War Savings Dividend for U.S. ‘Nation-Building’ Years Away, Analysts Say

Photographer: Massoud Hossaini/AFP/Getty Images

US Army soldiers from 3rd Platoon Chaos Company 1-75 Cavalry 2nd Brigade 101st Airborne Devision walk during a patrolling in Siah Choy village in Zari district of Kandahar province, south of Afghanistan. Close

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Photographer: Massoud Hossaini/AFP/Getty Images

US Army soldiers from 3rd Platoon Chaos Company 1-75 Cavalry 2nd Brigade 101st Airborne Devision walk during a patrolling in Siah Choy village in Zari district of Kandahar province, south of Afghanistan.

Any peace dividend from bringing U.S. troops home from Afghanistan likely will take years, not months, to make a dent in the federal budget, analysts said.

In his June 22 speech announcing the withdrawal of 33,000 U.S. troops from Afghanistan by September 2012, President Barack Obama said “it is time to focus on nation-building here at home.”

His withdrawal plan could save as little as $7 billion in fiscal year 2012, said Travis Sharp, a fellow at the Center for a New American Security, a defense-oriented policy institute in Washington. Sharp said he based his analysis on data from the nonpartisan Congressional Budget Office.

That amounts to less than 1 percent of this year’s projected federal budget deficit, which the CBO estimates will exceed $1 trillion.

“The cost-savings benefits of withdrawing troops from Afghanistan have been majorly oversold by our political leaders,” Sharp said. In the short term, he said, “the number of troops coming out are quite small. And the pace of operations for the troops remaining in Afghanistan will be quite high.”

The president didn’t detail estimated savings in his remarks, and White House press secretary Jay Carney said yesterday that “I don’t have dollar figures.” Obama also didn’t say how quickly he expects to withdraw the 68,000 U.S. troops who would remain in Afghanistan after next summer.

‘National Security Considerations’

Kenneth Baer, a spokesman for the White House Office of Management and Budget, said the troop withdrawal plan is “dictated by national security considerations. It will produce savings, the extent of which we will assess after the full schedule for the drawdown is set.”

House Appropriations Committee Democratic staff members estimate the troop reduction will save $10 billion in the 2012 fiscal year and $15 billion in the 2013 fiscal year, said Ryan Nickel, a committee aide.

Further troop cuts would result in greater savings. If the troop levels in Afghanistan and Iraq are reduced from the current 150,000 to a combined 45,000 by 2015, the CBO has estimated a savings of $1 trillion through 2020.

In his televised address, Obama said, “Now we must invest in America’s greatest resource, our people. We must unleash innovation that creates new jobs and industries, while living within our means. We must rebuild our infrastructure and find new and clean sources of energy.”

No Specific Projects

He didn’t mention any specific projects where savings from reduced war costs would be re-routed.

“Are we going to pave a new road, build a new high-speed rail from Los Angeles to Las Vegas? Probably not,” said Christopher Preble, director of foreign policy studies at the Cato Institute, a libertarian policy research center in Washington. “If you’re doing that, you’re still robbing Peter to pay Paul. We’re still borrowing money.”

Andrew F. Krepinevich, president of the Washington-based Center for Strategic and Budgetary Assessments, a policy research institute that examines national security issues, said that as much as the wars in Iraq and Afghanistan have cost -- more than $1 trillion over a decade -- Medicare and Medicaid spending are projected to be bigger drivers of the debt.

Not Literal

Krepinevich said that in calling for domestic “nation- building,” Obama isn’t being literal so much as promising to redirect war spending to deficit reduction.

“I think what the president means to say is, ‘Look, we’re spending $100 billion a year in Afghanistan. I’d rather be in a position to put that $100 billion to work for the American people, the American economy,’” Krepinevich said. “Deficit reduction contributes to a strong economic foundation here at home that provides for the economic growth that will benefit all Americans over the long run.”

While troop reductions after World War II, Korea, Vietnam and the Cold War resulted in savings, Krepinevich said that post-Afghanistan could be different because of the changing nature of terrorist threats and war.

“There are a number of emerging challenges that will likely frustrate efforts to reduce the size of our military and our defense budget as much as we would hope,” he said.

Cost Per Soldier

Officials have roughly estimated the cost of the war in Afghanistan at $1 million per soldier per year.

Sharp said that doesn’t translate to a savings of $33 billion by the end of next summer, partly because the troops aren’t withdrawing immediately and because anything saved is offset by costs of transporting troops and equipment out of theater and by increasing the training of Afghan security forces.

He said the withdrawals the president announced could be a catalyst for bigger savings if they lead to long-term cuts in the size of the U.S. armed forces.

“This decision will save money if it is the opening spark that leads to a much broader and more serious conversation about the role of the United States military in the world today,” Sharp said.

The Obama administration has set a goal of cutting $400 billion in national security spending through fiscal year 2023.

Defense Secretary Robert Gates, who retires next week, already included cuts in the military’s headcount as part of the $78 billion in budget reductions he proposed to help meet the administration’s cost-cutting goals.

Gates has proposed reducing the force by as many as 47,000 troops starting in fiscal 2015, including 27,000 soldiers and between 15,000 and 20,000 Marines. That would save $6 billion through 2016.

More money could be saved if the Defense Department either accelerated those reductions or sought larger cuts in the military headcount, Sharp said.

To contact the reporters on this story: Margaret Talev in Washington at mtalev@bloomberg.net; Mike Dorning in Washington at mdorning@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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