CSM had an excellent article yesterday on how the US is deferring war costs. Estimating the costs of the Long War is hard because DoD has funded much of the war through budget supplementals. These emergency supplementals receive less scrutiny and are not included in the federal budget (meaning that these funds are excluded from normal debt calcuations). This means that while much of the money does go to the actual costs of OEF and OIF, some other items on the services wish-lists have slipped in too. For example, CFR has examined the most recent supplemental and found it includes several F-35s and $1.2 billion in basic research for the Air Force.

Funding the war this way has helped DoD avoid making some truly hard, strategic choices between buying its dream modernizations programs (be they DD(X), FCS or the F-22) and adapting to the counterinsurgency/stabilization missions it faces today. It also has helped the administration avoid discussing the real costs of the wars. As Stephen Biddle argues, “it’s disingenuous of the administration to claim we have no idea what Iraq needs will be and so we can’t budget for them.”

Legislative folks have been on to this for a while, but with the 110th Congress entering with a Democratic majority, there has been a recent eruption of press coverage on the issue. There are signs that the emergency supplementals will soon face some heightened scrutiny:

This year, the White House is expected to ask for another $100 billion in supplemental war funds, but [new chairman of the House Budget Committee] Representative [John] Spratt says he would like to get the war back on the budget since it can be argued the war is no longer an emergency.

‘Calling it an emergency means the spending does not get the scrutiny,’ he adds, because then the spending is reviewed by only one committee – House Appropriations. In addition, he says, emergency spending is exempt from caps on discretionary spending. This has prompted the military to include in the bill items that are not directly related to the war. Making the spending a part of the budget would end the practice of some members placing pet projects on a bill that must be passed, he says.

Moving war costs into the budget will accelerate pressure to arrest the growth of defense spending ushered in by 9/11, as I’ve discussed previously.

This is not to say that I think the costs of OIF and OEF will cripple the US. As the CSM article points out, while the cost of these wars nears that of the Vietnam War, we are currently paying significantly less (as a percentage of our GDP). Spending on OIF and OEF represents less than 1% of our $13 trillion GDP. Constrast this with the Korean War, which cost 14% of GDP at its peak and Vietnam, which cost 9% of GDP at its peak.