Hearing of the House Budget Committee - The Growing Costs of the Iraq War

Interview

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REP. THOMAS H. ALLEN (D-ME): Thank you, Mr. Chairman,

And Dr. Orszag, thank you for being with us again.

I had several questions. First, I wanted to clarify: In your testimony, you indicate that DOD is currently obligating about $11 billion a month for activities in Iraq and Afghanistan and other aspects of the global war on terror.

It's true, is it not, that $9 billion a month of that is currently related to the war in Iraq?

MR. ORSZAG: That's approximately correct, yes.

REP. ALLEN: A little bit more than $9 billion? About.

MR. ORSZAG: It's in the range of $9 billion, yes.

REP. ALLEN: I would like to have Chart 3 put up for a moment if we can.

The direct budgetary costs -- I'm not blaming you for this, but the direct budgetary costs of the war in Iraq are astonishing. I mean, when we -- if the president's request is met, the total direct budget cost will be $611 billion. That is a staggering amount of money way beyond any projection that was ever made at the beginning.

And then if I could turn to Chart Number 5. Chart Number 5 indicates that if you add in the funding through '07, then the 2008 request, do the projected future costs on the more gradual drawdown that you mention, which is -- would leave us with 50(,000) or 60,000 troops in Iraq after 2013 -- if you do all that and then calculate interest on the war-related debt, the overall number is 2.4 trillion (dollars).

But it's true, is it not, Dr. Orszag, that approximately 1.9 (trillion dollars) of that 2.4 trillion (dollars) is related to the war in Iraq on that kind of calculation?

MR. ORSZAG: We didn't specifically parse out Iraq versus other components of the war on terrorism for the future scenarios. But if historical patterns evolved in the same way in the future, you'd wind up with a number that was approximately the figure you gave.

REP. ALLEN: Approximately 1.9 trillion (dollars) --

MR. ORSZAG: It would be a little less, but --

REP. ALLEN: All right.

REP. RYAN: Would the gentleman yield for just a friendly question?

REP. ALLEN: Yes.

REP. RYAN: Doesn't your budget resolution balance the budget by 2012? So --

REP. ALLEN: Thank you for the question. Let me go --

REP. RYAN: No, but I --

REP. ALLEN: Let me go back --

REP. RYAN: But for five years --

REP. ALLEN: I'm trying to understand this. I'll -- you and I can talk about that later.

Dr. Orszag, let me come back to this.

You said earlier on that DOD doesn't break down Iraq costs separately from Afghanistan, particularly with respect to outlays -- that with respect to budget authority, they're getting a little better in terms of segregating the costs in Iraq and the costs in Afghanistan. Is that right?

MR. ORSZAG: Yes.

REP. ALLEN: Is there any reason why DOD could not do that if they were directed by Congress to be more specific in segregating the costs -- both for budget authority and for outlays in terms of those two conflicts?

MR. ORSZAG: My understanding is on the outlay side that would require a very significant change in the budget system used at the Department of Defense. So I don't want -- I could get back to you in writing about the specific changes but it would not be a trivial undertaking.

REP. ALLEN: Okay, okay.

Then I guess -- so we're going to keep getting these costs lumped together. That's very difficult because of course the support for the conflict in Afghanistan and rebuilding in Afghanistan is very different from the public support for the -- or the lack of public support for this ongoing conflict in Iraq.

MR. ORSZAG: But just to be clear again, the biggest difficulty is on the outlay side where things are, for the war on terrorism, mingled together with other spending.

In terms of the budget authority that you are providing, there -- it is -- while it may not be perfect, there is a lot more transparency about what's going where.

REP. ALLEN: And could we enhance that transparency by action of this committee?

MR. ORSZAG: I would -- I am not sure that there are additional steps necessary. I think that in terms of projecting future costs, there is more transparency that could be provided to us through, for example, access to the cost model that the Department of Defense uses.

REP. ALLEN: Great. Thank you very much.

I yield back.

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