Congressional Report: Gross Mismanagement of Iraq Funds

By Jason Leopold
t r u t h o u t | Report

Wednesday 11 April 2007

A damning report issued last month by the nonpartisan research arm of Congress says the Department of Defense continues to overstate its financial needs, by tens of billions of dollars, to fund the wars in Afghanistan and Iraq. The agency also casts serious doubt on President Bush's statements that money to fund the war will dry up by the end of the month if his budgetary demands are not immediately met.

The 45-page report, "The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11," prepared for Congress by the Congressional Research Service, warned lawmakers that before they release additional funds to the Pentagon for the Iraq war, they should first demand that Defense Department officials provide an accurate accounting of how the money is being spent.

Since 2001, the Pentagon has grossly mismanaged the $510 billion spent thus far on the Iraq and Afghanistan wars; has used money earmarked for equipment upgrades to finance fighting on the battlefield, and has refused to provide Congress with a transparent accounting of the money it has spent and intends to spend, according to the CRS report.

"Congressional leaders have promised more scrutiny of the administration's requests for a [fiscal year] 2007 supplemental and [fiscal year] 2008 war costs. The [fiscal year] 2007 supplemental requests an additional $93.4 billion for war costs, which would bring DOD's annual war cost to $163.4 billion, the highest to date and 40 percent more than in 2006. If enacted, cumulative war costs would reach $607 billion," the report says. "Thus far, Congress is receiving fairly detailed quarterly reporting on various metrics for success in Iraq ... but cost is not one of those metrics."

Exacerbating the issue is the fact that the Department of Defense "has periodically revised the figures shown for each operation in previous years, suggesting questions about the validity of its figures," the report says, adding that some of the department's supplemental requests for 2007 include "$2 billion from some unknown source."

Last July, David Walker, comptroller general of the Government Accountability Office, testified before the Congressional Subcommittee on National Security, Emerging Threats and International Affairs. He told lawmakers that a lack of actual costs, supporting documentation and routine reporting problems by the Pentagon with regard to the wars in Iraq and Afghanistan "make it difficult to reliably know what the war is costing, to determine how appropriated funds are being spent, and to use historical data to predict future trends."

But the Defense Department "has not been willing to provide Congress" with the data it uses to predict its operating costs on the ground in Iraq and Afghanistan. As such, Congressional researchers have recommended in their report that Congress ask the Department of Defense Inspector General to audit the Pentagon in order to resolve these various gaps and discrepancies in cost data related to the Iraq and Afghanistan wars.

Until now, President Bush has enjoyed the luxury of having a Republican majority in Congress issue the Defense Department a blank check to use as the administration saw fit in Iraq without needed oversight from lawmakers, the report said.

Now, with a Democratic majority presiding over both Houses, Congressional researchers have advised lawmakers that they should be cautious not to give in to urgent budgetary demands from the administration that may very well be based on financial chicanery, the report added.

The report recommends that Congress should consider taking drastic measures to rein in the administration's out-of-control spending and draw on history for guidance.

"While only a handful of provisions have been enacted, Congressional consideration of these various limiting provisions placed pressure on the administration and thus influenced the course of events," the report says. "For example, one provision that prohibited the introduction of US ground troops into Cambodia was enacted in 1970 after US forces had invaded and then been withdrawn from Cambodia; that provision was intended to prevent the re-introduction of troops. Although President Nixon did not reintroduce US troops, the United States continued to bomb Cambodia for the next three years.

"Two well-known proposals - the McGovern-Hatfield amendment and the Cooper-Church amendments - were also part of this jockeying between the administration and Congress. The first prohibited expenditure of previously appropriated funds after a specified date "in or over Indochina," except for the purpose of withdrawing troops or for protection of US troops during the withdrawal, while the second prohibited the expenditure of any funds after July 1, 1970 to retain troops in Cambodia "unless specifically authorized by law hereafter. Overall, funding restrictions have generally proven more effective than the War Powers Act, which has been challenged by the executive branch on constitutional grounds," the report says.

Furthermore, before agreeing to provide the Pentagon with additional funds for Iraq, lawmakers should insist that the Defense Department provide a detailed financial report on the reasons its costs for funding the war have more than doubled from last year.

"Although DOD has testified frequently and submitted various reports on Iraq and the global war on terror, information and explanations of changes in the cost of OIF [Operation Iraqi Freedom] and OEF [Operation Enduring Freedom] have been limited, incomplete, and sometimes inconsistent," the CRS report dated March 15 says. "Until the [fiscal year] 2007 supplemental and [fiscal year] 2008 war costs request, DOD has submitted very little information to buttress its requests. Both the Iraq Study Group and [the Congressional Budget Office] have criticized DOD's presentation of cost data for Iraq and the global war on terror." The Iraq Study Group called the administration's requests "confusing, making it difficult for both the general public and members of Congress to know something that 'should be a simple question,' such as the amount requested for Iraq operations."

Documents turned over to Congress by the Defense Department to justify its financial needs in Iraq and the so-called global war on terror "have been sparse," and government agencies, including the Congressional Budget Office and the Government Accountability Office, "have all found various discrepancies in DOD figures - including understating budget authority and obligations, mismatches between [budget authority] and obligations data, double-counting of some obligations, questionable figures, and a lack of information about basic factors that affect costs such as troop strength ..."

"For example, DOD provided five pages to justify $33 billion in operation and maintenance spending, about half of the [fiscal year] 2006 supplemental request. Because few details are included, [the Congressional Budget Office] notes the difficulty in determining the basis of DOD requests and estimating alternatives," the report states. "And because appropriations for war are mixed with DOD's baseline budget, information about 'what has actually been spent,' or outlays, is not available. That information is important for estimating the cost of alternate future scenarios and also for showing the effect of war costs on the federal deficit."

The Pentagon claims the skyrocketing costs for funding the war are due to investments in "force protection" and "situational awareness, which amounts to radios, sensors, multi-purpose vehicles, as well as equipment for new Marine and Army units sent into battle, extensive upgrading of equipment, and the building of more extensive infrastructure to support troops and equipment in and around Iraq and Afghanistan.

But the Congressional Research Service report says "these reasons are not sufficient, however, to explain the scope of increases thus far or to sort out whether the new requests are legitimately war-related emergencies, rather than being part of ongoing modernization or transformation programs."

The Department of Defense "has provided little rationale or explanation for its requirements or change in requirements for replacing war-worn equipment or extensive upgrades. In some cases, requirements do not appear to be strictly related to war needs," the report says.

Congressional researchers have warned Congress that the Defense Department's $1.9 billion supplemental request for "military construction" in its 2007 budget is twice as much as what it received in 2005 and may be controversial if approved by lawmakers, because it would indicate an "intent to set up permanent bases in Iraq and ... not clearly an emergency. "

Finally, the report says that despite the rhetoric disseminated by the White House, the Pentagon has enough money to continue to fund the war until June or July, while Congress and President Bush try and come to an agreement about legislation lawmakers passed last month in which money to fund the Iraq war going forward is contingent upon a clear-cut exit date from the region. Bush has said he will veto the measure, and has stated publicly that additional funding for the war has now reached the point of urgency, a claim Congressional researchers say is untrue.

"The Army is currently claiming that the supplemental needs to be enacted by the end of April to avoid such problems. In this year's bridge fund, however, Congress provided $28.4 billion to meet the Army's operational needs, some $7 billion higher than last year's bridge fund. The additional funds could reduce the pressure to pass the supplemental quickly. Using DOD data, CRS estimates that the Army could cover its operational costs till about June or July 2007 by using war funds in the bridge, temporarily transferring procurement funds to operations, and tapping monies in its baseline budget that would not be needed until the end of the year," the report says.

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Jason Leopold is a former Los Angeles bureau chief for Dow Jones Newswire. He has written over 2,000 stories on the California energy crisis and received the Dow Jones Journalist of the Year Award in 2001 for his coverage on the issue as well as a Project Censored award in 2004. Leopold also reported extensively on Enron's downfall and was the first journalist to land an interview with former Enron president Jeffrey Skilling following Enron's bankruptcy filing in December 2001. Leopold has appeared on CNBC and National Public Radio as an expert on energy policy and has also been the keynote speaker at more than two dozen energy industry conferences around the country.