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Paying off post-9/11 war debt could cost $8 trillion: report

U.S. Army Soldiers attached to the 2nd Iraqi Army Division Military Transition Team (MiTT) patrol through a neighborhood in Mosul, Iraq, in 2007. (U.S. Army photo by Spc. Kieran Cuddihy)
November 14, 2017

The post-9/11 wars in Iraq, Afghanistan, and elsewhere have been fought with borrowed money, enough to require up to $8 trillion in interest payments in coming decades, a new report says.

Unlike America’s previous wars, its 21st-century conflicts have been paired not with a tax hike or massive sale of U.S. bonds, but a tax cut. The federal government has been operating at a deficit since 2002, accruing a national debt that now totals $20 trillion and counting.

“We have to recognize that we have been borrowing for 16 years to pay for military operations,” said Sen. Jack Reed, the ranking member of the Senate Armed Services Committee. It’s the “first time really in history with any major conflict that we have borrowed rather than ask people to contribute to the national defense directly, and the result is we’ve got this huge fiscal drag…that we’re not really accounting for or factoring into deliberations about fiscal policy as well as military policy.”

The 2017 report from Brown University’s Costs of War Project arrives as U.S. lawmakers and President Donald Trump strive to enact tax changes that will add at least $1.5 trillion to the national debt.

By coincidence, $1.5 trillion is also roughly how much the United States has spent on wars since 2001, at least according to the Pentagon’s most recent estimate. But the Cost of War Project researchers take a broader view of “war-related spending” by the federal government. They include State Department security funding, care for veterans, and interest on the related debt. Their latest annual report, released today, calculates that the last 16 years have seen the United States spend $4.3 trillion on the wars.

So far, they estimate, the U.S. has paid $534 billion on interest on borrowed Overseas Contingency Operations funding. That will only grow.

“Even if the U.S. stopped spending on war at the end of this fiscal year, interest costs alone on borrowing to pay for the wars will continue to grow apace,” says the report, written by Neta Crawford, a political science professor at Boston University. “By 2056, a conservative estimate is that interest costs will be about $8 trillion unless the U.S. changes the way that it pays for the wars.”

Concerns about how the government is paying for its overseas footprint were enough to persuade the ranking member on the House Armed Services Committee, Rep. Adam Smith, break from his colleagues in their full-fledged support of the National Defense Authorization Act.

Both Armed Services Committees agreed on Wednesday to pass a $700-billion defense authorization bill for 2018. That’s about $85 billion more than allowed by the 2011 Budget Control Act.

Related: Here’s How Much of Your Taxes Have Gone To Wars

Also read: The Biggest Bills for the Iraq and Afghanistan Wars Are Yet to Come

The NDAA announcement came as Republican lawmakers worked to whip up enough votes to pass a tax reform bill by year’s end.

The Congressional Budget Office says the GOP tax plan would add $1.7 trillion to the national debt over the next decade.

Sen. David Perdue, R-Georgia, a member of the Armed Services Committee, said “the greatest threat to our national security is the national debt.” He also said the tax cut wasn’t compounding the problem. It’s a short-term “investment.”

“You can’t fix this long-term problem unless you grow the economy and you’re not going to grow the economy unless you fix taxes,” he said.

Whether the GOP tax plan is enacted or not — and minority leader Sen. Chuck Schumer was ebullient and emboldened about Democrats’ chances to scuttle or reshape it after Tuesday’s state elections — the current model of funding U.S. wars overseas will have to be reckoned with.

In the early years of the war when the deficits started blooming, the U.S. had a relatively low debt. As it compounds, that changes the calculus on defense spending, said Todd Harrison, who directs defense budget analysis at the Center for Strategic and International Studies.

“I think we’re in a different place now than we were in 2001,” Harrison said. “ All of these factors did not exist then and now start to conspire to depress defense spending. They very well may weigh on the defense budget in the 2020s…Then when you combine that with tax cuts which are also going to make the deficit higher, it’s all putting downward pressure on defense budgets.”


© 2017 By National Journal Group, Inc. All rights reserved.

Distributed by Tribune Content Agency, LLC.