Tuesday, July 4, 2017

U.S. Military Spending: The Cost of Wars

One of the striking aspects of American military power is how little serious attention is spent on examining the key elements of its total cost by war and mission, and the linkage between the use of resources and the presence of an effective strategy. For the last several decades, there has been little real effort to examine the costs of key missions and strategic commitments and the longer term trends in force planning and cost. Both the Executive Branch and the Congress have failed to reform any key aspect of the defense and foreign policy budgets to look beyond input budgeting by line item and by military service, and doing so on an annual basis.

The program budgeting and integrated force planning efforts pioneered towards the end of the Eisenhower Administration—and put into practice in the Kennedy and Johnson Administrations—have decayed into hollow shells. The effort to create meaningful Future Year Defense Programs seem to have been given a final death blow by the Budget Control Act (BCA)—legislation originally designed to be so stupid that the Congress could not possibly accept it. Efforts to integrate net assessment with budget submissions were effectively killed by the Joint Staff decades earlier, during the Reagan Administration.
Critical Failures by Both the Executive Branch and Congress

What is even more striking, is the failure of both recent presidents and the Congress to properly analyze and justify the cost of America's wars. If one counts the Cold War, the United States has been at war for virtually every year since 1941. The United States has been actively in combat since late 2001, and there is little prospect that it can end the need to use force to check terrorism and violent extremism within the next decade. Moreover, the Cold War may be over, but the United States still faces strategic challenges from Russia and the emergence of China as a major global power in what is already a multipolar world.

"War" may not be the normal state of U.S. national security planning indefinitely into the future, but war—and/or the constant risk of war—is a grim reality of our time. Yet, the Administration and the Congress have tended to treat warfighting as a temporary aberration—as something to be delt with by supplementals or creating short-term budget categories like the Overseas Contingency Operations (OCO) account that seem to reflect the cost of wars, but have become something of a slush fund and a mechanism for selectively avoiding the caps on defense spending set by the BCA. (...)

This report is divided into 12 sections, each of which illustrates the need for better planning, programming, and budgeting; as well as the need for far more transparency and better official reporting:

The charts and tables in this section summarize the actual and projected cost of U.S. wars as reported for the OCO accoun—drawing heavily largely on earlier work by the Congressional Research Service.
  • The Department of Defense's OCO costs of the Afghan conflict since FY2001 will rise to $840.7 billion—if the President's FY2018 budget request is met. They will be $770.5 billion for Iraq.
  • The total costs for all OCO spending between FY2001 and FY2018 will be in excess of $1,909 billion. Given the costs omitted from the OCO budget, the real total cost will almost certainly be well over $2 trillion, even using OCO data as the only costs of the wars.
These latter estimates update a series of earlier CRS analyses, one of which noted that, "Other observers and analysts define war costs more broadly than congressional appropriations and include estimates of the life-time costs of caring for OEF/OIF/OND veterans, imputed interest costs on the deficit, or increases in DOD’s base budget deemed to be a consequence of support for the war…Such costs are difficult to compute, subject to extensive caveats, and often based on methodologies that may not be appropriate…"

Three alternative cost estimates are also summarized in this section.
  • One by Lina J. Blimes puts the total cost at $4 to $6 trillion by end FY2016.
  • A related estimate by the Watson Institute puts the cost at $4.8 trillion through FY2016.
  • A third estimate, by Neta Crawford, puts costs at more than $4.8 trillion through FY2017, plus more than $7.9 trillion in cumulative interest on past appropriations, or more than $12.7 trillion.
It is important to note that separate work by Todd Harrison of CSIS in assessing the overall OCO account—Enduring Dilemma of Overseas Contingency Operations Funding, Transition45 Series, January 11, 2017—states that both Congress and the Obama administration moved items from the base budget to the OCO budget as a way of circumventing the BCA budget caps. Roughly half of the OCO budget ($30 billion) is now being used for programs and activities that were previously funded in the base budget. These issues are discussed in more detail later in this study.

If these alternative estimates—and many others—are taken into account, it is all too clear that the United States now has no official estimate of the cost of its wars. Further, without such an estimate, there is no credible basis for either Executive Branch or Congressional review of the budgets and plans for such wars, much less of the ability to effectively execute given strategies, and provide credible indicators of the cost effectiveness and progress of key elements of military and civil activity.

by Anthony H. Cordesman, CSIS |  Read more: