Congress full of ideas to pay for Afghan war without ballooning deficit

U.S. House Speaker Nancy Pelosi, speaking with U.S. Army command Sgt. Maj. Roy Wells (right) and Brig. Gen. James Cook in San Francisco last month, says she opposes a surtax to pay for the war in Afghanistan.
REUTERS/Robert Galbraith
U.S. House Speaker Nancy Pelosi, speaking with U.S. Army command Sgt. Maj. Roy Wells (right) and Brig. Gen. James Cook in San Francisco last month, says she opposes a surtax to pay for the war in Afghanistan.

WASHINGTON, D.C. — There are almost as many ideas among lawmakers as to how to pay for President Obama’s planned 30,000 troop increase in Afghanistan as there are members of Congress.

Among them is Rep. Betty McCollum’s 1-percent war surtax, a plan that was rejected by House Speaker Nancy Pelosi Thursday but, given some of its senior Democratic backers, now stands as a jumping-off point for a host of other revenue increases that haven’t been put on paper.

Sen. Ben Nelson, a centrist Nebraska Democrat, wants to start issuing war bonds, an idea McCollum said she could support. Others, Republican Michele Bachmann included, want to cut planned or existing programs to find the funding.

But despite the dissention on how to pay for such a troop increase — which the White House estimates would cost an additional $30 billion this year — a growing consensus is emerging that it must be paid for up front rather than borrowing the money or using off-budget emergency supplemental bills.

“I believe we need to have a real, honest conversation about how we pay for this,” Democrat McCollum said, adding that any increased spending on the war would have to be paid for eventually — either up front or later in the form of repaying debt. “Several of us feel we have to pay for this war in real time,” she said.

Change in thinking
“There does seem to be a shift in thinking that if we’re going to be engaged in Iraq or Afghanistan, we need to find a way to pay for it and not add to the deficit,” said Larry Jacobs, a political scientist at the University of Minnesota. “There’s a sense of urgency, because the budget deficits are not sustainable.

“I think there will be a major push on the deficit,” Jacobs continued, “and there’s going to be a fairly significant effort to raise revenues for the Afghanistan surge that will draw support from Republicans.”

Getting those votes will be tricky, and some (Republican Bachmann included) have said they won’t vote for any revenue increase. But Senate Republican Whip Jon Kyl of Arizona said today in an interview on National Public Radio that his party would eventually vote to fund the surge.

Change in strategy
It’s important to point out that Congress hasn’t officially agreed to any troop escalation. At some point, regardless of how the White House goes about getting legislative approval, lawmakers will have a chance to put themselves on the record on the troop surge — either by voting for it, voting to pay for it or both.

Paying up front for the Afghanistan war would be a departure from a precedent forged under the Bush administration, when talks of a ballooning deficit and increasing national debt played second fiddle to the concern of paying for the war there and in Iraq. Contrary to the current focus on raising revenues, Congress approved large tax cuts to stimulate the economy while also voting to continue paying for the war.

“This is potentially a momentous shift because tax cuts were the top priority, even if it contributed to the deficit,” Jacobs said.

Minnesota Democrats seem to be largely aligned behind changing the way the Afghan war is funded, even if they’re not sure how to do it.

 “I’m concerned about how we’re going to pay for it,” Rep. Collin Peterson said of the war effort. Peterson is among the many in Congress who have said they want to try and find a way to pay for any additional war effort, though he added that “the last thing the economy needs is another tax increase.”

“We were put in a bad situation and there are no easy options,” Sen. Al Franken said. He was warm to McCollum’s bill, calling it probably “the most acceptable surtax that you could pass.”

“Of any surtax, it might be the one that I would vote for,” he said.

But Rep. Tim Walz is not so sure. “I don’t know that I support [McCollum’s] legislation, but we have to do everything possible to pay for [the surge],” said  Walz. “It cannot be off budget or done through supplementals.”

More broadly
Not all analysts agree with up-front funding.

“In principle it is a noble thought to pay as we go on war costs,” said Michael O’Hanlon, a defense and budgeting expert who spent five years in the Congressional Budget Office and now is a senior fellow in foreign policy at the Brookings Institution, a liberal think tank. He has endorsed the troop surge.

“In practice, during a recession, when the deficit is already $1 trillion a year, worrying about another 3 percent increase to that deficit and requiring a tax to pay for it makes little economic sense,” he said.

During World War II, for example, the United States’ deficit rose to 30 percent of its gross domestic product. The deficit today, by comparison, is about 8 percent. That spending didn’t just fund victories over Japan and Nazi Germany; it also spent the United States out of the Great Depression.

O’Hanlon’s solution?

“We don’t pay for it.  We keep running deficits until the economy starts to rebound,” he said.  “And then we view war costs as part of the broader fiscal problem, not an isolated and separable one.”

Such a recommendation, unlike in previous years, is likely to go unheeded.

“We’ve failed to appreciate the connection between our national security and our economy,” Obama said during a speech to the nation Tuesday. “We can’t simply afford to ignore the price of these wars.

“All told, by the time I took office, the cost of the wars in Iraq and Afghanistan approached a trillion dollars.  Going forward, I am committed to addressing these costs openly and honestly.  Our new approach in Afghanistan is likely to cost us roughly $30 billion for the military this year, and I’ll work closely with Congress to address these costs as we work to bring down our deficit.”

A spokesman for Bachmann said Democrats could find the money easily — and without raising taxes —  if they’d just scale back on some of their more expensive plans.

“It’s interesting that when it comes to bailing out Wall Street, auto manufacturers and spending hundreds of billions of dollars for an economic ‘stimulus’ plan, Democrats in Congress don’t bat an eye at spending money we don’t have,” Bachmann spokesman Dave Dziok said in an e-mail. “But when it comes to our national defense, they all of a sudden become number crunchers and budget hawks while our soldiers put their lives at risk overseas.”

White House officials also argue that costs in Afghanistan may be made up in part by savings in Iraq, as troops are drawn down in that country.

Pelosi so far has declined to endorse any specific plan to pay for the troop increase.

“When the president makes a request, we will make a judgment about what support it has, and some of that will relate to how it affects the deficit,” she said.

Derek Wallbank is MinnPost’s Washington, D.C., correspondent. He can be reached at dwallbank[at]minnpost[dot]com.

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Comments (2)

  1. Submitted by Richard Schulze on 12/04/2009 - 11:40 am.

    We are deeply in debt. Our GDP is down. Our manufacturing is down. Our savings are down. The value of the dollar is down. Our trade deficit is up. Business failures are up. Bankruptcies are up. The war is a threat to our national security. We’ll spend over $100 billion next year on it.

    Defense spending means that the government is pulling away resources from the uses determined by the market and instead using them to buy weapons and supplies and to pay for soldiers and other military personnel. In standard economic models, defense spending is a direct drain on the economy, reducing efficiency, slowing growth and costing jobs.

    In the most recent quarter, defense spending was equal to 5.6 percent of GDP. By comparison, before the September 11th attacks, the Congressional Budget Office projected that defense spending in 2009 would be equal to just 2.4 percent of GDP. Our post-September 11th build-up was equal to 3.2 percentage points of GDP compared to the pre-attack baseline.

    In other words, the standard economic models that project job loss from efforts to stem global warming also project that the increase in defense spending since 2000 will cost the economy close to 2 million jobs in the long run.

    //With 100,000 troops in Afghanistan at an estimated yearly cost of $30 billion, it means that for every one al Qaeda fighter, the U.S. will commit 1,000 troops and $300 million a year.In addition to the troops – the US now has more than 104,000 defense contractors in the country. So that drives up the cost per al Qaeda fighter even higher.//

    If we continue to react as we did after 9-11 then al Qaeda will win. Everyone here should understand ROI [return on investment]. al Qaeda invested less than a million and made us spend over 1 trillion dollars. They could pass the collection plate around at the average mosque in Pakistan and bankrupt us with 1 more operation. Even if you are not convinced that we are creating more extremists than we are killing, we simply cannot afford to “win the war on terrorism”.

    Keep in mind as well that most empires that have been defeated were not annihilated on the battlefield, but rather in the bank account.

  2. Submitted by Bernice Vetsch on 12/04/2009 - 04:03 pm.

    Thank you, Mr. Schulze, for a really informative comment.

    I wish Congress would give the War on Terror (and the War on Drugs while they’re at it) some deep reconsideration. Bush/Cheney used 9/11 as its excuse to invade Iraq for its oil, helped by Congress’s desire to keep Americans safe and therefore its authorization to hunt the bad guys wherever they may be.

    Thousands of dead Americans and hundreds of thousands of dead Iraqis later, we are now moving the War to Afghanistan (with spillover into Pakistan), where we have already killed many hundreds of Afghan and Pakistani civilians and a few terrorists. Are we really “keeping America safe” or just alienating and radicalizing more potential terrorists?

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