MEMORANDUM From: Subject: Stephen Daggett, Specialist in Defense Policy and Budgets, extension 7-7642 Ten-year savings in defense

due to withdrawals from Iraq and Afghanistan

July 25, 2011

This memo was prepared for distribution to more than one congressional office

Reductions in defense spending have been included as an element of measures being considered to rein in federal budget deficits in ongoing debt negotiations. The amount of savings projected in defense may or may not, however, include estimated reductions in spending due to the anticipated withdrawal of U.S. military forces from Iraq and Afghanistan. Currently, all U.S. troops are scheduled to be withdrawn from Iraq by the end of 2011, though senior officials have said that the United States may be receptive to an Iraqi government request to maintain some residual forces in the country after that time. The United States also plans to halt most operations in Afghanistan by the end of 2014. Whether significant numbers of troops remain in Iraq or Afghanistan or not, it is generally expected that forces will be based elsewhere in the region for some time, though at substantially lower levels than were deployed for the wars. The withdrawal from Iraq has already led to a substantial reduction in the request for overseas funding in next years defense budget compared to current and earlier levels. The Department of Defense (DOD) has requested $117 billion for Overseas Contingency Operations (OCO) in FY2012, compared to $159 billion enacted in FY2011 and a peak of $187 billion in FY2008. If the declining cost of overseas operations is included in calculations of potential reductions in defense spending over the ten years likely to be covered by a deficit agreement, the result might be to add $1 trillion or more in savings to estimated deficit cuts, though this depends on what baseline the calculations start from and what spending level the plan assumes. Recently it has been reported that Senator Reid may include estimates of such savings in a deficit reduction plan aimed at avoiding another vote to extend the federal debt limit until after the 2012 elections.1 Earlier, House Budget Committee Chairman Ryan included estimates of savings in overseas operations in calculating total spending reductions in the deficit reduction plan reflected in the Housepassed FY2012 budget resolution.2 Table 1 shows the most recent Congressional Budget Office (CBO) estimate of baseline overseas funding compared with Administration projections and other alternatives. The CBO baseline reflects CBOs March 2011 estimate of FY2011 overseas funding with increases at the rate of inflation in subsequent years. It is important to note that the Administration projection is not really a policy-based estimate
1 Alan K. Ota and Richard E. Cohen, House, Senate Going Their Own Ways; Reid Says Debt Talks Break Down, CQ Today Online News, July 24, 2011, 5:16 PM, http://www.cq.com/doc/news-3914965. 2 Chairman Ryans savings, reflected in the House-passed FY2012 congressional budget resolution, H.Con.Res.34, include the difference between the Congressional Budget Office March 2011 10-year baseline projection of overseas funding and the Administration estimate. See Table 1 for the estimates. Estimated defense savings from FY2012-FY2021 amount to $1.2 trillion.

Congressional Research Service

7-5700

www.crs.gov

Congressional Research Service

rather it continues a practice of showing $50 billion a year for overseas operations in future budgets as placeholder amounts for overseas operations in long-term Office of Management and Budget funding tables. Over the 11 years from FY2001-FY2011, Congress appropriated $1.2 trillion in DOD war-related budget accounts.3 The CBO baseline budget projection amounts to $1.8 trillion for overseas operations over the 10 years from FY2012-FY2021. CBO estimates that it would cost about $35 billion a year to sustain 45,000 troops in overseas operations over the next few years and about $25 billion a year for 30,000 troops, far below earlier war-related appropriations.4 Those figures appear relatively high compared to costs of deploying comparable numbers of forces abroad when not involved in large scale combat operations. Direct costs of the 34,000 troops deployed in Japan, for example, are projected to total $5.5 billion in FY2012.5 Costs of operations Northern Watch and Southern Watch, which maintained no fly zones over Iraq before the war in 2003, peaked at $1.5 billion in FY1998.6

See Amy Belasco, The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11, CRS Report RL33110, updated March 29, 2011. 4 These estimates are from CBO projections of the effect of alternative policies on the budget in annual reports on the budget and economic outlook, issued in January each year, and in updates issued in August. The cost of 45,000 troops is from CBO, The Budget and Economic Outlook, Fiscal Years 2011 to 2021,January 2011, Table 1-7, fn p. 23. The cost of 30,000 troops is from CBO, The Budget and Economic Outlook: An Update, August 2010, Table 1-7, fn p. 25. 5 For troop levels in Japan and elsewhere, see Department of Defense, Statistical Information Analysis Division, Active Duty Military Personnel by Service by Region/Country, March 31, 2011, on line at http://siadapp.dmdc.osd.mil/personnel/ MILITARY/history/hst1103.pdf. Cost data from Department of Defense, Operation and Maintenance Overview, Fiscal Year 2012, February 2011, p. 210, on line at http://comptroller.defense.gov/defbudget/fy2012/fy2012_OM_Overview.pdf. 6 CRS figures from DOD Comptroller and from annual Department of Defense Overseas Contingency Operations Transfer Fund budget justification books provided with annual budget requests.

Table 1. Alternative Projections of Overseas Contingency Funding, FY2011-FY2021*

(budget authority, in billions of current year dollars)
Fiscal Year: CBO March 2011 Baseline /a/ Feb 2011 Administration Plan /b/ Change from CBO Baseline House-Passed Budget Resolution /c/ Change from CBO Baseline CBO Reduce to 45K by FY2015 /d/ Change from CBO Baseline CBO Reduce to 30K by FY2013 /e/ (FY2010 projection of $164 billion) Change from CBO Baseline Sources: a. CBO baseline from Congressional Budget Office. b. Administration February 2011 projection from Office of Management and Budget, Budget of the U.S. Government Fiscal Year 2012: Analytical Perspectives, February 2011, Table 32-1. c. Ryan/House-Passed Budget Resolution from the text of House Report 112-58, Table 2, excluding $10 billion in FY2012 for foreign affairs-related overseas funding. d. Reduction to 45,000 troops from Congressional Budget Office, "The Budget and Economic Outlook, Fiscal Years 2011 to 2021," January 2011, Table 1-7, fn p. 23. "This alternative does not extrapolate the $159 billion in budget authority for military operations and associated costs in Afghanistan and Iraq provided for 2011. However, it incorporates the assumption that future funding for operations in Afghanistan, Iraq, or elsewhere would total $118 billion in 2012, $83 billion in 2013, $54 billion in 2014, and about $35 billion a year from 2015 onfor a total of $496 billion over the 20122021 period. (See Box 3-2)." e. Reduction to 30,000 troops from Congressional Budget Office, The Budget and Economic Outlook: An Update," August, 2010, Table 1-7, fn p. 25: "This alternative does not extrapolate the $164 billion in funding for military operations and associated costs in Iraq and Afghanistan provided for 2010. Future funding for operations in Iraq, Afghanistan, or elsewhere would total $134 billion in 2011, $70 billion in 2012, $39 billion in 2013, $29 billion in 2014, and then about $25 billion a year from 2015 onfor a total of $416 billion over the 20112020 period. FY2011 159 159 159 159 134 -25 FY2012 161 118 -43 118 -43 118 -43 70 -91 FY2013 164 50 -114 50 -114 83 -81 39 -125 FY2014 167 50 -117 50 -117 54 -113 29 -138 FY2015 170 50 -120 50 -120 35 -135 25 -145 FY2016 173 50 -123 50 -123 35 -138 25 -148 FY2017 177 50 -127 50 -127 35 -142 25 -152 FY2018 181 50 -131 50 -131 35 -146 25 -156 FY2019 184 50 -134 50 -134 35 -149 25 -159 FY2020 188 50 -138 50 -138 35 -153 25 -163 FY2021 192 50 -142 50 -142 35 -157 25 -167 Total FY11-20 1,724 677 -1,047 677 -1,047 624 -1,100 422 -1,302 TotaL FY12-21 1,757 568 -1,189 568 -1,189 500 -1,257 313 -1,444

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