After nearly nine years of war, the US is withdrawing from Iraq.  More than two million American troops have been deployed to the Iraq theater.  At its peak the US had more than 500 military bases across the country.  We are now down to our last 18,000 troops, who are leaving by the hundreds every day. We are moving 3 million pieces of equipment out of the country, although hundreds of thousands of items will remain.   Thousands of young Americans have been killed in this war, and hundreds of thousands have been wounded or injured or afflicted in some way.

We estimate that the final cost of the war will reach $4 to $6 trillion — once you add up the $2 trillion we have already spent, the $1 trillion we owe to our veterans, the costs of replacing and replenishing military and National Guard equipment,  the cost of paying interest on the money we have borrowed to pay for the war, and the economic costs of factors such as reservists losing their jobs, and spouses and parents who have been forced to become caregivers for wounded veterans.  The war was more expensive than it needed to be — due to US decisions about how to wage it.  These included decisions that lowered the upfront costs, but increased the long-term costs (like scrimping on body armor for troops, which increased injury rates) and decisions to rely heavily on contractors, reservists, and cost-plus contracts.

Beyond the price tag, what are the lessons for America?

1.  Going to war is messy, complicated and expensive — and difficult to extricate oneself from it once you go in, or to have the final say in the outcome. In Iraq, what began as a quick mission to bring “regime change”  produced a civil war and terrible loss of life for Iraqis and Americans.   Millions of Iraqis have been displaced internally and outside the country. Despite years of effort and a massive US effort to train Iraqi forces and help reconstruct the country, it is still a volatile and dangerous place, with frequent bombings in open air markets and other places that target civilians. Violence has dropped since the worst year  of the insurgency, but there are still enormous threats from Shi’ite militias (loyal to Iran)  with loyalties to Iran, as well as Sunni militants such as Al-Qaeda.   Meanwhile, the balance of power in the region, which President Bush hoped to tip in favor of the west through US intervention in Iraq,  is precarious and depends on many factors outside of US control.

2. The US does not have a functioning system for tracking war costs.  Throughout the years of this war, those who have attempted to tally the costs (the GAO, Congressional Research Service, Congressional Budget Office, Pentagon Inspector Generals, and others) have complained loudly that the US lacks the basic accounting systems for understanding where money is spent.  This has resulted in vast war profiteering for defense contractors, cost overruns, and co-mingling of funds appropriated for war and for other purposes.   Meanwhile the Pentagon continues to be the only department in the US federal government that cannot be audited (it does not merely “flunk” its audit —  its accounting systems are so flawed, there is simply no way to perform an audit).

3.  We made no provision to fund the long-term care of those who fought in this war.  To date, the Department of Veterans Affairs has treated more than 600,000 returning men and women; most of whom qualify to receive disability compensation for the rest of their lives.  In today’s dollars, the cost of providing this care equals nearly $1 trillion — money that has not been set aside for this purpose.   While the mood in Washington today is that veterans should be a priority, there is no guarantee that we will not turn our backs on this commitment in the future.  We have proposed that Congress establish a “Veterans Trust Fund”, in which we appropriate money for caring for veterans at the same time that money is appropriated for war.   But so far, Congress has not adopted this idea.

4.  The economic costs of war are extremely high, and unpredictable.  The war in Iraq set off a chain of  events that has had far-reaching consequences.  The US invasion was one of  the factors that led to pressure on oil prices, which increased from $25 barrel in 2003 to $140 in 2008.  These oil prices were one of the factors that contributed to the Federal Reserve’s policy of injecting liquidity and lowering interest rates; which in turn played a role in the housing bubble and rising consumer debt.   Meanwhile, the US decision to finance the war entirely through borrowing added $2 trillion to the national debt,  at a time when the US could have been paying for the war directly.  It is impossible to determine how much these policies contributed to the financial crisis, it is likely they worsened the situation considerably.

5.    The time and attention that senior military leaders devoted to Iraq was not available to spend on Afghanistan, with serious consequences.   Following on lesson 1:   What began as a quick mission in Afghanistan to topple the Taliban and eradicate Al-Qaeda bases has led to a decade of terrible war in that country, with mixed results and limited progress on the ground.   History suggests that Afghanistan would have been challenging even without the distraction of Iraq;  but after 2003, the Pentagon became preoccupied with the Iraq conflict where it was deploying five times the number of troops and 5x the money.  The lack of attention to Afghanistan was one of the factors that allowed the situation there to deteriorate and the Taliban to regroup.  We may never know what might have happened if Afghanistan if the US had not invaded Iraq, but it is clear that the US underestimated the difficulty of waging two wars, not just militarily,  but in the amount of  intellectual capital that was available to focus on the original effort.

Since the CFO Act was enacted in 1990, the federal government has been making steady progress on tracking where federal dollars go.   This process of obtaining clean audits on federal dollars is an important part of budget transparency and the ability to at least understand what we are buying for our tax dollars.  Today, 23 of 24 departments can pass their financial audits.

The Department of Defense has flunked its audit every year, and today has the dubious distinction of being the ONLY remaining federal government to still fail to be able to track where its money is spent.  The Pentagon’s lack of auditable financial records is one of the reasons why it is so difficult to estimate  the true costs of war.

Read the OMB press release:

http://www.whitehouse.gov/blog/2011/11/18/audits-records-broken

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