At the request of the Chairman of the Senate Budget Committee, the Congressional Budget Office (CBO) has reviewed the funding provided for military activities in Iraq, Afghanistan, and elsewhere in the war on terrorism and analyzed the increases in appropriations that have occurred over the past several years. CBO’s analysis is based on supplemental budget requests submitted by the Administration, budget justification materials provided by the Department of Defense (DoD), reports on obligations incurred during the war, and committee reports accompanying appropriation acts.1
The United States began combat operations in Afghanistan in fiscal year 2002 and in Iraq in fiscal year 2003. To finance those operations (and other activities related to the war on terrorism), the Congress provided $18 billion and $76 billion in emergency appropriations in those years, respectively.2 After a slight decrease in 2004, to $74 billion, funding increased steadily each year, to a total of $165 billion for 2007. If the Administration’s request for 2008 is funded in full, appropriations for those purposes will rise to $188 billion this year and to a cumulative total of $752 billion since 2001 (see Table 1). (An additional $40 billion has been appropriated for diplomatic activities and foreign aid over that period.) Thus far, for 2008 the Congress has provided $87 billion for military operations and other defense programs and another $1 billion for diplomatic activities related to the war.
War-Related Appropriations for Defense
(Billions of dollars, by fiscal year)
Source: Congressional Budget Office.
Notes: * = less than $500 million; DoD = Department of Defense; n.a. = not applicable.
a. Includes $6.4 billion in war-related appropriations provided in the Department of Defense Appropriations Act, 2003 (P.L. 107-248), and $10 billion provided in the Consolidated Appropriations Resolution, 2003 (P.L. 108-7). Those funds were not recorded as emergency or supplemental appropriations but were provided for war-related purposes. In 2004, the Congress rescinded $3.5 billion that had been appropriated to the Iraq Freedom Fund in 2003.
b. Title IX of the Department of Defense Appropriations Act, 2005 (P.L. 108-287), provided $25 billion in budget authority that was made available upon enactment in August 2004. Only $1.9 billion was obligated in that year, however, and the remainder was used to pay for expenses in 2005. For this analysis, amounts shown in 2004 include only the funds obligated in that year.
c. Includes $23.1 billion of the $25 billion provided in title IX of the Department of Defense Appropriations Act, 2005 (P.L. 108-287). Excludes $226 million for tsunami relief operations, primarily in operation and maintenance for the Navy.
d. Funding for the Joint Improvised Explosive Device Defeat Fund has been appropriated under operation and maintenance but has generally been recorded in the budget under procurement. The amounts in this table include all such funding under procurement.
e. Excludes $5 billion in supplemental funding for Base Realignment and Closure activities, basic allowance for housing, defense health care, and atomic security activities. That funding was provided in the supplemental appropriations act for war activities in 2007 but was for expenses not related to the war.
f. The President requested $188 billion in war-related defense funding for 2008. The Congress had appropriated $87 billion for that purpose as of December 2007.
g. Includes appropriations for family housing and revolving funds.
h. DoD has transferred about $6.5 billion from regular appropriations for war-related activities. Those funds were expended in accounts for operation and maintenance, military personnel, and procurement; however, CBO cannot distribute the net effect of those transfers among the appropriations.
i. Excludes emergency funding for hurricane recovery, avian flu, border security, and other purposes not related to the war. Also excludes about $40 billion in nondefense funding related to the war, such as appropriations for diplomatic operations, foreign aid, and veterans’ benefits.
Before 2005, funding for military operations in Iraq, Afghanistan, and elsewhere in the war on terrorism was largely limited to the incremental amounts needed to mobilize and deploy troops, transport equipment and supplies, and purchase additional quantities of consumables such as fuel, repair parts, and munitions. War funding also paid for an increase in the number of service members on active duty. About 60 percent of appropriations provided during this period went to operation and maintenance (O&M) accounts and 20 percent went to military personnel accounts.
Beginning in 2005, as part of its request for war funding, DoD asked for appropriations to "reset" equipment, that is, to repair or replace worn or damaged equipment. Those efforts include major overhauls that restore the item to "like new" condition. At the same time, DoD often added major upgrades to repaired items, returning equipment to the field with significantly enhanced abilities; those upgrades involved much higher costs than simply repairing equipment. Most such efforts are funded through the O&M and procurement accounts. During this phase, O&M funding continued to account for roughly 60 percent of total funding. 3
In 2006, DoD began widening its focus from resetting equipment to "reconstituting" the force, an effort that involved purchasing new equipment as well as repairing and replacing damaged systems. Whereas the reset program had required more O&M funding, the shift to reconstitution increased the need for procurement funds.
In 2007, DoD expanded the list of expenses that could be included in the request for wartime appropriations. In addition to seeking funds to pay for the direct incremental costs of operations in Iraq and Afghanistan, the services were permitted to include costs related to the broader war on terrorism. DoD requested funds to replace damaged equipment with newer models, accelerate planned purchases of new systems, address emerging needs, and enhance the military’s capability not only to continue current operations but also to be better prepared for the longer war on terrorism. Achieving the goals of that expanded reconstitution program required significantly more procurement spending.
Thus, in 2007 and 2008, procurement funding soared, averaging about 35 percent of total war funding in those years. While O&M funding continued to increase and funds for military personnel held steady, those accounts fell to an average of 52 percent and 10 percent of total war funding, respectively.
If the Congress provides the remaining $101 billion that DoD has requested for the war in 2008, annual funding levels will have increased by 155 percent since 2004. Increases in procurement and in operation and maintenance account for almost all of that growth. Appropriations for military personnel have changed little, and other DoD appropriations contribute relatively small amounts to the total.
The Congressional Budget Office relied on four sources of data for information on war costs:
■
Supplemental budget requests submitted by the Administration,
■
Budget justification materials provided by the Department of Defense,
■
Data on obligations from the cost-of-war reports compiled by the DoD comptroller, and
■
The supplemental budget requests submitted between 2002 and 2006 contained little detailed information on war expenses. DoD provided detailed justification materials for its regular budget request but did not submit similarly detailed information for its war-related expenses. In February 2007, DoD expanded the quantity of justification material submitted with its requests for war funding. In addition to providing more informative summary material, it prepared budget justification materials for each appropriation, similar to those provided for the regular budget. Those details are available for the 2007 and 2008 requests for war funding, as is some additional information on 2006 war-related funding that was provided in 2007. However, because similarly detailed information is not available for 2005 or for earlier years, a detailed analysis of the changing patterns of spending is impossible.
The material explaining war-related budget requests has become more informative, but it is not uniformly so for all categories of spending. Although the procurement documents provide details on each program, large portions of the operation and maintenance request fall into one, undifferentiated category. About 75 percent of the Army O&M request is identified as "operating forces, additional activities," a classification lacking enough explanation to be helpful in this analysis. Also, certain detailed documents that accompany the regular budget request—which would contain information on fuel costs, travel expenses, and civilian personnel costs, for example—are not provided with the request for war-related appropriations. Furthermore, when appropriating O&M dollars, the Congress does not always use the same terms and classifications that appeared in the department’s request, so it is difficult to determine the exact purposes for which funding is provided. Because of those limitations, CBO cannot clearly identify the factors that account for the growth in O&M appropriations for the war.
CBO has also analyzed reports on obligations of war-related funding in DoD’s cost-of-war reports. Because DoD aggregates obligations of O&M appropriations into broad categories, those reports suffer from the same limitations as the O&M budget justification materials. The Government Accountability Office has also noted that shortcomings in DoD’s systems for data collection reduce the accuracy of those reports and has concluded that the information they contain should be considered approximate.4
Funding for Operation and Maintenance
Half of the cumulative growth in war-related defense funding over the 2002–2007 period is explained by increases in annual appropriations for war-related operation and maintenance. The O&M accounts pay for the day-to-day operating costs of the armed forces and the related support activities of the Department of Defense. Those appropriations are used to
■
Cover the costs of operating and maintaining military equipment (including the purchase of repair parts);
■
Provide training and education to military and civilian personnel;
■
■
Purchase services provided through contracts with private entities;
■
Provide health care for military members, dependents, and retirees;
■
■
Appropriations for O&M, which account for 60 percent of all war-related funding to date, doubled between 2004 and 2007. Thus far, the Congress has provided just over $58 billion in war-related O&M funding for 2008. If the additional $32 billion requested by the Administration is provided, such funding for O&M will rise to $91 billion for 2008, slightly less than the 2007 figure (see Table 2).
Supplemental and Emergency War Appropriations for Operation and Maintenance
(Billions of dollars, by fiscal year)
Source: Congressional Budget Office.
Notes: * = less than $500 million; n.a = not applicable.
Excludes emergency funding for hurricane recovery, avian flu, border security, and other purposes not related to the war.
a. The Administration requested a total of $91 billion for war-related operation and maintenance (O&M) in 2008. The Congress had appropriated $58 billion for those purposes as of December 2007.
b. Other O&M accounts include the Defense Emergency Response Fund, Defense Health Program, Iraq Freedom Fund, and other miscellaneous O&M accounts. The Defense Emergency Response Fund received $24 billion in 2001 and 2002, some of which was used to support the operations of the military services. The Congressional Budget Office does not have information on how those funds were distributed.
c. Funding for indigenous security forces was appropriated to the Department of State in 2004 and to the Department of Defense thereafter. All appropriations for those forces are included in O&M in this analysis.
The Administration does not provide the types of data that would enable CBO to explain much of the annual change in war-related O&M funding since 2001. Factors that should influence O&M costs include the number of military and civilian personnel deployed, the number and size of bases and facilities in the theater of operations, and the pace of war-related activity by operational components, such as aircraft squadrons and Army and Marine Corps ground forces.
The Administration’s requests for supplemental appropriations have generally lacked the detail and consistent format necessary to undertake a comprehensive analysis of the changes in O&M costs. In addition, significant portions of the funding provided to pay for the operating support costs associated with the war have been provided as emergency appropriations in the regular defense appropriation bills, with little detailed information documenting the intended use of such funds. The justification materials that DoD provided in February 2007 to support its 2007 and 2008 supplemental O&M requests presented details in a structure generally consistent with the justification materials that accompany the regular budget request.
Similar materials for earlier years would be helpful for analyzing the growth in war-related O&M funding.
Operation and Maintenance: Army
The Army has received the largest portion of war-related O&M funding since the outset of operations in Iraq in 2003. If the Congress provides the remaining funds requested for 2008, total Army O&M funding over the 2003–2008 period for those purposes will be approximately $221 billion—more than half of all war-related O&M funding over that period. Appropriations for Army O&M grew from $20 billion in 2003 to $50 billion in 2007, accounting for more than 60 percent of the growth in total war-related O&M funding for those years. A total of $56 billion has been requested for 2008, of which $36 billion has been appropriated to date.
One contributor to the growth in Army O&M has been the increase in funding for repairing damaged or worn equipment, referred to by the Army as "reset." 5 Funding for reset has risen from $3 billion in 2003 to almost $9 billion in 2007. That increase explains 20 percent of the growth in total appropriations for Army O&M over that period.
Data from DoD’s cost-of-war reports show a steady rise in obligations for personnel support, operating support, and transportation for the Army since 2002.6 Some of the growth in personnel support can be attributed to an increased emphasis on providing items such as individual body armor and other personal equipment. Funding for such items increased from $1.7 billion in 2006 to $3 billion in 2007.
Excluding reset, the Army’s obligations for operating support grew from approximately $14 billion in 2003 to about $30 billion in 2007. Because CBO has limited data on factors that affect such costs, and detailed justification materials are not generally available for Army O&M, CBO cannot identify the factors that account for those increases in reported obligations. However, because the number of d