for FY2005; all those funds are scored as
FY2004 because they were available upon enactment in August 2005. Figures include funds provided
in P. L. 107- 38, the first emergency supplemental after 9/ 11, and funds allocated in P. L. 107- 117.
CRS- 12
19 These funds were characterized as “ additional appropriations,” and put in a separate title
of DOD’s regular appropriation bill in FY2005, FY2006, and FY2007. For discussion of
using regular vs. supplemental appropriations for war funding, see CRS Report RS22455,
Military Operations: Precedents For Funding Contingency Operations in Regular or in
Supplemental Appropriations Bills, by Stephen Daggett.
20 The FY2005 and FY2006 budget resolutions exempted up to $ 50 billion in overseas
contingency operations funds from budget controls ( see Section 403, H. Con. Res. 95
( FY2005) and Sec. 402, S. Con. Res. 95 ( FY2006)). Congress did not pass a budget
resolution in FY2007.
21 The exception is FY2004 when Congress appropriated $ 20 billion for reconstruction in
the supplemental.
Foreign operations figures were prepared with the help of CRS analysts Larry Nowels, Connie
Veillette, and Curt Tarnoff.
a. CRS combined funds for FY2001 and FY2002 because most were obligated in FY2002 after the
9/ 11 attacks at the end of FY2001.
b. DOD’s new estimate for Iraq shows BA from FY2003 as $ 48 billion, $ 2 billion higher than
reported by DFAS without identifying a source for these funds.
c. Foreign operations figures include monies for reconstruction, development and humanitarian aid,
embassy operations, counter narcotics, initial training of the Afghan and Iraqi army, foreign
military sales credits, and Economic Support Funds. For FY2007, CRS estimates reflect request;
the State Department can set country levels under the FY2007 Continuing Resolution, HJ Res
20/ P. L. 110- 5.
d. Medical estimates reflect figures in VA’s FY2008 budget justifications.
e. Known as Operation Noble Eagle, these funds provide higher security at DOD bases, support
combat air patrol, and rebuilt the Pentagon.
Over 90% of DOD’s funds were provided as emergency funds in supplemental
or additional appropriations; the remainder were provided in regular defense bills or
in transfers from regular appropriations. 19 Emergency funding is exempt from
ceilings applying to discretionary spending in Congress’s annual budget resolutions. 20
Some Members have argued that continuing to fund ongoing operations in
supplementals reduces congressional oversight. Generally, much of foreign and
diplomatic funding has been funded in regular rather than emergency
appropriations. 21
Estimates for Iraq and Afghanistan and Other Operations
How much has Congress provided for each of the three operations launched
since the 9/ 11 attacks — Iraq, Afghanistan and other GWOT, and enhanced security?
Using a variety of sources and methods, CRS estimated the distribution of war-related
funds appropriated for defense, foreign operations, and VA medical costs
from the 9/ 11 attacks through the FY2006 supplemental request ( see Table 3). With
passage of the FY2007 bridge fund ( H. R. 5631/ P. L. 109- 289), CRS estimates that
war- related appropriations enacted to date total about $ 609 billion through FY2007.
These funds are allocated as follows
! $ 449 billion for Iraq ( or 74%);
! $ 127 billion for Afghanistan ( or 20%);
! $ 28 billion for enhanced security ( 5%); and
! $ 5 billion unallocated ( 1%) ( see Table 3).
CRS- 13
22 Table 1 CBO, Statement of Peter Orszag, Director, before House Budget Committee,
“ Estimated Cost of U. S. Operations in Iraq and Afghanistan and Other Activities Related
to the War on Terrorism,” October 24, 2007;
[ http:// www. cbo. gov/ ftpdocs/ 86xx/ doc8690/ 10- 24- CostOfWar_ Testimony. pdf].
23 Ibid, p. 1.
24 CRS adjusted the CBO estimates by subtracting $ 70 billion for the additional funding
( continued...)
In addition, Congress provided $ 16.8 billion for MRAP vehicles in the FY2008
Continuing Resolution and the FY2008 DOD Appropriations bill ( H. R. 3222).
Since the FY2003 invasion, DOD’s war costs have been dominated by Iraq.
Costs for OEF have risen in recent years as troop levels and the intensity of conflict
have grown. The cost of enhanced security in the United States has fallen off from
the earlier years which included initial responses to the 9/ 11 attacks. Foreign
operations costs peaked in FY2004 with the $ 20 billion appropriated for Iraq and
Afghan reconstruction and then run about $ 3 billion to $ 4 billion a year.
Although some of the factors behind the rapid increase in DOD funding are
known — the growing intensity of operations, additional force protection gear and
equipment, substantial upgrades of equipment, converting units to modular
configurations, and new funding to train and equip Iraqi security forces — these
elements are not enough to explain the size of the increases. Until this year, DOD has
provided little explanation in its requests.
The FY2007 DOD Emergency Request and the FY2008 Global War on Terror
( GWOT) request provide more justification material than previously. In FY2009, the
Administration includes a $ 50 billion placeholder figure for war costs and no funds
in later years.
CBO Projections of Future Costs. Based on two illustrative scenarios
assuming a more and less gradual drawdown in deployed troop levels, CBO
estimated the cost of all three operations for the next ten years from 2008 - 2017.
CBO projects that over the next ten years war costs for DOD, State, and VA could
total
! $ 570 billion if troop levels fell to 30,000 by 2010; or
! $ 1,055 billion if troop levels fell to 75,000 by 2013.22
This CBO estimate does not split funding for Iraq and Afghanistan. If these CBO
estimates are added to funding already appropriated, CBO projects that the cost of
both Iraq, Afghanistan, and enhanced security could reach from $ 1.2 trillion to $ 1.7
trillion by 2017 if troops fell to 30,000 or 75,000 respectively. 23
CBO stated that future costs were difficult to estimate because DOD has
provided little detailed information on costs incurred to date, and does not report
outlays, or actual expenditures for war because war and baseline funds are mixed in
the same accounts. Nor is information available on many of the key factors that
determine costs such as personnel levels or the pace of operations. 24
CRS- 14
24 (... continued)
assumed by CBO for FY2007; see Letter to Chair, Senate Budget Committee, Kent Conrad,
“ Summarizing and projecting funding for Iraq and GWOT under two scenarios,” February
7, 2007, Table 1 and p. 2 - p. 3; [ http:// www. cbo. gov/ ftpdocs/ 77xx/ doc7793/ 02- 07-
CostOfWar. pdf]. See also, CBO, Statement of Robert A. Sunshine, Assistant Director,
before the House Budget Committee, “ Issues in Budgeting for Operations in Iraq and the
War on Terrorism,” January 18, 2007.
25 Sec. 9012 required that the president submit an estimate for FY2006- FY2011 unless he
submitted a written certification that national security reasons made that impossible; the
Administration did not submit a waiver but then- OMB Director, Joshua B. Bolten sent a
letter on May 13, 2005 to Speaker of the House J. Dennis Hastert saying that an estimate
was not possible because there were too many uncertainties.
26 CRS estimates the allocation of about $ 9 billion in funding requested in the FY2007
Supplemental for classified programs and for baseline fuel that DOD does not include for
either OIF or OEF.
27 CBO, Letter to Congressman John M. Spratt, Jr, “ Estimated funding for two specified
scenarios for Iraq over the period 2007- 2016,” July 13, 2006, Table 1;
[ http:// www. cbo. gov/ ftpdocs/ 73xx/ doc7393/ 07- 13- IraqCost_ Letter. pdf]. CRS adjusted
CBO’s estimate by subtracting the amount assumed for FY2007.
Both CBO scenarios assume a gradual drawdown in forces over the next ten
years. The Administration has not provided any long- term estimates of costs despite
a statutory reporting requirement that the President submit a cost estimate for
FY2006- FY2011 that was enacted in 2004.25
Past Trends and Future Costs in Iraq. How has funding for Iraq changed
over time and what is the outlook for the future? CRS estimates that Iraq will receive
funding totaling about $ 450 billion as of funds appropriated through the FY2007
Supplemental ( H. R. 2206/ P. L. 110- 28). War costs in Iraq have risen sharply from
initial funding to deploy troops starting in the fall of 2002 ( presumably drawn from
DOD’s regular appropriations since supplemental funds were not available) to $ 50
billion in the invasions year of 2003 to about $ 135 billion for FY2007.
Projections of Future Iraq Costs. The total for Iraq in FY2007 is about
one- third higher than the previous year and almost three times the first year ( see
Table 1 and Table 2). 26 The amended FY2008 DOD war request includes $ 158
billion for Iraq, about $ 25 billion more than in FY2007 reflecting primarily higher
procurement funding.
A Gradual Withdrawal Option. In response to a request last summer, CBO
estimated the cost of two alternative scenarios for Iraq for FY2007- FY2016 if all
troop levels were to be removed by the end of 2009 or if the number of deployed
troops fell to 40,000 by 2010. Adjusting CBO’s estimates for passage of the FY2007
Supplemental, a withdrawal by FY2009 could cost an additional $ 147 billion while
a reduction to 40,000 troops by 2010 could cost an additional $ 318 billion. 27 CBO
has not estimated the cost of a more immediate withdrawal.
Maintaining a Long- Term Presence. CBO has also estimated that the
annual cost of maintaining about 55,000 troops in Iraq over the long- term — referred
CRS- 15
28 CBO, Letter to Congressman Spratt on Long- Term Presence in Iraq, 9- 20- 07
[ http:// www. cbo. gov/ ftpdocs/ 86xx/ doc8641/ 09- 20- ConradLTpresenceinIraq. pdf].
29 DOD’s new estimate for ONE is $ 8 billion rather than the $ 6.5 billion shown in an earlier
DOD briefing. For more information, see CRS Report RL31187, Combating Terrorism:
2001 Congressional Debate on Emergency Supplemental Allocations, and CRS Report
RL31829, Supplemental Appropriations FY2003: Iraq Conflict, Afghanistan, Global War
on Terrorism, and Homeland Security, both by Amy Belasco and Larry Nowels.
to as the Korea option — in Iraq would be about $ 10 billion in a non- combat scenario
and $ 25 billion with combat operations. 28 CBO’s projections of costs assumes only
minimal procurement costs for replacing or upgrading war- worn equipment unlike
DOD’s recent and current war requests.
Past Trends and Future Costs in Operation Enduring Freedom. How
has funding for Afghanistan and other Global War on Terror Operations changed
over time and what does the future hold? As of enactment of the FY2007
Supplemental, Afghanistan has received about $ 127 billion in appropriations for
DOD, foreign and diplomatic operations, and VA medical. In recent years, funding
for Afghanistan was about $ 20 billion annually but is slated to jump by 75% to about
$ 37 billion in FY2007. Funding requested for FY2008 matches the FY2007 level
( see Table 1.)
Increases in previous years reflect higher troop levels, the cost to train Afghan
forces, and part of the cost of upgrading and replacing equipment and converting
Army and Marine Corps units to a new modular configuration. Some of the $ 17
billion increase in the FY2007 supplemental reflects a $ 5.5 billion increase in funds
to equip and train Afghan security forces ($ 1.9 billion in FY2006 to $ 7.4 billion in
FY2007), and $ 510 million for the 7,200 additional troops. The reasons for the rest
of the increase are not clear.
Past Trends and Future Costs in Enhanced Security. How has the cost
of Operation Noble Eagle or enhanced security for DOD bases changed since 9/ 11?
Funding for enhanced base security and other responses to the initial attacks fell from
the $ 12 billion available in the first year after the attacks to $ 8 billion in 2003. These
decreases reflect the end of one- time costs like Pentagon reconstruction ($ 1.3
billion), the completion of security upgrades, the scaling back of combat air patrol
( about $ 1.3 billion for around- the- clock coverage), and a cut in the number of
reservists guarding bases. 29 In FY2004, the cost of enhanced security more than
halved again, dropping to $ 3.7 billion.
Beginning in FY2005, DOD funded this operation in its baseline budget rather
than in supplementals and costs fell to under $ 1 billion in FY2006 and $ 400 million
in FY2007, a level CRS projects for FY2008 as well ( See Table 3). The services are
now requesting funds for base security in the United States as a war cost in the
FY2007 and FY2008 Supplemental, which could overlap with the enhanced security
mission.
CRS- 16
30 Communication with DOD Comptroller staff, October 2007 and Table 1a in DOD,
FY2008 Global War on Terror Amendment, October 2007, for total for non- DOD
intelligence and non- GWOT;
[ http:// www. defenselink. mil/ comptroller/ defbudget/ fy2008/ Supplemental/ FY2008_ Octo
ber_ Global_ War_ On_ Terror_ Amendment. pdf].
31 Averages correct for monthly fluctuations which may reflect when individual contracts
are signed. Operational costs include working capital funds, defense health, and counterdrug
monies and investment costs include procurement, RDT& E and military construction.
DOD Spending Thus Far
Average monthly obligations are frequently used as a way to measure the rate
of ongoing war spending. As of August 2007, DOD estimated that the cumulative
total of war- related obligations is $ 470.6 billion. DOD figures show average monthly
obligations of about $ 11.0 billion including $ 9.2 billion for Iraq, $ 1.5 billion for
Afghanistan, and $ 30 million for enhanced security. ( see Table 4 below).
Although these figures capture DOD’s contractual obligations for pay, goods,
and services, they do not give a complete picture because they do not capture all
appropriated funds or all funds obligated. DOD acknowledges that these figures do
not capture over $ 30 billion in classified activities. According to DOD, other funds
which DOD does not consider to be war- related — such as for Congressional adds
for equipment for the National Guard and Reserve, force protection, and more C- 17
aircraft — also will not be captured in Defense Finance Accounting Service ( DFAS)
reports because the services will treat these as part of DOD’s regular programs. 30
Table 4 below shows CRS estimates of obligations rates after adjusting DOD
accounting reports to add classified and other unreported war- related activities
through August 2007.31 These estimates show FY2007 obligations running $ 11.4
billion per month on average including:
! $ 9.6 billion for Iraq;
! $ 1.8 billion for Afghanistan; and
! $ 30 million for enhanced security.
Average obligations are a good indicator of ongoing operational costs because these
funds must be obligated — put in contract — within the first year. For investment
costs, however, average monthly obligations lag appropriated budget authority since
only some funds are obligated in the first year because of the time for the planning
and negotiation of contracts.
CRS- 17
Table 4. DOD’s Obligations by Operation: FY2001- August 2007
( in billions of dollars)
Average monthly obligation as of
August 2007
DOD
Reported
Cum. Obs
from FY01-
Aug. 07
Mission and type of
spending FY03 FY04 FY05 FY06
FY07
DFAS
Rpted
FY07
adj.
Operation Iraqi Freedom
Operationsb 4.2 4.3 4.7 5.9 6.3 6.6 NA
Investmentc 0.2 0.6 1.8 1.3 2.9 3.0 NA
Total 4.4 4.8 6.5 7.2 9.2 9.6 360.7
Afghanistan and the Global War on Terrord
Operationsb 1.1 0.9 0.9 1.2 1.4 1.7 NA
Investmentc 0.2 0.1 0.2 0.2 0.0 0.1 NA
Total 1.3 1.0 1.1 1.4 1.5 1.8 82.3
Enhanced security and othere
Operationsb 0.5 0.3 0.2 0.1 0.0 0.0 NA
Investmentc 0.0 0.0 0.0 0.0 0.0 0.0 NA
Total 0.5 0.3 0.2 0.1 0.0 0.0 27.6
All missions
Operationsb 5.8 5.5 5.8 7.2 7.8 8.3 NA
Investmentc 0.4 0.7 2.0 1.5 2.9 3.1 NA
Total 6.2 6.2 7.7 8.7 10.7 11.4 470.6
Notes: NA = Not available. Numbers may not add due to rounding. Estimates reflect Defense Finance
Accounting Service ( DFAS) reported obligations through August 2007 almost the end of the fiscal
year.
a. Figures for FY2003- FY2006 reflect CRS calculations based on DFAS reports with estimated
adjustments for funds excluded by DFAS such as intelligence and Congressional additions.
b. Includes funds appropriated for military personnel, operation and maintenance, working capital, and
defense health.
c. Includes funds appropriated for procurement, RDT& E, and military construction.
d. Operation Enduring Freedom funds Afghanistan and other global war on terror ( GWOT) activities.
e. ‘ Enhanced security and other’ includes additional security at defense bases, combat air patrol
around U. S. cities, and reconstruction of the Pentagon after the 9/ 11 attacks.
Obligations figures do not reflect outlays — or payments made when goods and
services are delivered — which would be a better measure of spending rates and
actual costs. DOD does not track outlays for its war costs because war- related
appropriations are co- mingled with regular or baseline funds in the same accounts
making it difficult to segregate the two. If DOD had separate accounts for war and
peace costs, outlays could be tracked, which would capture the amount spent and
give a better sense of actual spending rates.
Changes in Average Monthly Obligations. Based largely on DOD
accounting reports, average monthly obligations grew from $ 6.2 billion in FY2004
to $ 11.4 billion in FY2007, an increase of 85% with a doubling of spending in Iraq.
Monthly obligations for OEF hovered around $ 1 billion a month but have recently
grown to $ 1.8 billion in FY2007.
CRS- 18
32 CBO, Replacing and Repairing Equipment Used In Iraq and Afghanistan: The Army’s
Reset Program by Frances M. Lussier, September 2007, p. ix, pp. 35- 37;
[ http:// www. cbo. gov/ showdoc. cfm? index= 8629& sequcence= 0& from= 7].
33 CRS estimates would be somewhat higher.
More Procurement Increases Iraq Spending. In the case of Iraq, much
of the increase reflects a five- fold increase in investment obligations — primarily
procurement — as the services have begun to spend substantial amounts on reset —
the procurement of new weapons systems and equipment not simply to replace not
only war losses ( a small share of the total) but more often to upgrade and replace
“ stressed” equipment and enhance force protection.
Some observers have questioned whether all of DOD’s war- related procurement
reflects the stresses of war. For example, a recent CBO study found that more than
40% of the Army’s spending for reset — the repair and replacement of war- worn
equipment — was not for replacing lost equipment or repairing equipment sent
home. Instead, Army funds were spent to upgrade systems to increase capability, to
buy equipment to eliminate longstanding shortfalls in inventory, to convert new units
to a modular configuration, and to replace equipment stored overseas for
contingencies. 32
Operating Costs Rise in Afghanistan. In the case of Afghanistan,
spending rates are growing for operations for reasons that are not clear though troop
levels have increased somewhat.
As of August 2007, obligations are running about $ 11 billion a month with Iraq
at $ 8.6 billion and Afghanistan at $ 1.4 billion. 33 As of March 31, 2007 — halfway
through the fiscal year — these rates have increased to about $ 10 billion for Iraq and
$ 1.9 billion for Afghanistan.
The monthly average for enhanced security ( Operation Noble Eagle) has fallen
substantially from $ 520 million per month in FY2003 to less than $ 100 million in
FY2006 as one- time costs ended, and costs have been incorporated in day- to- day
base operations.
Total Obligations to Date. DOD reports that of the $ 470.6 billion in DFAS-reported
obligations since FY2003:
! $ 360.7 billion or 77% is for Iraq;
! $ 82.3 billion or 17% is for Afghanistan and other GWOT; and
! $ 27.6 billion or 6% is for enhanced security ( see Table 4).
This does not include obligations for intelligence or other expenses that are included
in CRS estimates but not captured by DOD’s DFAS reports.
Difficulties in Explaining DOD’s War Costs
What makes war costs change? Changes in war costs would be expected to vary
with troops levels, war- related benefits, the intensity of operations, and levels of
CRS- 19
34 See CRS, Statement of Amy Belasco before the House Budget Committee, Hearing on
“ The Rising Cost of the Iraq War,” October 24, 2007;
[ http:// budget. house. gov/ hearings/ 2007/ 10.24Belasco_ testimony. pdf] Stat.
35 DOD, Information Paper, “ Congressional Research Service Request for Boots on the
Ground ( BOG) Statistics for Iraq and Afghanistan, January 1, 2007,” 1- 2- 07.
basing and support. The extent of competition in contracts and the price of oil would
also be expected to affect the prices of goods and services purchased by DOD.
A list of the primary war cost drivers would be expected to include:
! the number of troops deployed or anticipated to deploy;
! changes in the pace of operations or optempo;
! changes in the amount of equipment and number of personnel to be
transported to the theater of operations;
! whether support is designed to be temporary or longer- term;
! force protection needs;
! how quickly equipment breaks down and how quickly it is to be
replaced or upgraded; and
! military basing plans that underlie construction requests.
Troop levels would be expected to be the basic underlying factor that determines the
cost of military activities and support ranging from the number of miles driven by
trucks ( which, in turn, affects how quickly trucks break down), purchases of body
armor ( varying with the threat), or meals served and housing provided. Troop levels,
however, have risen far less than costs.
Little of the $ 93 billion DOD increase between FY2004 and FY2007 appears
to reflect changes in the number of deployed personnel, which has grown by only
15% ( see Table 4). Rather the increase is attributable to several factors:
! certain unanticipated requirements for force protection gear and
equipment;
! the cost of training and equipping Afghan and Iraqi security forcesx;
and
! even more, a broadened definition of th types of programs that DOD
considers part of war reconstitution or reset — funds to repair and
replace war- worn equipment. 34
Changes in Troop Strength. In testimony and supplemental requests, DOD
typically cites the number of “ boots on the ground” at a particular time to illustrate
military personnel levels. For example, DOD figures show that there were about
139,000 troops in Iraq and 19,000 in Afghanistan or about 158,000 as of October 1,
2006.35 Similar figures are cited by DOD witnesses in hearings.
This figure, however, does not include all troops in the region deployed for OIF
or OEF operations or capture the annual average as troops rotate in and out of the
theater during the year. Nor does it capture activated reservists in the United States
who are training, backfilling for deployed troops, or supporting DOD’s enhanced
CRS- 20
36 DOD, FY2007 Emergency Supp, p. 16. [ http:// dod. mil/ comptroller/ defbudget/
fy2008/ fy2007_ supplemental/ FY2007_ Emergency_ Supplemental_ Request_ for_ the_ GWOT. pdf].
security ( ONE) mission. For these reasons, “ boots on the ground” figures understate
the number of military personnel dedicated to these operations.
For example, in FY2006, average troop strength was some 319,000 for
operations in Iraq, Afghanistan and other counter- terror operations or almost twice
as high as “ boots on the ground” figures. In its new supplemental request, DOD cites
about 320,000 for its troop strength in FY2007, acknowledging the higher troop
levels for the first time. 36
In FY2004, the first year of occupation, DOD figures show average troop
strength for all three missions of 304,000. In its FY2007 Supplemental request, DOD
projected a total of about 319,000 troops, a 5% increase since FY2004. Costs would
more than double from $ 72 billion in FY2004 to $ 164 billion for FY2007 ( see Table
3).
Some would argue that the average number of deployed troops dedicated to Iraq
and GWOT operations would be provide a better metric to explain war costs because
those are the troops carrying out ongoing operations. Under this reasoning, reservists
in the United States — whether training up or backfilling — are considered the
support tail for deployed troops.
Between FY2004 and FY2006, average deployed troop strength increased from
about 220,000 to 250,000 or by about 13% whereas funding levels increased by 60%
( see Table 5). If the planned “ plus- up” of about 35,000 troops increases average
troop strength by roughly 10,000 ( taking into accounts dips earlier in the year and the
fact that additional troops would be in place for only part of the year), that would
bring troop strength for FY2007 to about 260,000 or about 17% above FY2004. At
the same time, DOD’s enacted funding for FY2007 is more than double the amount
in FY2004. Changes in troop strength do not explain such increases. Defense
Manpower Data Center does not show average troop strength data by operation.
CRS- 21
Table 5. Average Troop Strength for Iraq, Afghanistan and other
Counter- Terror Operations and Enhanced Security
in the United States
( in thousands)
by Service FY01 FY02 FY03 FY04 FY05 FY06 Oct/ Nov.
2006
Average Deployed 51 78 226 220 259 269 257
Army 8 17 110 144 167 176 162
Navy 29 30 42 25 29 32 37
Marine Corps 0 4 32 25 36 34 30
Air Force 15 27 41 26 27 27 27
Activated Reserves
State- sidea
NAb 47 87 84 64 49 46
All OIF/ OEF/ ONE
Military Personnel
51 125 313 304 323 319 302
Note: Average strength computed by the Defense Manpower Data Center by totaling the number of
days deployed for each service member in a year and then dividing that figure by the 365 days
in the year.
a. Activated reservists in the United States are training up for deployments, backfilling the positions
of deployed active- duty personnel, or providing enhanced security at U. S. installations.
b. Not available.
CRS- 22
Table 6. DOD’s War Budget Authority by Title:
FY2004- FY2007 Enacted Supplemental
( in billions of dollars)
Title FY04 FY05 FY06 FY07
Military Personnel 17.8 19.7 16.7 18.8
Operation & Maintenance 42.0 47.9 60.0 75.0
Defense Health 0.7 1.0 1.2 3.0
Other Defense Programsa 0.1 0.2 0.2 0.4
Procurement 7.2 18.0 22.9 45.4
Research, Dev., Tstg. & Eval. 0.4 0.6 0.8 1.5
Working Capital Fundsb 1.6 3.0 3.0 1.1
Military Construction 0.5 1.2 0.2 1.7
Subtotal: Regular Titles 70.3 91.7 105.1 146.9
Special Funds and Caps
Iraqi Freedom Fund ( IFF) 2.0 3.8 3.3 0.4
Afghan Sec. Forces Training Fd. c 0.0 1.3 1.9 7.4
Iraq Security Forces Training Fdc [ 5.0] 5.7 3.0 5.5
Joint Improvised Explosive Device ( IED) Defeat
Fdd 0.0 0.0 3.3 4.4
Strategic Reserve Readiness Fd. d 0.0 0.0 0.0 1.6
Coalition Support Cape [ 1.2] [ 1.2] [. 9] [ 1.1]
Lift and sustain Capf [ 0] [ 0] [. 4] [. 3]
Global lift and sustain Cape [ 0] [ 0] [ 0] [ 0]
Global train and equip Cape [ 0] [ 0] [. 1] [ 0]
Cmdrs’ Emerg. Response Cape [. 2] [. 8] [. 9] [ 1.0]
Special Transfer Authority Capf [ 3.0] [ 3.0] [ 4.5] [ 3.5]
Subtotal: Special Funds 2.0 10.7 11.5 19.3
Dept. of Defense Total 72.3 102.4 116.7 166.2
Coast Guard Transfer 0.0 [. 2] [. 1] [. 2]
Intell. Comm. Mgt Fund 0.0 0.3 0.2 0.1
Def. Nuclear Nonproliferation 0.0 0.0 0.0 0.1
Salaries & Expenses, FBI 0.0 0.0 0.0 0.1
Subtotal: Defense- Relatedg 0.0 0.3 0.2 0.3
National Defense Total 72.3 102.6 116.8 166.5
Sources: CRS calculations based on H. Rept. 110- 60, S. Rept. 110- 37, H. Rept. 110- 107, H. R. 1591
and H. R. 2206 as passed by both houses, and “ additional explanatory materials in the Congressional
Record, May 24, 2007, p. H. 8506ff. submitted by Congressman Obey, Chair of the House
Appropriations Committee.
Note: This table separates funds with special purposes such as the Afghan Security Forces Fund from
the regular titles to better identify trends. For FY2007, request reflects amended FY2007 supplemental
submission of March 9, 2007; see OMB, Appendix: FY2008 Budget, “ Other Materials: FY2007
Supplemental and FY2008,” February 5, 2007 for original request, p. 1143ff; [ http:// www. whitehouse
. gov/ omb/ budget/ fy2008/ pdf/ appendix/ sup. pdf]. For amended request, see OMB, “ Estimate No. 3,”
[ http:// www. whitehouse. gov/ omb/ budget/ amendments/ amendment_ 3_ 9_ 07. pdf]. Includes transfers
from baseline accounts to war to meet unanticipated needs through FY2005.
a. “ Other Defense Programs” includes counter drug and Office of Inspector General funds.
b. Working capital funds finance additional inventory for support items such as spare parts.
CRS- 23
37 Average annual strength for activated reservists from Defense Manpower Data Center,
“ Average Member Days Deployed by Service Component and Month/ Year, 9/ 01 to 11/ 06.”
38 GAO, FY2004 Costs for Global War on Terrorism Will Exceed Supplemental, July 2004
[ http:// www. gao. gov/ new. items/ d04915. pdf].
c. Training Iraqi security forces was initially funded in the State Department [ shown in brackets ] but
is now funded in DOD. The Afghan Army also received some State Department funds.
d. The Joint IED Defeat Fund finances responses to IED attacks through transfers to procurement,
RDT& E, and operation and maintenance programs. Initially, Congress appropriated $ 1.4 billion
for IED Defeat to the Iraq Freedom Fund and then appropriated $ 1.9 billion to a separate new
account, the Joint IED Defeat Fund. The $ 3.3 billion total for FY2006 includes both amounts.
e. Congress sets caps on different types of coalition support — reimbursements to allies conducting
operations or logistical support for OIF and OEF, and lift, support, training and equipping of
allies conducting other counter- terror operations. Congress also sets a cap on CERP, a program
which permits military commanders to fund small- scale reconstruction projects in Iraq and
Afghanistan.
f. Congress sets the amount of transfer authority in each bill. The table includes amounts provided for
both bridge and supplemental funds. Includes $ 10.4 billion for Iraq Freedom Fund in FY2003
( deducting specified floors) plus $ 2 billion in transfer authority.
g. Defense- related programs are included in the national defense budget function.
Military personnel funding has hovered between $ 16 billion and $ 20 billion a
year ( see Table 6). About half of the $ 16 billion for war- related military personnel
is for the cost of full- time pay and benefits to the 150,000 reservists to110,000
reservists who have been activated each year since FY2004, with the number falling
in recent years. 37
Funds for war- related military personnel also include special war- related pay
and benefits ( e. g., hostile fire or imminent danger pay or survivors benefits) and
“ overstrength” or the additional active- duty personnel who have been recruited and
retained to meet wartime needs above DOD’s pre- war strengths — 482,000 for the
Army and 172,000 for the Marine Corps. “ Overstrength” has been considered a war
cost because DOD initially argued that the increases would be temporary but in the
FY2007 Supplemental, the Defense Department requested that these increases be part
of a permanent expansion of the Army and Marine Corps, an issue still to be
resolved.
Since FY2004, DOD has reduced its reliance on reservists with the number
activated falling from 151,000 in FY2004 to 113,000 in FY2006. Despite this 25%
decrease, DFAS cost reports show a more modest 8% decrease in cost from $ 8.8
billion to $ 8.1 billion. It is not clear why cost figures are inconsistent with average
troop levels but GAO has found various inconsistencies in DOD reporting of military
personnel costs. 38
Reliance on Reservists Falls. Between FY2004 and FY2006, DOD
reduced its reliance on reservists as their share of total personnel dedicated to war
missions declined from 30% to 24% ( see Figure 1). This change reflects the fact that
some reservists have bumped up against a DOD- imposed policy set after the 9/ 11
attacks that limited their total deployment time to 24 months. Since reserve
deployments were typically for 18 months — including time to train up — reservists
were often available for only one deployment.
CRS- 24
39 David S. C. Chu, Under Secretary of Defense for Personnel and Readiness,
“ Mobilization/ Demobilization Personnel and Pay Policy for Reserve Component Members
Ordered to Active Duty in Response to the World Trade Center and Pentagon Attacks,”
September 20, 2001; and Robert M. Gates, Secretary of Defense, “ Utilization of the Total
Force,” January 19, 2007.
40 DFAS, Supplemental and Cost of War Execution Reports, September 2005 and September
2006, “ DoD Totals.”
Secretary Gates recently changed this policy, setting call- ups for 12 rather than
18 months. The services could also exclude train up and demobilization time and
make exceptions if necessary. The policy change also emphasizes activating units
rather than individuals to improve morale and readiness. 39 This policy change is
likely to make reservists available for two tours if necessary.
Notes and Sources: Includes all activated reservists whether deployed, preparing to deploy or serving
in the United States. Data from Defense Manpower Data Center, Contingency Tracking System,
“ Average Member Days Deployed by Service Component and Month/ Year,” November 2006. The
Contingency Tracking System covers military personnel serving in Operation Iraqi Freedom,
Operation Enduring Freedom, and Operation Noble Eagle.
Changes in Military Personnel Costs. As DOD reduces its reliance on
activated reservists, war- related military personnel costs would be expected to fall
because the incremental cost of active- duty personnel — special pays — is less than
paying full- time salaries to reservists. Budget authority for military personnel dips
in FY2006 but rises again in FY2007 ( see Table 6). At the same time, military
personnel costs increase as DOD “ overstrength” or the number of personnel over the
Army and Marine Corps pre- war levels — grows. Yet DFAS reports show a decline
in funding for overstrength from $ 2.0 billion in FY2005 to $ 1 billion in FY2006,
possibly a reporting error. 40 Although the Administration announced in January 2007
that these increases would be permanent in order to sustain higher deployments for
the Global War on Terror, DOD requested the funds in the FY2007 supplemental as
an unanticipated emergency expense.
83% 76% 70% 66%
76% 77%
17% 24% 30% 34%
24% 23%
0%
20%
40%
60%
80%
100%
120%
02 03 04 05 06 11/ 06
All Reserves
Active- Duty
Figure 1. Active- Duty and Reserve Shares of OIF/ OEF Average
Annual Troop Levels, FY2003- Early FY2007
CRS- 25
41 DFAS, Supplemental and Cost of War Execution Reports, September 2005 and September
2006, “ DoD Totals.”
42 Department of the Army, Global War on Terrorism ( GWOT)/ Regional War on Terrorism
( RWOT), FY2007 Supplemental Budget Estimate, Volume 1, February 2007;
[ http:// www. asafm. army. mil/ budget/ fybm/ fy08- 09/ sup/ fy07/ oma- v1. pdf].
43 DOD received $ 80.9 billion for procurement in FY2006; see H. Rept. 109- 676, p. 135.
Changes in Operating Costs. Even if troop strength remains the same,
operational costs could grow if operating tempo intensifies, repair costs increase, or
support costs grow. These factors appear to explain some but not all of the $ 17
billion increase in operating costs from $ 43 billion in FY2004 to $ 60 billion in
FY2006 ( see Table 6). Based on DOD reporting of obligations, this increase reflects
! more body armor and other protective gear for troops ( purchased
with O& M funds), growth of $ 1 billion to $ 2 billion;
! the jump in oil prices and the rise in intensity of operations, growth
of about $ 4 billion;
! the coming due of maintenance bills as equipment wears out, growth
of $ 4 billion; and
! a $ 2 billion increase in command, communications, control,
computers and intelligence support. 41
With the exception of force protection gear where congressional interest has been
high, DOD has provided little explanation for these changes.
With enactment of the FY2007 Supplemental, operating costs will jump from
$ 60 billion in FY2006 to $ 75 billion in FY2007 or by 25%. This increase reflects the
Administration’s surge in troop levels and naval presence ( about $ 5 billion), higher
repair costs ($ 3 billion), more force protection gear ( about $ 1 billion), a doubling in
transportation costs for unspecified reasons ($ 2 billion), increased LOGCAP
contractor support ($ 300 million), and higher operating tempo. 42 These factors
account for some but not all of the increase though the rationales for the changes are
often not clear.
Changes in Investment Costs. Since FY2004, the rise in investment costs
has been dramatic — about a sixfold increase from $ 7.2 billion in FY2004 to $ 45
billion in FY2007. Procurement almost doubles between FY2006 and FY2007.
Investment costs include procurement, RDT& E and military construction. As a share
of DOD war appropriations, investment monies grew from about 10% in FY2004 to
about 20% in FY2006 and about 29% in FY2007. Since FY2003, DOD has received
about $ 93.5 billion in war- related procurement funds — about $ 11 billion more than
received by DOD in its regular baseline budget in FY2007 ( see Table 6). 43
Again, some of the reasons for this upsurge in war- related investment costs are
known:
! a push by both DOD and Congress to provide more force protection
equipment and increase situational awareness ( e. g., uparmored High
CRS- 26
Mobility Multipurpose Wheeled Vehicles ( HMMWVs), radios,
sensors);
! a decision to fund equipment for newly configured Army and Marine
Corps units, known as modularity or restructuring;
! the growing bill to rebuild or replace damaged equipment, a process
known as reset or reconstitution;
! extensive upgrading of equipment; and
! the building of more extensive infrastructure to support troops and
equipment in and around Iraq and Afghanistan.
These reasons do not fully explain the scope of increases thus far or sort out
whether the new requests are war- related emergencies rather than being part of
ongoing modernization or transformation programs. DOD has provided little
rationale or explanation for its requirements or changes in requirements for replacing
war- worn equipment or extensive upgrades.
In some cases, requirements do not appear to be strictly related to war needs. For
example, Congress included funds for C- 17 aircraft in order to keep the production
line open though its relationship to current war needs is tenuous. Congress also
agreed to fund the cost of equipping newly configured Army and Marine Corps units
— a pre- war initiative known as modularity or restructuring initiative — in the
FY2005 and FY2006 supplemental ( see section on reset below and CRS Report
RL33900 on FY2007 Supplemental).
Typically, war funds do not include RDT& E or military construction because
both activities take considerable time, and hence do not appear to meet an emergency
criterion. In this respect, the Iraq and GWOT conflicts are breaking new ground.
DOD is now receiving war funding for RDT& E in both specific programs and in the
Joint IED Defeat Fund, a new account where DOD transfers funds after enactment
with prior reporting to Congress.
In the FY2007 Supplemental, DOD is receiving an additional $ 1.7 billion for
military construction, almost doubling the previous peak in FY2005. Funding for
military construction has been controversial for two reasons — concerns among some
Members that construction indicates an intent to set up permanent bases in Iraq and
construction funding in the United States that is part of proposed plans to increase
the size of the force, and not clearly an emergency. Although DOD has not ruled out
retaining bases in Iraq, current guidelines limit the use of concrete structures and
emphasize building relocatable units and the FY2007 Supplemental continues a
prohibition on spending funds to set up permanent bases in Iraq.
Special Funds and the Flexibility Issue. Since the 9/ 11 attacks, Congress
has relied on a variety of special accounts that give DOD additional flexibility to
respond to the uncertainty of wartime needs. Congress has also been more willing to
approve higher levels of transfer authority which allow DOD to move funds into
different accounts after enactment. The funding in these new accounts generally does
not reflect troop levels or immediate operational needs.
Table 5 shows the funding provided in these flexible accounts including
CRS- 27
44 Congress appropriated $ 20 billion in the government- wide Emergency Response Fund
which could be spent by the President at his discretion ( P. L. 107- 38). DOD also received
another $ 3.5 billion in the DERF but had to follow allocations that were set in the FY2002
DOD Conference report ( H. Rept. 107- 350, p. 423).
45 H. Rept. 107- 593, p. 17 and 128.
46 Congress rescinded $ 3.5 billion of the $ 15.6 billion originally appropriated to the IFF and
included ceilings for certain purposes, such as intelligence, within the total.
! Afghan and Iraq Security Forces Funds for training and equipping
police and security forces;
! the Joint Improvised Explosive Device ( IED) Defeat Fund for
providing funds to be transferred to procurement, RDT& E, or
operation and maintenance to develop and field solutions to the IED
threat;
! the Iraq Freedom Fund set up to cover war operations cost in the first
year of the invasion and occupation ( IFF);
! the Natural Resources Risk Remediation Fund set up to cover
expected damage to Iraqi oil fields; and
! the Defense Emergency Response Fund ( DERF).
Typically, Congress has given DOD latitude in how to use these funds and required
after- the- fact quarterly reporting.
The Afghan and Iraq Security Forces Funds provide lump sums which DOD
could then allocate between equipment and training needs. Similarly the Joint IED
Defeat Fund allows DOD to decide where funds are needed to meet this threat.
Although the new accounts are designated to meet particular goals, they are similar
to funding flexibility given to DOD after the 9/ 11 attacks.
In the first two years after the 9/ 11 attacks, Congress gave DOD substantial
leeway to move funds after enactment to meet war needs by appropriating funds to
special accounts. Initially, DOD received $ 17 billion in its Defense Emergency
Response Fund ( DERF), spending those funds in broadly defined allocations such as
“ increased situational awareness,” and “ increased worldwide posture.” 44 In the
FY2002 Supplemental, Congress appropriated $ 13 billion for war costs including
$ 11.9 billion in the DERF, transformed into a transfer account, with guidelines set
in the conference report. 45
In the FY2003 Supplemental, Congress appropriated a total of $ 77.4 billion in
war funding, including $ 15.6 billion in a new Iraq Freedom Fund ( IFF) where DOD
could transfer funds after enactment and then report to Congress. 46 Since FY2004,
Congress has appropriated most war funds to specific accounts but has given DOD
larger amounts of transfer authority where DOD can move funds after enactment with
the consent of the four congressional defense committees ( see Table 5) as well as
setting up new transfer accounts for specific purposes such as training Iraqi security
forces.
Congress has also set caps or ceilings on funding within O& M accounts for
specific purposes rather than set program limits. These include funding for
CRS- 28
! various types of coalition support which pays U. S. allies for their
logistical support in counter- terror operations related to OIF and
OEF or other counter- terror operations; and
! Commanders Emergency Response Program ( CERP) for small
reconstruction projects selected and run by individual commanders;
The issue for Congress is the amount of flexibility to give DOD to meet needs
which it cannot define when appropriations are provided.
Average Cost Per Deployed Troop and Estimates of Future
Costs
To give another window into trends and how changes in troop levels may affect
costs, CRS estimated the average annual cost for each deployed troop — showing
operational and investment costs separately. Because only some costs ( e. g., for meals,
body armor, operating tempo, and ammunition) are likely to vary in proportion with
troop levels, the average cost per troop cannot be used to directly estimate the cost
of alternate troop levels ( see Table 7).
Table 7. Average Annual Cost Per Deployed Troop:
FY2003- FY2006
Average Troop Strength &
Obligations
FY03 FY04 FY05 FY06 Change
Since
FY2003
Number of deployed troopsa 225,800 219,600 258,800 269,300 19%
Average annual obligations in
000s of $
$ 320,000 $ 340,000 $ 350,000 $ 390,000 22%
Operational costsb $ 300,000 $ 300,000 $ 270,000 $ 325,000 8%
Investment costsc $ 20,000 $ 40,000 $ 80,000 $ 65,000 225%
Notes and Sources: Numbers rounded. CRS calculations based on average deployed troop strength
from the Defense Manpower Data Center ( DMDC) and costs from Defense Finance Accounting
Service, Supplemental & Cost of War Execution Reports, FY2003- FY2006 with CRS estimates of
unreported expenses. DMDC troop strength does not separate Iraq and OEF.
a. Does not include additional activated reservists who are training up for deployments, backfilling for
active- duty personnel or providing additional security at bases. DMDC figures do not separate
military personnel in OIF and OEF.
b. Includes military personnel and operation and maintenance costs.
c. Includes procurement, RDT& E, and military construction costs.
Some costs would rise or fall immediately as troops are withdrawn ( e. g., meals
served, fuel consumed, spare parts replaced), whereas other costs would change more
slowly ( e. g., utilities costs, building maintenance, equipment wear and tear). Still
other costs would temporarily increase, such as transportation costs to ship personnel
and equipment back to the United States. Over time, however, support costs would
begin to change in proportion with personnel levels if higher troop levels persist or
if troops are withdrawn.
CRS- 29
47 CRS revised these costs because of better data on average deployed troop levels received
recently from the Defense Manpower Data Center. Because this data does not segregate
military personnel by OIF and OEF, CRS includes only one figure for both.
48 See Table 1 in CBO, Letter to Senator Kent Conrad, “ Estimated Funding for Operations
in Iraq and the War on Terrorism,” February 7, 2007; [ http:// www. cbo. gov/
ftpdocs/ 77xx/ doc7793/ 02- 07- CostOfWar. pdf].
Since FY2003, the estimated average cost per deployed troop has risen from
about $ 320,000 to $ 390,000 per deployed troop. 47 While that increase reflects
primarily more spending for procurement — for replacement and upgrading of
equipment — operational costs have also grown ( see Table 7).
Estimates of Future Costs. CBO developed two alternative paths for the
future cost of the Global War on Terror — both Iraq and OEF — in its FY2008
budget outlook. Under the faster drawdown scenario, troop levels and costs would
decline from current levels to 30,000 troops by FY2010. Concurrently, costs would
decline from $ 149 billion in FY2007 ( lower than the $ 166 billion enacted) to
! $ 124 billion in FY2008;
! $ 78 billion n FY2009;
! $ 42 billion in FY2010;
! $ 26 billion in FY2011; and
! $ 20 billion each year from FY2012 through FY2017.
Under the more gradual drawdown scenario, troop levels would decline from
current levels to 75,000 troops by FY2013. Costs would decline to
! $ 144 billion in FY2008;
! $ 133 billion in lFY2009;
! $ 112 billion in FY2010;
! $ 91 billion in FY2011;
! $ 71 billion in FY2012; and
! about $ 58 billion a year for FY2013 through FY2017.48
CBO did not estimate a more rapid withdrawal of troops.
Major War Cost Issues in the 110th Congress
Several issues may arise in congressional debate about war costs and the
FY2007 Supplemental and the FY2008 war request:
! the issue of transparency in war costs;
! congressional mechanisms for affecting troop levels;
! defining reset and upgrade requirements; and
! readiness problems.
All these issues are made more difficult by the limitations, gaps and discrepancies in
DOD information on war costs.
CRS- 30
49 James A. Baker, III, and Lee H. Hamilton, Co- Chairs, The Iraq Study Group Report ( New
York: Vintage Books) 2006, p. 91.
50 Testimony of Robert A. Sunshine, CBO, before the House Budget Committee, January
18, 2007, p. 5.
51 Ibid., p. 5 and p. 6. CBO has estimated war- related outlays, and presumably DOD and
OMB do as well though separate outlays for war are not shown in the budget.
52 GAO, FY2004 Costs for Global War on Terrorism Will Exceed Supplemental, July 2004,
at [ http:// www. gao. gov/ new. items/ d04915. pdf] ; GAO- 05- 882, Global War on Terrorism:
DOD Needs to Improve the Reliability of Cost Data and Provide Additional Guidance to
Control Costs, September 2005; [ http:// www. gao. gov/ new. items/ d05882. pdf]; CBO,
Testimony before the House Budget Committee, January 18, 2007.
53 Government Accountability Office, Global War on Terrorism: DoD Needs to Improve the
( continued...)
Transparency Issues
Although DOD has testified frequently and submitted various reports on Iraq
and the global war on terror, information and explanations of changes in the cost of
OIF and OEF have been limited, incomplete, and sometimes inconsistent. Until the
FY2007 Supplemental and FY2008 War Cost request, DOD submitted very little
information to buttress its requests. Both the Iraq Study Group and CBO have
criticized DOD’s presentation of cost data for Iraq and the global war on terror.
The Iraq Study Group called the Administration’s requests “ confusing making
it difficult for both the general public and members of Congress,” to know,
something that “ should be a simple question” such as the amount requested for Iraq
operations. 49 CBO pointed out that DOD’s justification materials have been sparse
— for example, DOD provided five pages to justify $ 33 billion in operation and
maintenance spending, about half of the FY2006 supplemental request. 50
Because few details are included, CBO notes the difficulty in determining the
basis of DOD requests and estimating alternatives. And because appropriations for
war are mixed with DOD’s baseline budget, information about “ what has actually
been spent,” or outlays is not available. That information is important for estimating
the cost of alternate future scenarios and also for showing the effect of war costs on
the federal deficit. 51
Gaps and Discrepancies. CRS, CBO, and GAO have all found various
discrepancies in DOD figures — including understating budget authority and
obligations, mismatches between BA and obligations data, double- counting of some
obligations, questionable figures, and a lack of information about basic factors that
affect costs such as troop strength or operating tempo metrics. 52
For example, DOD does not count about $ 7 billion from its FY2003 regular
appropriations act that was intended for GWOT but that it cannot track. CRS and
CBO both include these funds. In 2005, GAO also found that DOD planning
documents included $ 10 billion in each year for GWOT for the next five years that
also cannot be identified. 53 It also appears that DOD used about $ 2.5 billion from an
CRS- 31
53 (... continued)
Reliability of Cost Data and Provide Additional Guidance to Control Costs, GAO- 05- 882,
September 2005, pp. 33, 35; [ http:// www. gao. gov/ new. items/ d05882. pdf].
54 A DOD table attributes $ 2.5 billion in funds for Iraq to years before the FY2003
Supplemental, which provided funds for the Iraq invasion in the spring of 2003 probably from
DOD’s baseline funds. Some $ 700 million in such funding are mentioned in Bob Woodward’s
book, Plan of Attack. This account was disputed by then- Deputy Defense Secretary Wolfowitz.
DOD’s most recent justification material for its FY2007 Supplemental Request also appears to
include these funds because the $ 48 billion shown as Iraq obligations in FY2003 obligations
exceeds by $ 2 billion the total reported by DFAS. CRS estimates also include intelligence funds
not captured by DFAS.
55 See CBO, “ Estimated Funding for Operations in Iraq and the War on Terrorism,” August
25, 2006; [ http:// www. cbo. gov/ ftpdocs/ 75xx/ doc7506/ GWOT_ Tables_ 2006_ 08. pdf].
56 DOD, FY2007 Supplemental, p. Figures 1 and 2, p. 93 and p. 94. CRS now includes this
additional $ 2 billion in total war BA.
57 CRS calculations from DFAS, Supplemental & Cost of War Execution Reports,
September, FY2004, FY2005, and FY2006.
unidentified source ( probably from DOD’s baseline funds) to prepare for the invasion
of Iraq in the summer and fall of 2002 before Congress approved the resolution
approving the use of force in Iraq in October 2003.54
Both CRS and CBO also include transfers from DOD’s regular accounts to
cover war costs. 55 DOD does not include transfers in the total for war appropriations
of $ 455 billion in its FY2007 Supplemental justification. At the same time, however,
the figures in its justification show that obligations exceeded budget authority by $ 2
billion in FY2001 and $ 4 billion in FY2004, a gap presumably met through transfers
from DOD’s regular appropriations. 56
DOD’s FY2007 justification also acknowledges that its reporting of obligations
does not include $ 27 billion in intelligence funding. About $ 10 billion in funding for
modularity also may not to be captured. With incomplete obligations data, it is
difficult to know how much funding is available or carried over from previous years,
a figure typically used to evaluate whether new requests for procurement and
Research, Development, Test and Evaluation ( RDT& E) are urgent.
For example, using only DFAS reports, DOD’s carryover from previous
appropriations would be about $ 14 billion for funds appropriated in FY2004,
FY2005, and FY2006 and another $ 14 billion in unobligated procurement monies in
the FY2007 bridge. That would suggest that DOD has considerable carryover in
investment funds, which could raise questions about whether additional funds are
urgently needed. At the same time, DFAS reports show few recent obligations from
these earlier years, which suggest that these funds may not be captured in its
reports. 57
For the first time, DOD’s FY2007 supplemental request follows more of a
standard budget format showing not only the new request but also funding in
FY2006, previous enacted bridge funds for FY2007, the full year’s funding in
FY2007 if the request is enacted, a considerable improvement over previous requests.
CRS- 32
58 CBO, Letter to Senator Conrad, Estimated Funding for Operations in Iraq and the Global
War on Terror, February 7, 2007. [ http:// www. cbo. gov/ ftpdocs/ 77xx/ doc7793/ 02- 07-
CostOfWar. pdf].
59 Office of Secretary of Defense, Comptroller, Table with corrected DFAS figures; see
DOD, FY2007 Supp, Figure 2 for new obligations figures, p. 93; CRS added up figures in
DFAS reports for September 2004, FY2005, and FY2006 for OIF from FY2003 monies.
60 GAO, Testimony of David Walker, Comptroller General before the Subcommittee on
National Security, Emerging Threats and International Affairs, “ Global War on Terror:
Observations on Funding, Costs, and Future Commitments,” July 18, 2006, p. 3 and 4;
[ http:// reform. house. gov/ UploadedFiles/ Final% 20GAO% 20Walker% 20Testimony. pdf].
61 DOD’s Contingency Operations Support Tool ( COST) model is used to predict most
operating costs.
Unlike DOD’s regular requests, the supplemental does not include funds two years
prior to the request or for FY2005. Despite this improvement, some of the FY2006
figures do not match those reported in the DFAS reports, which raises questions
about the accuracy of those reports. And only the Army includes the same categories
as those used in the DFAS reports making comparisons to prior years difficult if not
impossible.
Both CBO and GAO have raised concerns about the fact that DOD obligations
reporting classifies large portions of funding as “ other services and miscellaneous
contracts,” a category too vague to be useful. Because of these and other limitations
— such as the lack of performance metrics, limited detail on costs, and no outlay
figures — estimates of the cost of alternative troops levels are difficult to make. 58
Uncertainty About Figures. DOD has also periodically revised the figures
shown for each operation in previous years suggesting questions about the accuracy
of its figures. CRS has used figures from DOD briefings, DFAS reports, and
most recently, the FY2007 Supplemental justification to build its estimates. For
example, DFAS reports originally showed $ 38 billion in obligations for Iraq in
FY2003, later revised to $ 42.4 billion. Most recently, DOD reports show $ 48 billion
for Iraq in FY2003, which include not only obligations in later years but also $ 2
billion from an unknown source. 59
The Comptroller General testified that the lack of actual costs, adequate
supporting documentation, and reporting problems “ make it difficult to reliably know
what the war is costing, to determine how appropriated funds are being spent, and to
use historical data to predict future trends. 60 Some suggest that an audit by the
Department of Defense Inspector General might resolve these various gaps and
discrepancies in cost data. Despite these problems, the DFAS reports are the main
figures available that capture past costs and can be used to project future costs. DOD
has not been willing to provide Congress with other tools, such as the model the
services use to predict operating costs, which reflects assumptions about operating
tempo, personnel levels and many other factors. 61
CRS- 33
Congressional Options to Affect Military Operations
As interest in alternate policies for Iraq has grown, Congress may turn to the
Vietnam and other experience to look for ways to affect military operations and troop
levels in Iraq. In the past, Congress has considered both funding and non- funding
options. Most observers would maintain that restrictions tied to appropriations have
been more effective. ( For an analysis of the legal issues in restricting military
operations, see CRS Report RL33837, Congressional Authority to Limit U. S.
Military Operations in Iraq, by Jennifer K. Elsea, Michael John Garcia, and Thomas
J. Nicola. For examples of past enacted and proposed restrictions, see CRS Report
RL33803, Congressional Restrictions on U. S. Military Operations in Vietnam,
Cambodia, Laos, Somalia, and Kosovo: Funding and Non- Funding Approaches, by
Amy Belasco, Hannah Fischer, Lynn Cunningham, and Larry Niksch. For recent
proposals to restrict military operations, see CRS Report RL33900, FY2007
Supplemental Appropriations for Defense, Foreign Affairs, and Other Purposes, by
Stephen Daggett et al.)
Restrictive funding options generally prohibit the obligation or expenditure of
current or previously appropriated funds. Obligations occur when the government
pays military or civilian personnel, or the services sign contracts or place orders to
buy goods or services. Expenditures, or outlays, take place when payment is
provided.
Past attempts or provisions to restrict funding have followed several patterns
including those that
! cut off funding for particular types of military activities but permit
funding for other activities ( e. g., prohibiting funds for combat
activities but permitting funds to withdraw troops);
! cut off funds as of a certain date in a specific country;
! cut off funds “ at the earliest practical date,” which essentially gives
the president leeway to set the date;
! cut off funds if certain conditions are met ( such as a new
authorization) or certain events take place ( such as the release of
U. S. prisoners of war).
Other non- funding approaches to restrict military operations have:
! required that troops be withdrawn by a specified date in the future or
at the “ earliest practical date;”
! withdrawn funds unless there was a declaration of war or a specific
congressional authorization of the war activities; or
! repealed previous congressional resolutions authorizing military
activities.
One or both houses may also state a “ sense of the Congress,” or non- binding
resolution that does not need to be signed by the President that U. S. military
operations should be wound down or ended or forces withdrawn.
While only a handful of provisions have been enacted, congressional
consideration of these various limiting provisions placed pressure on the
CRS- 34
62 See discussion and language of the Cooper- Church amendment ( Sec. 7, P. L. 91- 652) in
CRS Report RL33803, Congressional Restrictions on U. S. Military Operations in Vietnam,
Cambodia, Laos, Somalia, and Kosovo: Funding and Non- Funding Approaches.
63 One provision was included in both P. L. 93- 52, the Continuing Appropriations Act of
1974 and the Second Supplemental Appropriations Act of 1973, P. L. 93- 50, both enacted
July 1,1973; see CRS Report RL33803, Congressional Restrictions on U. S. Military
Operations in Vietnam, Cambodia, Laos, Somalia, and Kosovo: Funding and Non- Funding
Approaches, by Amy Belasco, Hannah Fischer, Lynn Cunningham, and Larry Niksch.
64 See H. R. 17123, H. R. 6531, and H. R. 15628 in Table 1 and Appendix of CRS Report
RL33803.
65 CRS Report RS20775, Congressional Use of Funding Cutoffs Since 1970 Involving U. S.
Military Forces and Overseas Deployments, by Richard F. Grimmett.
Administration and thus influenced the course of events. For example, the well-known
Cooper- Church provision that prohibited the introduction of U. S. ground
troops into Cambodia was enacted in early 1971 after U. S. forces had invaded and
then been withdrawn from Cambodia; that provision was intended to prevent the re-introduction
of troops. 62
Although President Nixon did not re- introduce U. S. troops, the United States
continued to bomb Cambodia for the next three years. Later in 1973, Congress passed
two provisions that prohibited the obligation or expenditures of “ any funds in this or
any previous law on or after August 15, 1973” for combat “ in or over of from off the
shores of North Vietnam, South Vietnam, Laos or Cambodia.” 63 The final version
reflected negotiations between the Administration and Congress about when the
prohibition would go into effect with August 15, 1973 set in the enacted version and
bombing did stop on that day.
Several well- known proposals that were not enacted — two McGovern- Hatfield
amendments and an earlier Cooper- Church amendment — were also part of this
Vietnam Era jockeying between the Administration and Congress. One McGovern-
Hatfield amendment prohibited expenditure of previously appropriated funds after
a specified date “ in or over Indochina” except for the purpose of withdrawing troops
or protecting our Indochinese allies while another also prohibiting spending funds to
support more than a specified number of troops unless the president notified the
Congress of the need for a 60 day extension. The earlier Cooper- Church amendment
prohibited the expenditure of any funds after July 1, 1970 to retain troops in
Cambodia “ unless specifically authorized by law hereafter.” 64
Generally, Congress continued to provide funds for U. S. troops in Vietnam at
the requested levels as the Nixon Administration reduced troop levels. Overall,
funding restrictions have generally proven more effective than the War Powers Act,
which has been challenged by the executive branch on constitutional grounds. 65
The FY2007 Supplemental and the FY2008 War Request
When the Administration submitted its requests for a FY2007 Supplemental and
FY2008 war costs, Congressional leaders indicated that these would be more closely
CRS- 35
66 CRS Report RL33405, Defense: FY2007 Authorization and Appropriations, by Stephen
Daggett.
67 DOD, Financial Management Regulations, Chapter 12, Sec. 23, “ Contingency
Operations,” p 23- 11ff, 23- 21, 23- 25, 23- 27; [ http:// www. dod. mil/ comptroller/
fmr/ 12/ 12_ 23. pdf].
68 Under Secretary of Defense, Memorandum for Secretaries of the Military Departments,
“ Fiscal Year ( FY) 2008- 2013 Program and Budget Review,” July 19, 2006, p. 34- 49,
specifically p. 36, 39, 41.
69 Deputy Secretary of Defense Gordon England, Memorandum for Secretaries of the
( continued...)
scrutinized. For FY2008, the Administration is requesting $ 141.7 billion for war
costs, somewhat less than in FY2007 but about 20% more than in FY2006. ( For
Congressional action on the FY2007 Supplemental, See CRS Report RL33900,
FY2007 Supplemental Appropriations for Defense, Foreign Affairs, and Other
Purposes, by Stephen Daggett et. al.)
Although the Administration classified both requests as emergency funds, much
of the funding would not seem to meet the traditional definition of emergency — as
an urgent and “ unforeseen, unpredictable, and unanticipated” need — though defense
requests in the past have not been held to that standard. 66
DOD Changes Definition of War Costs. For the past ten years, DOD
financial regulations have defined the cost of contingencies to include only
incremental costs directly related to operations. Until October 2006, that guidance
was used by the services to prepare their estimates for Iraq and GWOT. The guidance
required that the service show assumptions about troop levels, operational tempo, and
reconstitution and limits requests to incremental costs — “ that would not have been
incurred had the contingency operation not been supported.” Investment requests are
also to be incremental and included “ only if the expenditures were necessary to
support a contingency operation.” 67 ( Little of this information was provided to
Congress in DOD’s requests.)
In the July 19, 2006 guidance to the services for developing the FY2007
Supplemental and FY2008 war cost requests, these strictures were reiterated. That
guidance also prohibited including Army modularity “ because it is already
programmed in FY2007 and the outyears,” and warned that the services would have
to demonstrate that investment items were “ directly associated with GWOT
operations,” rather than to offset “ normal recurring replacement of equipment.” 68 In
addition, the services would have to show that reset plans could be executable in
FY2007, likely to mean within the last several months of the fiscal year based on
experience in FY2006.
On October 25, 2006, Deputy Secretary of Defense Gordon England issued new
guidance for requesting war funds to the services, requiring them to submit new
requests within two weeks that reflect the “ longer war on terror” rather than strictly
the requirements for war operations in Iraq, Afghanistan and other counter- terror
operations. 69 Such a substantial change would be expected to reflect guidance from
CRS- 36
69 (... continued)
Military Departments, “ Ground Rules and Process for FY’ 07 Spring Supplemental,”
October 25, 2006.
70 Testimony of OMB Director Robert Portman before the House Budget Committee,
Hearing on the FY2008 DOD Budget, February 6, 2007, p. 41 of transcript.
71 See table inserted by Senator Stevens in Congressional Record, August 2, 2006, p. S8571
showing $ 23.7 billion for reset, including $ 14 billion in procurement; total funded also
provided $ 4.9 billion for unfunded FY2006 requirement; see also DOD’s Report to
Congress, Long- Term Equipment Repair Costs, September 2006.
the Secretary of Defense, the Office of Management and Budget and the President.
This new definition appeared to open the way for including a far broader range of
requirements particularly since the needs of the “ longer war” are relatively undefined.
In its review of the FY2007 Supplemental, the appropriators rejected certain
procurement and depot maintenance requests as either unexecutable or not clearly an
emergency. ( See CRS Report RL33900, FY2007 Supplemental Appropriations for
Defense, Foreign Affairs, and Other Purposes, by Stephen Daggett et al.) Since the
long war on terror is now part of DOD’s key missions according to the national
strategy, it could be argued that these types of expenses should be included in DOD’s
regular budget where they would compete with other defense needs.
Procurement Requests in the FY2007 Emergency Supplemental.
Both the FY2007 Supplemental and the FY2008 war cost requests include large
increases in procurement funding — $ 20.4 billion in FY2006, $ 39.7 billion in
FY2007, and $ 32.9 billion in FY2008. Much of this increase may be a response to
the new England guidance to fund requirements for the “ longer war” rather than
DOD’s traditional definition of war costs as strictly related to immediate war needs.
For example, the Navy initially requested $ 450 million for six EA- 18G aircraft,
a new electronic warfare version of the F- 18, and the Air Force $ 389 million for two
Joint Strike Fighters, an aircraft just entering production; such new aircraft would not
be delivered for about three years and so could not be used meet immediate war
needs. Other new aircraft in DOD’s supplemental request include CV- 22 Ospreys and
C- 130J aircraft. In its March amendment to the FY2007 Supplemental, the
Administration withdrew several of these requests, possibly in anticipation that
Congress would cut these aircraft.
Front Loading Reset Funding. The FY2007 Supplemental included an
additional $ 14 billion for reset — the replacement of war- worn equipment. DOD’s
request appears to front load ( or fund in advance) DOD’s reset requirements, a fact
acknowledged by then- OMB Director Robert Portman in recent testimony. 70
According to DOD figures, Army and Marine Corps reset requirements were fully
met in the enacted FY2007 bridge fund when Congress provided $ 23.7 billion for
Army and Marine Corps reset costs, the amount that the services said was needed. 71
As substantial amounts of equipment are being sent back to the United States
for repair, the Army and Marine Corps would be expected to be able to check
previous estimates of the effect of current operations on wear and tear of equipment.
CRS- 37
72 See CRS Report RL33900, FY2007 Supplemental Appropriations for Defense, Foreign
Affairs, and Other Purposes, by Stephen Daggett et al; for definition, see Office of the Secretary
of Defense, Report to Congress, Ground Force Equipment Repair, Replacement, and
Recapitalization Requirements Resulting from Sustained Combat Operations, April 2005, p. 8;
see also GAO- 06- 604T, Defense Logistics: Preliminary Observations on Equipment Reset
Challenges and Issues for the Army and Marine Corps, p. 3.
73 Statement of Peter J. Schoomaker, Chief of Staff, Department of the Army, before the
House Armed Services Committee, “ Reset Strategies for Ground Equipment and Rotor
Craft,” June 27, 2006, p. 2; see also testimony of Brigadier General Charles Anderson, U. S.
Army, House Armed Services Subcommittee on Readiness and Subcommittee on Air and
Land Forces Hold, transcript, “ Joint Hearing on Costs and Problems of Maintaining Military
Equipment in Iraq,” January 31, 2007, p. 6.
74 Testimony of General Michael Hagee, Marine Corps Commandant before the House
Armed Services Committee, “ Army and Marine Corps Reset Strategies for Ground
Equipment and Rotor Craft,” June 27, 2006, p. 41.
75 DOD, FY2008 Global War on Terror Request, February 2007, Table 3;
[ http:// www. dod. mil/ comptroller/ defbudget/ fy2008/ fy2007_ supplemental/ FY2008_ Glob
al_ War_ On_ Terror_ Request. pdf] hereinafter, DOD, FY2008 GWOT Request.
76 GAO- 07- 439T, Testimony of William Solis before the Subcommittee on Readiness and
Air and Land Forces, House Armed Services Committee, January 31, 2007, p. 2 and 3.
As of enactment of the FY2007 Supplemental, DOD has received about $ 64 billion
for reset, which is defined as the “ process of bringing a unit back to full readiness
once it has been rotated out of a combat operation,” by repairing and replacing
equipment and resting and retraining troops. 72 The services are to repair equipment
if economical or replace it if replacement costs almost as much as repair.
The FY2007 Supplemental and the FY2008 war request both appear to include
an extra year of Army and Marine Corps reset requirements. According to statements
by Army Chief of Staff, General Peter J. Schoomaker and other military spokesman,
Army reset is estimated to be $ 12 billion to $ 13 billion a year as long as the conflict
lasts at the current level and “ for a minimum of two to three years beyond” 73
According to Marine Corps Commandant, General Michael Hagee, their
requirements are about $ 5 billion a year for a total of about $ 17 billion for the two
services most heavily affected. 74 DOD estimated that reset would total $ 37.5 billion
in FY2007 and in FY2008 based on its requests, which was largely supported by
Congress in FY2007.75 The front loading of requirements may be an attempt by the
services to avoid being in the position of requesting reset funds after U. S. troops have
started to withdraw.
Although it is clear that reset requirements reflect the stress on equipment from
operations, the accuracy of the Army’s estimates has not been determined. Recently,
GAO testified that until FY2007, the Army could not track reset or ensure that funds
appropriated for reset were in fact spent for that purpose, making it more difficult to
assess the accuracy of DOD’s requests. 76 In addition, presumably much of the
equipment that is being repaired now because of the effect of war operations, was
originally slated for repair or replacement at a later date, and so is being repaired or
replaced sooner than anticipated. That could mean DOD’s baseline budget could be
reduced to offset war funding already provided.
CRS- 38
77 Office of the Secretary of Defense, Report to the Congress, “ Long- Term Equipment
Repair Costs,” September 2006, p. 24 and p. 25.
78 Army Briefing, “ Army Equipment Reset Update,” May 18, 2006, p. 8.
79 CBO Testimony by Douglas Holtz- Eakin, Director, “ The Potential Costs Resulting from
Increased Usage of Military Equipment in Ongoing Operations,” before the Subcommittee
on Readiness, House Armed Services Committee April 6, 2005, p. 2.
80 The RAND study argued that the types of units created were not those most needed.
RAND, Stretched Thin: Army Forces for Sustained Operations, 7- 15- 05;
( continued...)
Reset requirements may also be uncertain because the number of troops and
intensity of operations may change. Service estimates of requirements have changed
over the past couple of years. In a September 2006 report to Congress, for example,
annual reset requirements in FY2008 were estimated to be $ 13 billion for the Army
and about $ 1 billion for the Marine Corps. 77 Several months earlier in the spring of
2006, the Army estimated that reset requirements would decrease from $ 13 billion
a year to $ 10.5 billion a year for the next two years and then decline to $ 2 billion a
year if troops were withdrawn over a two- year period. 78 A year earlier, in March
2005, CBO estimated that annual repair and replacement costs would run about $ 8
billion a year based on the current pace of operations and service data. 79
DOD’s definition of reset now includes not only replacing battle losses
( typically about 10% of the total), equipment repair ( about half) but also
recapitalization that typically upgrades current equipment, and repair and
replacement of prepositioned equipment stored overseas that has been tapped to meet
war needs. The Army has been planning to recapitalize equipment and modernize
prepositioned equipment stocks to match the new modular designs as part of its
ongoing modernization. For this reason, it’s not clear whether these expenses are
actually incremental wartime requirements.
Modularity as an Emergency Expense. The distinction between war-related
and regular funding has also ben made murky by DOD requests to treat
conversion of Army and Marine Corps units to new standard configurations —
known as modularity and restructuring — as a war requirement. For example, at
DOD’s request, Congress agreed to provide $ 5 billion in the FY2005 and in FY2006
supplementals for converting units with the understanding that DOD would move
these funds back to its regular budget in later years. The FY2007 supplemental again
included $ 3.6 billion to convert two Army brigade teams and create an additional
Marine Corps regimental combat team highlighting the issue of whether funds that
are part of DOD’s regular requirements are being shifted to emergency funding.
DOD argued that these costs should be considered war- related because having
more modular units makes it easier to rotate units to the war zone and hence would
extend the time between deployments giving soldiers more time at home, or “ dwell
time” and hence improving readiness. This conclusion has been questioned in studies
by CBO and the RAND. Both studies found that modularity would only marginally
improve rotation schedules. CBO estimated that the Army’s modularity initiative
would only make available an additional 6,000 to 7,000 troops. 80
CRS- 39
80 (... continued)
[ http:// www. rand. org/ pubs/ monographs/ 2005/ RAND_ MG362. pdf]. CBO, An Analysis of
the Military’s Ability to Sustain an Occupation in Iraq: an Update, October 5, 2005;
[ http:// www. cbo. gov/ ftpdocs/ 66xx/ doc6682/ 10- 05- 05- IraqLetter. pdf].
81 Program Budget Decision 753, “ Other Secretary of Defense Decisions,” December 23,
2004, p. 1.
82 CBO, Budget Options, February 2007, p. 9- 10; [ http:// www. cbo. gov/ ftpdocs/
78xx/ doc7821/ 02- 23- BudgetOptions. pdf].
Congress included the funds in the FY2005 and FY2006 with some reluctance
( effectively giving the Army more room in its regular budget for two years) based on
an understanding with DOD that this funding would return to the regular budget after
FY2006 and that $ 25 billion was set aside for the Army in future years to cover these
costs. 81 Congress appears to have approved these costs in FY2007 as well.
DOD does not estimate the effect of either its previous or new funding for
modularity on the amount of time soldiers have at home between deployments.
Growing the Force as a War Cost. Previously, Congress has provided
funding to cover “ overstrength” or the cost of recruiting and retaining additional
personnel above the Army’s pre- war end strength of 482,000 and the Marine Corps
end strength of 175,000. DOD has argued that these increases were required to
reduce the stress on forces and that the increases would be temporary. In January
2007, the President announced plans to permanently increase the size of the Army
and Marine Corps by 92,000 over the next six years including the almost 30,000
additional personnel already on board.
The FY2007 supplemental included a total of $ 4.9 billion to cover the military
personnel cost of additional troops plus $ 1.7 billion for equipment and infrastructure
for the forces to be added in FY2007. DOD promises that funding to equip future
increases in the force will be funded in the regular budget starting in FY2009.
In a reversal of its previous position, DOD argued that the Army and Marine
Corps need to be permanently expanded by 92,000 by 2012. The President’s proposal
marks a major change and appears to assume that the United States needs to be able
to deploy substantial numbers of troops on a permanent basis. CBO estimates that
adding two divisions to the Army — roughly equivalent to the President’s proposal
— would require an additional $ 108 billion between FY2008 and FY2017, a major
investment. 82
Questions About War- Related Procurement Issues. To evaluate
DOD’s war- related procurement requests, Congress may want to consider
! whether reset requirements are sufficiently firm to justify front
loading and what assumptions about force levels and the pace of
operations underlie those requests;
! whether upgrading equipment and replacing prepositioned
equipment is actually a war expense rather than a part of ongoing
modernization initiatives;
CRS- 40
83 Washingtonpost. com, “ General Pace: Military Capability Eroding,” February 27, 2007.
84 U. S. House of Representatives, Committee on Appropriations — Democratic Staff,
“ United States Army Military Readiness,” September 13, 2006, pp. 2- 4.
! how war funding of repair and replacement of equipment could
affect maintenance and procurement needs funded in DOD’s regular
budget;
! whether upgrades requested reflect requirements to equip deployed
or deploying forces — war- related — or the entire force; and
! whether DOD estimates of war requirements for force protection
reflect war- related requirements for deploying forces or
modernization of the entire force.
To some extent, these war- related requirements for recapitalization, modularity,
force protection, and upgrades overlap each other and the baseline budget since all
involve the purchase of new equipment to improve capability. Since DOD is
constantly modernizing, some of the funding for these requirements may have been
assumed in estimates for the later years of DOD’s baseline budget. DOD appears to
have shifted some of its baseline requirements to war requests.
Shifting funding from the regular budget to emergency funding is attractive
because DOD’s emergency spending has not been subject to budget caps, allowing
the services to substitute other less urgent requirements in their baseline budgets. On
the other hand, DOD consistently faces budget pressure from unanticipated increases
in the cost of its new weapon systems.
The FY2007 Supplemental also includes a more than doubling of the amounts
for force protection, and substantial increases in funding Iraq and Afghan Security
Forces as well as over $ 1 billion for military construction funding in FY2007. See
CRS Report RL33900, FY2007 Supplemental Appropriations fo Defense, Foreign
Affairs, and Other Purposes, by Stephen Daggett et al for additional information on
these and other war issues.
Potential Readiness Issues
In recent months, service representatives and Members of Congress have raised
concerns about current readiness levels, particularly the Army’s ability to respond to
the full range of potential war scenarios with trained personnel and fully- operational
equipment, a concern recently reiterated to Congress by General Pace, Chair of the
Joint Chiefs of Staff. 83 According to reports, current Army readiness rates have
declined to the lowest levels since the end of the Vietnam war with roughly half of
all Army units, both active and reserve, at the lowest readiness ratings for currently
available units. 84
Because DOD’s standard ratings ( known as C- ratings) assess readiness relative
to the full range of standard wartime scenarios, however, they do not necessarily
reflect whether units are ready to deploy to Iraq and Afghanistan to conduct
counterinsurgency operations. For example when asked about his readiness concerns
during a hearing of the House Armed Services Committee, General Schoomaker,
CRS- 41
85 Transcript of hearing before House Armed Services Committee, “ Hearing on Iraq Policy
Issues: Implications of the President’s Policy for Readiness, the Total Force and Strategic
Risk,” January 23, 2007, p. 10.
86 Joint Chiefs of Staff, “ Chairman of the Joint Chiefs of Staff Manual 3150.02A”, p. J- 4.
87 Ibid.
88 Transcript of hearing before House Armed Services Committee, “ Hearing on Iraq Policy
Issues: Implications of the President’s Policy for Readiness, the Total Force and Strategic
Risk,” January 23, 2007, p. 10.
Chief of Staff of the Army stated that “ I have no concerns about how we are
equipping, training and manning the forces that are going across the berm into harm’s
way. But I do have continued concerns about the strategic depth of the Army and its
readiness,” referring to other potential missions of the Army [ italics added]. 85
General Schoomaker’s testimony may reflect an alternate DOD readiness system
that assesses units about to deploy to carry out missions that are not their tradi