(Non) transparency of GWOT expenditures, and an update on Iraq metrics

While the events in Lebanon and Gaza have pushed Iraq off center stage, Iraq and Afghanistan remain the largest fiscal drains on the U.S. Treasury and the military’s ability to respond to other strategic challenges. In this light, GAO Comptroller David Walker’s testimony on Tuesday [pdf] is both illuminating and depressing. From the Summary:

Since the beginning of GWOT in 2001, Congress has appropriated about $430 billion to DOD and other U.S. government agencies for military and diplomatic efforts in support of GWOT. This funding has been provided through regular appropriations as well as supplemental appropriations, which are provided outside of the normal budget process. Since September 2001, DOD has received about $386 billion for GWOT military operations, including funding for homeland defense through Operation Noble Eagle. This $386 billion includes “bridge” funding in fiscal years 2005 and 2006 to continue GWOT operations until supplemental appropriations could be enacted. In addition, U.S. government agencies, including the Department of State (State), DOD, and the United States Agency for International Development (USAID), have received about $44 billion since 2001 to fund reconstruction and stabilization programs in Iraq ($34.5 billion) and Afghanistan ($9 billion) with an additional $400 million for the Commanders’ Emergency Response Program in Iraq and Afghanistan. For fiscal year 2007, DOD has requested another $50 billion in bridge funding for military operations and other U.S. government agencies have requested $771 million for reconstruction and stabilization activities.

Since 2001, U.S. government agencies have reported hundreds of billions of dollars in costs associated with GWOT; however, we have previously reported on our concerns with DOD’s data reliability and cost reporting. DOD has reported incremental costs of about $273 billion for overseas GWOT-related activities through April 2006. This amount includes almost $215 billion for operations in Iraq and almost $58 billion for operations in Afghanistan, the Horn of Africa, the Philippines, and elsewhere. These reported costs do not include obligations for intelligence and the Army’s modular force transformation. The difference between the amount appropriated and DOD’s reported costs through April 2006 can generally be attributed to unreported costs for intelligence and Army modular force transformation, as well as funding for procurement, military construction, and research, development, test, and evaluation, which can be obligated over multiple years, that has not yet been obligated. However, our prior work has found numerous problems with DOD’s processes for recording and reporting costs for GWOT, including long-standing deficiencies in DOD’s financial management systems and business processes, the use of estimates instead of actual costs, and the lack of adequate supporting documentation. For example, we found inadvertent double counting in a portion of DOD’s reported costs amounting to almost $1.8 billion from November 2004 through April 2005. Furthermore, DOD’s reported costs for GWOT operations overseas have grown steadily in each fiscal year through fiscal year 2005 — from about $105 million in fiscal year 2001, to begin preparation for operations in Afghanistan, to about $81.5 billion in fiscal year 2005. With this steady growth, it is important to ensure that all commands seek to control costs to the extent possible. In addition to reported costs for military operations, about $23 billion has been obligated for Iraqi reconstruction and stabilization, as of January 2006. However, U.S. government agencies, other than DOD, do not formally track all GWOT costs. This, along with DOD’s cost reliability and reporting problems, make it difficult for the decision makers to reliably know how much the war is costing, to determine how appropriated funds are being spent, and to use historical data to predict future trends. (emphasis added –mdc)

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By the way, my use of the term “GWOT” does in no way mean that I agree with the appropriatness of the term.

Now for the update on Iraq (expenditures on which comprise a portion of the GWOT expenditures). A month ago, I wrote a post on some Iraq metrics. Below is the updated figure for U.S. casualties.


Figure 1: Cumulative fatalities and wounded in Iraq, up to end-June. Source: Iraq Coalition Casualities, accessed 20 July 2006.

I was admonished by several individuals for not taking into account Iraqi civilian casualties. As is well known, accurate counts of these casualties is inherently difficult. I have relied upon the work of O’Hanlon and Kamons at Brookings’ Saban Center, as reported in the 13 July 2006 edition of the Iraq Index [pdf]:

Figure 2: Fatalities and wounded reported by press sources up to July 12. Source: Iraq Index [pdf].

Caution: Since the figures are as of July 12, the apparent decline in deaths and wounded for July should not necessarily be taken as an improvement in the situation. More likely, it would be appropriate to multiply the reported figure by at least two to bring the adjust the figure up to a monthly rate (this is a conservative adjustment as there are more than 24 days in July, and additional reports trail in after the end of the month).

Late Addition (7/22/06)


Figure 3: Total civilian casualties, compiled by UN Assistance Mission in Iraq. Source: Iraq Index [pdf].

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18 thoughts on “(Non) transparency of GWOT expenditures, and an update on Iraq metrics

  1. GWG

    “…my use of the term “GWOT” does in no way mean that I agree with the appropriatness of the term.”
    What would you suggest?

  2. 2slugbaits

    Shortly after 9/11 the money folks (called “G-8″ in HQDA) have been at war with the operations (“G-3″) and logistics (“G-4″) folks. As my friends at Rand told the HQDA leadership, the G-8 side of the house has to learn to accept more financial risk and the G-3 and G-4 sides have to accept somewhat more operational risk. This conflict has been directly responsible for a lot of the cost shifting within the Pentagon as one Army account borrows against another. Is it any wonder that the financial transactions look like a bowl of spaghetti? Here’s a real world example. The logistics records, which are used to formulate budget estimates, reflect assets that have been de facto lost in combat, intransit or are among the 200,000 CONEX containers stuck in theater. These records reflect the logisticians’ best estimate of reality. On the other hand, the General Ledger Accounting Codes (GLAC), the “130 Report” and Supply System Inventory Report (SSIR) used by the G-8 still reflect billions of dollars of phantom inventory that cannot be financially “written off” due to Congressional rules. In fact, in this regard the risk of a GAO audit is largely to blame for the G-8′s refusal to write off phantom inventory…now there’s irony for you! There are other financial problems too. For example, if an Apache helicopter has to be returned to a depot for overhaul, should the helicopter be repaired to its old configuration or should it be simultaneously upgraded? If upgraded, then it ain’t legal to use GWOT funds to overhaul. When a National Guard unit trains an extra month preparing for possible deployment, should that training cost be charged to GWOT or normal Training Resource Model (TRM) funds? If a unit has to use TRM operations and maintenance dollars to fund GWOT operations pending approval of a GWOT supplemental, should that same unit use the GWOT funds to reimburse the TRM dollars? Finally, it doesn’t help when the DoD leadership relies upon “supplementals” to fund ongoing operations but refuses to do any advance planning for those supplementals. Just try and get the DoD leadership to commit to a guess as to troop deployments and optempo rates for FY2007. Good luck. The DoD is in a financial mess right now, but as with so many GAO findings there is a tendency to always blame financial execution but never blame the leadership’s policies that ultimately caused the financial execution mess in the first place. But hey Mark, if this GAO finding is causing you to lose sleep now, just wait until it all comes crashing down in FY2008.
    The GAO also mentions the Army’s ongoing modularity effort that transforms the traditional corps/division force structure into modular “plug and plan” brigade combat teams. It’s the worst kept secret around that Rumsfeld has long since lost interest in the war and what really captures his imagination is this military transformation stuff. In principle it might be a good idea, but it makes about as much sense to try and do this during wartime as it did to fire up a radically new and unproven financial system in Kuwait literally hours before troops crossed into Iraq. You can guess how well that worked!

  3. menzie chinn

    2slugbaits: Thanks for the extensive insight into DoD accounting.

    GWG: As is well documented, Iraq had no operational link to the attacks of 9/11. Hence, I would separate expenditures for the intervention in Iraq — which constitute the majority of expenditures — into a different category (titled “Operations in the Iraqi theater”, or something not driven by PR concerns). For the expenditures in Afghanistan, and for increasing security against attacks by al Qaeda, I favor the term Rumsfeld used for a short period: “a global struggle against violent extremism”, or GSAVE. This reflects more accurately the fact that military means alone — or even primarily — are unlikely to achieve U.S. aims of defeating terrorism. But the Administration as well as GAO and CBO use GWOT as a category, so I adhere to their convention.

  4. Joseph Somsel

    The public utterances of the Administration are restrained for valid political reasons. At the root, this is a religous war with a faction within Islam. Are we to all start singing “Onward Christian Soldiers?” Not likely and for good reason. Acknowledging the religous nature of the war would almost force more Muslims to support the fanatics we are fighting.
    By framing the war as GWOT, we are segregating the fanatics without making it a war against all Muslims which we are by no means angry with.
    As to costs, wars are always expensive. But this one was brought to us and we must respond and we must win. We can always do better and accounting methods have to support our military goals by ensuring that resources are allocated as wisely and as effectively as possible.
    The GAO’s statement quoted about only partially addresses how we can win with least waste and in large part is not particularly constructive.
    I don’t see anything here likely to need a replay of Harry Truman’s Senate hearings during WWII. I sense that less Congressional involvement in internal Pentagon accounting might be better than more rules and audits.

  5. Spengler

    With Sunnis and Shiites killing each other in large numbers every day, the Iraq War has been succeeding brilliantly, though perhaps not in a way George W Bush intended. One hopes that the next US President will be smart enough to know how to stir the pot and bring about an Islamic version of the Thirty Years War and how to keep the US and the rest of the civilized world out of harm’s way.

  6. menzie chinn

    Joseph Somsel: I’m not certain I understand you point regarding titles. For me, the main point is that GWOT is a misnomer for actions in Iraq. I further don’t understand which war “was brought to us and we must respond and we must win.” If you’re speaking about Iraq, well, I’m still waiting to hear about those WMD’s and the operational link to al Qaeda.

    Regarding expenditures in Iraq, my interpretation of your statement is that no Conressional oversight is necessary. If this is the case, do you expect internal pressures from the White House and/or DoD to effect changes?

    Spengler: Regarding civil war, see today’s NYT article by op-ed by Sambanis. I’ve added a bar chart of total civilian casualties compiled by the UN Assistance Mission in Iraq, and drawn from Iraq Index to the orginal post.

    Since it’s hard to read the figure, note the June figure is 3149.

  7. Nobody

    According to CIA World Factbook, the population size and growth rate of Iraq are 26.783 million and 2.66%, respectively. This means that the population of Iraq increases by about 712K per year, or 59K per month. So 3K per month makes barely a dent on Iraq’s population growth.
    Historians disagree, but some estimates suggest that the Thirty Years War reduced the population of Central Europe by 10%~20%.

  8. Menzie Chinn

    Nobody: First, with all due respect to the CIA World Factbook, no accurate census of Iraq has taken place for decades. Both the figure and the growth rate are estimates of a highly uncertain nature.

    Second, the US population is at 298.444 million (CIA estimate for 2006), so scaling up to the US size would result in 34089 deaths per month or 421073 per year. Despite the fact that this would only make a small dent in America’s population growth of 2.7 million per year (once again based upon the CIA estimate), I would suspect that people would take notice.

  9. Joseph Somsel

    Professor Chinn,
    I think we agree that GWOT is not an accurate title and is one that future historians will retire. Iraq is just the main current theatre in the “Long War.” War was brought to us with steady escalation until we got serious following 9/11. Perhaps you don’t recognize that day as an act of war?
    Once one recognizes a state of war exists, the only strategy is defeat of the enemy – that’s al Quida’s goal, is it not? As to Iraq, would you have considered the Normandy invasion as NOT part of WWII? Saddam’s policies were clearly aggressive, subversive, and hostile in the extreme to the US. Programs, personnel, and infrastructure for WMD all remained in place to execute Saddam’s hostile intent. The story of his stockpiles being transfered to Syria is slowly leaking out. His broad support of terrorists and bribery of foreign government officials is well documented.
    There are numerous facts that are not mentioned in the media. For example, remember the reactor that the Israelis bombed? It had several core reloads of highly enriched uranium fuel already in-country as supplied by the French. Did you follow it’s retrieval?
    As to Congressional oversight, I will assert that GAO is not an impartial, neutral player. The tone and content of this report may well be read as saying that Congressionally mandated accounting practices are inappropriate for war-fighting. One can also read this as bureaucratic infighting. It should be a truism that financial signal-to-noise ratios always degrade during the stress of combat. The goal is to support victory, not to have the perfect set of books.
    Show me corruption and we’ll gladly whack’em.

  10. Nobody

    Back in WWII, if an American were told that the Germans and the Japanese had started to fight each other and produce a casualty of 3K per month, he or she would have greeted the news with great joy. Today, it seems that one is supposed to merely “take notice”. The inability or unwillingness of the elite of this country (a professor at a pretigious university should certainly be counted as an elite) and the West in general to take sides in this conflict is truly sad.
    Side remark: Please spare us such empty boilerplates as that Islam is a religion of peace and that this is not a war against a religion. The fact that there is no significant antiwar movement despite the best efforts of the media shows very clearly that the American people see right through them.

  11. JDH

    Nobody, I’m not really following your point here. Are you suggesting that Americans in WW2 would have favored the idea of 3,000 random German civilians being killed each month?
    It seems to me that most of these car-bomb victims are ordinary Iraqis trying to go about their lives. Their deaths are surely tragic, particularly for someone who is hoping for the American mission of creating a peaceful democracy in the Middle East to succeed.

  12. Nobody

    “Are you suggesting that Americans in WW2 would have favored the idea of 3,000 random German civilians being killed each month?” It is almost surreal, if not so sad, that apparently even university professors here have not heard of Dresden, Tokyo, and Hiroshima.
    Please spare us revisionist histories. Those acts clearly had popular support back then in this and other Allied countries.

  13. JDH

    Nobody, Truman chose to use nuclear bombs in Nagasaki and Hiroshima not because he wanted Japanese dead, but because he believed (correctly) that these events would end the war quickly.
    Civilian deaths in Iraq make a quick end to the war less likely. I therefore do not understand why you think that anyone should view these casualties as anything other than tragic.

  14. Menzie Chinn

    Joseph Somsel: I think you are lumping lots of disparate things together — an incipient civil war in Iraq based upon sectarian divisions, anti-modernist tendencies associated with rapidly changing societies — into what from a distance looks like a single phenomenon.

    In my mind, your metaphor is not apt. Iraq is to this long term struggle against anarchy like Khalkhyn Gol — not Normandy — is to WW II.

    Here is one instance of corruption — from The Record, Jan. 24, 2004 ($), via NexisLexis:

    Halliburton employees have been accused of taking up to $6 million in kickbacks from a Kuwaiti subcontractor that was supplying U.S. soldiers in Iraq, new trouble for Vice-President Dick Cheney’s former company.

    A Halliburton spokeswoman said the company fired the employees involved and reported the problem to the Pentagon.

    “We found it quickly, and we immediately reported it,” spokeswoman Wendy Hall said. “We do not tolerate this kind of behaviour by anyone at any level in any Halliburton company.”

    The Pentagon already has in progress a criminal inquiry into possible overcharging involving another Halliburton contract: the company’s deal to supply gasoline to Iraqi civilians. Democrats have criticized the contracts and demanded further investigations; the company has denied wrongdoing.

    In the latest investigation, Halliburton auditors found a $6 million overcharge by a Kuwaiti subcontractor in its U.S. army supply contract, Hall said yesterday. Part of that money may have been paid as kickbacks to one or two Halliburton workers, she said.

    Actually, for me, the key issue is not corruption. Perhaps more importantly, there is the issue of whether funds are being used in an efficient manner; in other words, I wonder about the competence of the managers (who for all I know might be the same ones who didn’t think a post-War stabilization plan was necessary, or that body armor in large amounts might be needed).

    Nobody: I don’t believe I mentioned “Islam” in my post at all. Which “side” I am on is on the side of those who want to effectively mitigate the ability of violent elements to disrupt the United States, by way of trying to understand what is going on. I’m not certain the present course of deliberately confusing different phenomena is serving the aim that responsible people share — that of safeguarding the Nation.

  15. 2slugbaits

    Menzie said: “I wonder about the competence of the managers (who for all I know might be the same ones who didn’t think a post-War stabilization plan was necessary, or that body armor in large amounts might be needed).”
    I know those managers. At the ground level most of them are dutiful and want to do the right thing. They are also typically field grade officers who want to impress the boss with their “can do” attitude. And sometimes that’s a problem because it leads to all kinds of inefficient decisions. Military officers are trained to think in terms of priorities, which is a useful skill in combat situations with a very short time horizon; but when you take that same mindset and apply it to logistics problems in the rear, that’s a recipe for mismanagement and inefficiency. Decisions in the logistics tail should be guided by equalizing marginal benefits across many different projects over a long time horizon. But that’s not how our military officers are trained to think. As a result those well intentioned colonels in the rear find themselves authorizing premium charges in order to achieve a goal with marginal benefits. That’s the nature of the military mind. It’s the kind of thinking that will keep you alive in a foxhole but will bankrupt you in business.

  16. Menzie Chinn

    2slugbaits: Thanks for the comments. I do believe the uniformed service members are doing the best they can. By managers, I am talking about those at much higher levels than you are speaking of — that is the Secretary of Defense and the Undersecretary of Defense for Policy. I hope that clarifies matters.

  17. Bruce the Fierce

    Nobody & Joseph: I have no interest in debating the worthiness of the Iraq war here, and I don’t think anyone else does either.

    One question I have (a bit off topic – apologies). I do believe that almost all of the GWOT expenditures are (still) ‘off-budget’ (please correct me if I’m wrong – I hear very little about this lately). Anyone want to comment on the appropriateness of this, and the effects on government debt figures generally used (as I believe that these use ‘official’ figures)?

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