Happy New Year. We have ripped ourselves away from the riveting Alito confirmation hearings to bring you this belated ATRC E-Update.

In this edition we focus on money for war.

I .IRAQ: : HUMAN AND ECONOMIC COSTS CONTINUE TO GROW
II. WINNERS IN THE MILITARY BUDGET
III: ...AND LOSERS IN THE MILITARY BUDGET
IV. OH YEAH!? SO, WHAT’S YOUR EXIT STRATEGY?
V. CRUDE DESIGNS - THE RIP-OFF OF IRAQ'S OIL WEALTH

Sadly, continuing large scale casualties in recent weeks have underscored concerns that the Iraqi elections would not stem the tide of violence there. And now, a new report by Linda Bilmes of Harvard and Nobel Laureate Joseph Stiglitz of Columbia University gives estimates for the full economic and human costs of the war that dwarf the direct budgetary costs of $251 billion to date.

Taking into account costs of future military operations, the costs of caring for veterans (including billions for treating brain injuries), higher costs for recruiting, replacement costs for military equipment used in the war, and a wide range of broader economic impacts, Bilmes and Stiglitz put the full cost of the Iraq war at somewhere between $1 trillion and $1.8 trillion. This is a huge drain of resources when one considers that even these vast sums are not providing adequate protection for U.S. troops in Iraq or promoting democracy or stability. And with other life-threatening dangers from hurricanes to epidemics of disease to potential attacks on U.S. ports, trains, or chemical and nuclear plants, the costs of the Iraq war seem not just misguided, but obscene.

Resources:

Linda Bilmes and Joseph Stiglitz, "The Economic Costs of the Iraq War," available at http://www2.gsb.columbia.edu/faculty/jstiglitz/Cost_of_War_in_Iraq.htm

President Bush’s signature is dry on the 2006 federal budget after a long slog through Congress. The big news is that the Pentagon budget, along with all other discretionary programs, was subjected to a 1% across-the-board cut aimed at fiscal discipline and belt tightening in a deficit environment. This 1% cut amounts to $8.6 billion in total cuts to the federal budget. Coming on top of reports that the Pentagon plans on cutting its budget by $32 billion over the next 5 years, the 1% cuts produced a lot of sound and fury among military contractors and Pentagon boosters.

In the new context, "We can't do everything we want to do," said Ryan Henry, principal deputy under secretary of defense for policy. At an industry meeting described by Leslie Wayne in the New York Times on December 27, 2005, Mr. Henry gave defense industry leaders an early glimpse of the Defense Department's priorities over the next four years. Ryan described the need for flexible and innovative systems designed to battle international networks of terrorists, not the naval destroyers and fighter jets used in nation to nation military engagements. Executives from Lockheed Martin, Boeing, General Dynamics and other leading military contractors were there.

The next step in belt tightening will be a proposed $10 billion in cuts to the Department of Defense’s 2007 budget. James Albaugh, the Boeing Corporation’s chief executive, commented that the Pentagon’s budget has "been a great ride for the last five years, but "we will see a flattening of the defense budget. We all knew it was coming."

Senator Jeff Sessions, a big recipient of weapons contractors political contributions, recently commented in a Senate Armed Services hearing that the "glory days for defense budgets" are coming to an end.

But industry leaders and defense officials are being a little too dramatic. Unlike education, health and human services-- which are all sustaining major cuts-- the Pentagon budget has a savior. It is called the war in Iraq. Cuts to the Pentagon budget are likely to be restored when the emergency appropriations for the war in Iraq are rammed through Congress this spring.

According to analysts at the Center on Budget Policy and Priorities, the across-the-board-cuts will "likely have little or no effect on the actual level of funding that defense programs ultimately received in 2006." Their report, released on December 16, 2005 has the catchy title of "Why the Application of the Expected Across-the-Board Appropriations Cut to Defense is Likely to be Purely Cosmetic," and was written by Richard Kogan and Jim Horney.

The authors assert that a large supplemental appropriations bill (in addition to the $50 billion for Iraq in this current defense bill) "almost certainly will include additional funds that could effectively be used to restore any reductions in funding that result from applying across-the-board cuts." They also note that the Defense Department has authority to transfer money from one account to another and that "funds ostensibly intended for operations in Iraq could be used to backfill shortages in routine DoD activities." Education and health care have no such supplementals or other sources of money with which they can augment their budgets or restore cut money.

While the emergency appropriations will fill the gaps left by short and long term slices off the military budget, neither the cuts or their restoration solve the longer term problem of a military industrial complex raging out of control (still!!!). The power wielded by the military industry in Congress and the Executive insures that there remains a huge gap between the weaponry and equipment necessary to wage current wars and the weaponry and equipment that is being funded and built by the military industry.

As Richard Aboulafia, a military analyst with the Teal Group, observes, this is "crunch time for a lot of programs. Equipment is wearing out at a fast rate because of Iraq and Afghanistan. And a lot of money has been spent to develop new equipment that isn’t even being produced yet and now the money is running out."

The Pentagon has weapons programs worth $1.3 trillion in its current portfolio and some $800 billion of that balance remains unpaid. These are naval destroyers and fighter jets, not the equipment needed in Iraq and Afghanistan. Here is one example ripped from the headlines: A recent Pentagon study found that as many as 80% of Marines killed in Iraq from wounds to the upper body could have survived if they had extra body armor that covered more of the torso.

The report, which was completed by the Marines’ Office of the Armed Forces Medical Examiner last summer, and posted on a soldier’s advocacy website just days ago, looked at 93 fatal wounds between the start of the war in March 2003 through June 2005. It concluded that 74 of those wounds were bullet or shrapnel wounds to shoulders or areas of the torso not protected by ceramic armor plating. But weapons manufacturers don’t get rich making body armor, they get rich on fat pentagon contracts for big ticket items.

Winslow Wheeler, a fellow with the Straus Military Reform Project, quips, "Osama is happy" when the U.S. spends billions on the F-22 fighter plane which can "do him no harm" and skimps on body armor and other useful gear.

Unsustainable Defense Spending

Not only are systems like the F-22 fighter plane (designed for dogfights with Soviet planes) sucking billions in resources and not making U.S, soldiers or U.S. territory any safer, they are also getting more and more expensive every day. According to recent testimony from the Government Accountability Office, the five most expensive weapons in the Pentagon’s 2001 portfolio cost a total of $291 billion, measured in today’s dollars. Five years later, the five costliest weapons on the list cost nearly double that-- $550 billion, with many of the programs on the same two lists. Go figure.

Resources

Leslie Wayne, "Contractors Brace for Flattening Budget," International Herald Tribune, December 27, 2005.
http://www.military.com/NewsContent/0,13319,83901,00.html

Why the Application of the Expected Across-the-Board Appropriations Cut to Defense is Likely to be Purely Cosmetic, Richard Kogan And Jim Horney, Center on Budget and Policy Priorities, http://www.cbpp.org/12-16-05bud.htm

Soldiers for the Truth, Defense Watch, January 11, 2006

Interceptor OTV (Outer Tactical Vest) Body Armor Cost Lives, An Internal U.S. Marine Corps Reports Shows

DOD Acquisition Outcomes: A Case for Change, Katherine V. Schinasi, Managing Director Acquisition and Sourcing Management, Government Accountability Office, November 15, 2005, http://www.gao.gov/new.items/d06257t.pdf (pdf)

"Why We Fight," a new documentary from Eugene Jarecki on the Military Industrial Complex, due in theaters January 20, 2006.

III. ...AND LOSERS IN THE MILITARY BUDGET

The winners in this military budget are clear. And they are always the same- Lockheed Martin and their ilk. But the group of losers just gets bigger and bigger… A November 2005 report by the United Nation’s High Commission on Human Rights turned its attention to the richest country in the world and found that more and more are not enjoying that wealth:

• 12 percent of the United States population--or about 37 million people--lived in poverty in 2004, with nearly 16 percent--or about 46 million--having no health insurance.

• 38 million people, including 14 million children, are threatened by lack of food.

• Ethnic minorities are suffering more from extreme poverty than white Americans. Compared to one in ten Whites, nearly one in four Blacks and more than one out of every five Latinos are extremely poor in the United States.

• Incidence of poverty, including food insecurity and homelessness, has been on the rise during the Bush administration

• High costs of healthcare, inadequate access to quality education and vocational training, low wages, limited protection of tenants, and lack of low-cost housing are major factors posing "serious obstacles" to people struggling to get out of poverty.

The press release for the report is online at http://www.unhchr.ch/huricane/huricane.nsf/view01/68E2DD8540B09F7DC12570BA002FE0FD

Arjun Sengupta, an independent expert on human rights and extreme poverty of the United Nations Commission on Human Rights, visited six different states, going to poverty-stricken urban areas, and holding consultations with groups of homeless people and with several national civil-society organizations.

Concluding his report, Sengupta observed, "The case of the United States was particularly interesting as it presented an apparent paradox: as the wealthiest country on Earth, with higher per capita income levels than any other country, the United States has also had one of the highest incidences of poverty among the rich industrialized nations."

IV. OH YEAH!? SO, WHAT’S YOUR EXIT STRATEGY?

Did you get into a heated political argument about the war in Iraq over the holidays? Maybe it was your know-it-all uncle or sister-in-law with a Masters in IR from Georgetown? Did they sneer when you talked about the need to withdraw troops from Iraq? Did they demand you elaborate a step by step plan for withdraw over figgy-pudding and that third glass of sherry? Were you stumped?

Never again! Our friends at the Project on Defense Alternatives have compiled the best plans for U.S. withdrawal from Iraq. Their site- which they update constantly- currently lists fourteen different plans from some of the most thoughtful and well-informed experts and analysts in the business.

Here are just three:

Exit Strategy: How to Disengage From Iraq in 18 Months
Barry R. Posen. Boston Review, January/February 2006.

Operation Homecoming: How to End the Iraq War
Erik Leaver. Yes Magazine, Fall 2005.

400 Days and Out: A Strategy for Resolving the Iraq Impasse
Carl Conetta. PDA Briefing Memo #34, 19 July 2005.

Links to these three reports, and many more are online at http://www.comw.org/pda/0512exitplans.html along with a compendium of political leaders’ positions on Iraq exit. So you can compare Ralph Nader’s position to Wesley Clark’s or Hillary Clinton’s.

V. CRUDE DESIGNS - THE RIP-OFF OF IRAQ'S OIL WEALTH

Control of Iraq's future oil wealth is being handed to multinational oil companies through long-term contracts that will cost Iraq hundreds of billions of dollars, according to a new report published today in London.

Crude Designs: The Rip-Off of Iraq's Oil Wealth reveals that current Iraqi oil policy will allocate the development of at least 64% of Iraq’s reserves to foreign oil companies. Iraq has the world’s third largest oil reserves.

Figures published in the report for the first time show:

• The estimated cost to Iraq over the life of the new oil contracts is $74 to $194 billion, compared with leaving oil development in public hands. These sums represent between two and seven times the current Iraqi state budget.

• The contracts would guarantee massive profits to foreign companies, with rates of return of 42% to 162%.

Published by a unique group of experts, including the Institute for Policy Studies and Oil Change International and New Economics Foundation, the report is available online at www.crudedesigns.org