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Iraq Journals

Glimpses of life in a war-torn country by GNS national security correspondent John Yaukey and photo director Jeff Franko.


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Friday, October 17

Iraq costs rise with little relief in sight

By John Yaukey | GNS

If the nearly $87 billion aid and security package for Iraq seems a bit steep to the average taxpayer, the cost of the war has been doubly heavy for the Robison family of Krum, Texas, and others like them.

While the family breadwinner serves in Iraq with an Army Reserve unit facing an extended deployment, Candance Robison and their two small children must get along without a full salary.

``I'm pinching my pennies and trying to get through this day by day,'' Robison said. ``I don't know how much longer my husband's employer is going to be able to pay us what we're getting now. The longer this drags on, the closer I'm afraid I'm getting to some real problems.''

Indeed, the cost of the war in Iraq is running deep and wide.

On Capitol Hill, lawmakers had to swallow hard as they debated their second major war supplemental spending package - the largest budget add-on in history.

In living rooms across the country, thousands of families are struggling on incomes slashed by long reserve deployments in Iraq. Reserve and National Guard units make up 38 percent of the roughly 110,000 U.S. Army troops now in Iraq.

``Obviously, we're talking about a lot of money here, but there is little else we can do now except stay the course,'' said Sen. Lincoln Chafee, R-R.I. ``We're in it, and we can't leave. We are the government in Iraq now.''

And governing a country struggling to rebuild amid flying bullets and bomb shrapnel is especially expensive.

So far, the total cost to U.S. taxpayers is running close to $165 billion - and counting.

In April, Congress approved a $78.5 billion package that quickly evaporated in a campaign that chews up roughly $1 billion a week.

By comparison, the monthly cost is approaching that of the Vietnam War, which cost the inflation-adjusted equivalent of $5.15 billion per month.

Unless U.S. allies loosen up their purse strings at a meeting of potential donors to the Iraqi cause Thursday and Friday in Spain, the cost to Americans for ousting Saddam Hussein and rebuilding what he neglected for three decades could run $200 billion or more over the next few years.

That's more than a third of the projected $480 billion federal deficit for fiscal year 2004.

According to the Middle East Economic Digest, the total cost for rebuilding postwar Iraq could hit $150 billion - far more than the $20.3 billion President Bush requested for reconstruction in his latest Iraq package.

If rebuilding costs continue to spiral far higher than initial Bush administration projections - an April 23 estimate put the total U.S. cost at $1.7 billion - consumers and businesses could start feeling the effects as the deficit grows. Over time, deficits can push up interest rates, making mortgages, car loans, credit cards and investment capital all more expensive.

Grants vs. loans

The debate in Congress over the Iraq spending package was never about whether to approve the funds but rather how to structure them.

Despite intense lobbying by Bush himself, the Senate decided that half of the roughly $20 billion in rebuilding money should be a loan - rather than a grant - underwritten by Iraq's massive oil reserves. The loan would be forgiven only if other nations write off 90 percent of the roughly $200 billion Iraq owes them.

The fear was that U.S. dollars would be used to pay off Iraqi debt to Russia, France and Saudi Arabia.

Bush argued that grants, rather than loans, would buy some good will in Iraq and the Arab world.

Opponents won by championing the taxpayer.

``In the Bush administration's viewpoint, the loser here should be the American taxpayers,'' said Sen. Richard Durbin, D-Ill.

The House decided to keep the entire reconstruction allotment a grant. The winning argument was that expecting repayment from Iraq through oil revenues would make the war appear to have been a colonial plundering rather than a liberation.

The debate saw occasional moments of clarity and candor, sometimes rare on Capitol Hill.

``None of this is ever gonna be repaid anyway,'' said Rep. John Boehner, R-Ohio. ``So you can play it to the folks at home like a loan if you want.''

House and Senate negotiators will reconcile their differences next week.

Little help from friends

The $87 billion supplemental package is supposed to be the last for operations in Iraq, but that assumption by senior Bush administration officials is based on more international generosity than some U.S. allies have shown thus far.

To date, only Japan is talking about contributions in the billions rather than millions. The Japanese are preparing an aid package of between $1.5 billion and $4 billion over four years that they'll likely announce at the donor conference.

The European Union has pledged $230 million.

Britain, the United States' closest ally in Iraq, has agreed to $438 million.

Spain will commit $105 million.

Sweden has said it will provide only humanitarian support and only if the United States gives the United Nations authority over the reconstruction, which the Bush administration has flatly refused.

Germany has pledged reconstruction aid but has not specified how much.

At the upcoming donor conference in Spain, Bush administration officials are hoping to raise $36 billion.

Despite a recent United Nations resolution calling for more foreign aid, it doesn't appear the administration will come close to its target with help from allies.

By elimination, that leaves U.S. taxpayers.