SCHUMER, MALONEY INVITE OMB DIRECTOR NUSSLE TO EXPLAIN ADMINISTRATION’S ECONOMIC COST OF WAR ESTIMATES

Previously Released Joint Economic Committee Report Estimates Iraq War Could Cost $3.5 Trillion Through FY2017, Likely to Reach 1.3 Trillion in FY2008

OMB Director Nussle Criticized the JEC Report, But JEC Calculations Were Based on White House and CBO Endorsed Guidelines and Figures

U.S. Senator Charles E. Schumer, Chairman of the Joint Economic Committee (JEC) and Congresswoman Carolyn B. Maloney, Vice Chair of the JEC, sent a letter to the Office of Management and Budget Office Director James Nussle today, inviting him to testify before the committee on the costs of the Iraq War. The Joint Economic Committee recently released a report, “War at Any Price? The Total Economic Costs of the War” revealing the true costs of the wars in Iraq and Afghanistan beyond the funding budgeted by Congress. The JEC estimates that the sum of direct budget costs, lost productive investment due to Iraq-related borrowing, interest payments to foreign purchasers of Iraq-related debt, oil market disruptions, long term health care for veterans, and the costs due to strains on our military could total $3.5 trillion or more depending on how long President Bush pursues the same course of action in Iraq. OMB Director Nussle has taken issue with these findings according to press reports.

“The backbreaking costs of this war to American families, the federal budget, and the entire economy are beyond measure in many ways,” Schumer said. “What this report makes crystal clear is that the cost to our country in lives lost and dollars spent is tragically unacceptable, and this Administration’s refusal to enter into an honest debate about the costs of its war policy, beyond the dollars included in federal budget, is shameful.”

Maloney said, “An open and honest debate about the true costs of the Iraq war is long overdue.  No credible economist or policy expert would doubt that the full long-run costs of war spending to the American economy do in fact exceed the enormous Federal budgetary costs. The OMB Director has charged that we are trying to ‘manufacture bad news’ about the Iraq war, but the staggering figures speak for themselves. By every measure, this war has cost Americans far too much – whether it’s lives lost, dollars spent, or our reputation tarnished around the world. The Iraq war threatens to harm our economy for years to come and it’s time for the Administration to acknowledge this fact.”      

In their letter to Nussle, Schumer and Maloney point out that the JEC report relied only on sound, generally accepted data and many cost estimation assumptions and methodologies that had already been endorsed by the White House. “In fact, the JEC report relies heavily on OMB Circular A-94, the official White House guidance to Federal agencies on how to perform cost analyses of Federal programs that your agency produced,” they write.

“Unfortunately, to date, the Administration has failed to produce any economic cost estimate of our continued presence in Iraq and will not even include war spending in traditional defense budgeting and spending requests. The American people deserve an honest debate about the full costs of this war, not empty partisan rhetoric.  To that end, we would certainly welcome your appearance before the Committee, where you could present your data and calculations about what the administration believes the full economic costs of the Iraq war have been so far, and will be going forward.  We look forward to a productive and open dialogue with you on this critically important issue,” Schumer and Maloney conclude.

The JEC has estimated the total costs of the war to the American economy and the key findings are:

·        The total economic costs of the wars in Iraq and Afghanistan so far have been approximately double the total amounts directly requested by the Administration.

·        Even assuming a moderate drawdown in troop levels, total economic costs of the wars in Iraq and Afghanistan (with the vast majority of funds going to the war in Iraq) would amount to $3.5 trillion between 2003 and 2017.  This is over $1 trillion higher than the recent Congressional Budget Office (CBO) federal cost forecast for the same scenario, which counted only direct spending and interest paid on war-related debt.

·        The total economic cost of the war in Iraq to a family of four is $16,500 from 2002 to 2008. When the war in Afghanistan is included, the burden to the American family is $20,900.  The potential future impact on the family of four skyrockets to $36,900 for Iraq and $46,400 for Iraq and Afghanistan from 2002 to 2017.

 

Senator Schumer and Congresswoman Maloney’s letter to OMB Director, James Nussle, is reproduced below:

December 6, 2007       

The Honorable James Nussle
Director

The Office of Management and Budget
725 17th Street, NW
Washington, DC 20503

Dear Director Nussle:

In a recent Associated Press article you were quoted taking issue with the Joint Economic Committee (JEC) report examining the total economic costs of the war in Iraq

Virtually no economist or policy expert would doubt that the full long-run costs of war spending to the American economy do in fact exceed the Federal budgetary costs. Since these Federal budgetary costs are enormous, over ten times what the Administration originally estimated the war would cost and still rising, it stands to reason that the economic costs would be substantial as well.

As a former Chairman of the House Budget Committee and new Director of the Office of Management and Budget, we’re sure you would agree that determining the true economic costs of this war is vital to our economic security. Right now, our economy faces threats from the housing downturn and related credit crunch, the falling dollar, and our $9 trillion debt, which is being fueled in no small part by the growing cost of the Iraq war. We asked our staff on the Joint Economic Committee to undertake this study in order to examine the broader impact of the war on the American economy.

The JEC report estimates that through the close of FY 2008 the full economic costs of the Iraq war will be about $1.3 trillion.  This is about double the immense federal budget costs that have been reported to the American people.  Based on Congressional Budget Office (CBO) budget forecasts, the JEC report estimates that the total economic costs of the wars in Iraq and Afghanistan would rise to at least $3.5 trillion over the next decade if the occupation of Iraq continues.

The JEC report relied only on sound, generally accepted data and many cost estimation assumptions and methodologies that had already been endorsed by the White House. In cases where there were doubts about proper assumptions to use in determining the economic costs of the war, moderate to conservative assumptions were used.  In fact, the JEC report relies heavily on OMB Circular A-94, the official White House guidance to Federal agencies on how to perform cost analyses of Federal programs that your agency produced.

The American people deserve a full and complete accounting of the costs of this war. Given our current budgetary situation, which has led the President to state that the nation cannot afford to spend an additional $5 billion per year on health care for our nation’s low-income children, it is especially important that we have a clear picture of what this war is costing us and will cost us in the future. Unfortunately, to date, the Administration has failed to produce any economic cost estimate of our continued presence in Iraq and will not even include war spending in traditional defense budgeting and spending requests.

The American people deserve an honest debate about the full costs of this war, not empty partisan rhetoric.  To that end, we would certainly welcome your appearance before the Committee, where you could present your data and calculations about what the administration believes the full economic costs of the Iraq war have been so far, and will be going forward.  We look forward to a productive and open dialogue with you on this critically important issue.

Sincerely,

Senator Charles E. Schumer

Chairman, Joint Economic Committee

Congresswoman Carolyn B. Maloney

Vice Chair, Joint Economic Committee

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