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A Peace Dividend from Troop Withdrawals


Obama's budget for Iraq and Afghanistan is said to tumble 26 percent—the lowest amount since 2005

If President Barack Obama follows through on his plans to reduce the number of U.S. troops in Iraq and Afghanistan this year, he will get a small peace dividend that could alleviate pressure elsewhere on the federal balance sheet. Obama will propose cutting the Pentagon's war budget by $42 billion—a 26 percent decrease from this year's level—when he sends his next budget to Congress the week of Feb. 14, according to government officials.

The savings are minuscule next to the Congressional Budget Office's Jan. 26 projection of a $1.5 trillion budget deficit for fiscal 2011. Still, they would pay for a month's worth of Medicare bills or cover almost all of the Education Dept.'s annual discretionary budget. "That's the largest year-to-year decrease in total war funding" since the Afghan war began in October 2001, Todd Harrison, a defense budget analyst for the nonpartisan Center for Strategic and Budgetary Assessments in Washington, said in an e-mail.

The proposed $117 billion war budget for fiscal year 2012, which begins on Oct. 1, would be the lowest expenditure for the wars since fiscal 2005, when it was $102.6 billion, says Amy Belasco, a war-cost analyst with the nonpartisan Congressional Research Service (CRS).

The war-spending request will be in addition to the $553 billion defense budget for fiscal 2012, the officials say. That compares with the $525 billion Congress allocated for this fiscal year, says Stephen Daggett, an analyst with the CRS.

The drop from the Pentagon's fiscal 2011 war-spending request of $159 billion reflects Obama's plan to reduce troop levels in the war zones and impose stricter rules on what costs can be included in the war budget, say the officials, who decline to be named because the budget has not been formally released. Most U.S. troops are scheduled to leave Iraq by the end of this year, and Obama has said he wants to start drawing down troops in Afghanistan in July.

The Pentagon today has roughly 97,000 troops in Afghanistan and 47,000 in Iraq. The 144,000 total is the lowest since July 2006, when the U.S. had about 148,100 deployed, according to the CRS. Annual Pentagon-only war costs peaked at $179.2 billion in fiscal 2008, with the height of troop deployments to both nations totaling 194,000 in May 2008. From the September 2001 terrorist attacks through last Sept. 30, the end of fiscal 2010, Congress authorized $1.2 trillion to pay for military operations, base security, embassy costs, and homeland defense air patrols, the CRS says.

The bottom line: Obama's next war budget will free up money that could go toward the deficit or pay for pressing domestic needs.

Capaccio is a reporter for Bloomberg News.

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