Cash-Strapped Pentagon Taps Emergency Fund

THE CONFLICT IN IRAQ

A $25-billion account was to have been an 'insurance policy' unneeded this year. But insurgents in Iraq changed the equation.
By John Hendren
Times Staff Writer

September 22, 2004

WASHINGTON — A relentless insurgency in Iraq has prompted the Pentagon to begin spending money from a $25-billion emergency fund that Bush administration officials had once said would not be needed this fiscal year, officials said Tuesday.

Unable to tap into regular 2005 funding until the Oct. 1 start of the new fiscal year, the Pentagon has already spent more than $2 billion from the emergency fund.

President Bush requested the emergency funds from Congress in May to pay for a war that is longer and more violent than he and his Pentagon strategists had predicted. The money will help pay for equipment for troops heading to Iraq this fall.

The need to dip into the fund, which also covers the war in Afghanistan, highlights the intensity of an Iraqi insurgency that has virtually wrested control of several cities — most notably the western Sunni Triangle hotbed of Fallouja and the northern city of Samarra — from 135,000 American troops and allied forces still operating in Iraq.

"It shows the pace of operations is far greater than anticipated," said Stanley E. Collender, a former House and Senate budget analyst and now general manager of Financial Dynamics, a business communications firm in Washington.

"The cost is much greater than expected. All of the early estimates were based on the idea that we'd get in and out quickly, and that hasn't happened."

Although Army and Marine officials warned Congress in February of a looming funding shortfall, administration officials at that time said they would not need additional money for Iraq and Afghanistan this year.

In May, however, the administration sought the $25-billion emergency fund — calling it an "insurance policy" that probably would not be needed.

Overriding an administration request that the money be available beginning Oct. 1, Congress made the funds accessible immediately.

The war in Iraq is costing about $4.4 billion a month and reached a total of $86.2 billion as of June, according to Pentagon figures.

If the additional funds were not available this month, the armed services either would have to cut other programs to shift money to the war or face the prospect of new troops going to battle without sufficient body armor, armored Humvees and other protective gear. That, administration officials insist, will not happen.

"The president said that our troops in the field are going to have what they need when they need it, and the Department of Defense is using the resources Congress provided to ensure that they'll have the equipment they need this fall," said Chad Kolton, a spokesman for the White House Office of Management and Budget.

The announcement follows the Bush administration's move early this month to seek congressional approval for diverting $3.3 billion earmarked for reconstruction of Iraq's infrastructure into programs focused mainly on establishing law and order by shoring up Iraqi security forces.

The disclosure that the continuing insurgency has forced the administration to turn to the emergency fund to cover spending on security poses a potential embarrassment as Iraqi interim Prime Minister Iyad Allawi arrived in the United States on Tuesday and met with Bush and members of the United Nations in New York.

Allawi plans to address Congress on Thursday.

The military spending shortfalls have fueled recent bipartisan criticism of the administration's war spending strategy on Capitol Hill since Army Chief of Staff Gen. Peter J. Schoomaker warned in February that a shortfall would force the Army to shift money from other current and future projects to cover the funding gap.

The administration has insisted on funding much of the war through emergency spending bills, a move that Sen. John McCain (R-Ariz.) criticized in February, saying that it "deceives the American people about the size of the deficit and the debt that we are incurring."

The administration originally asked for $87 billion in emergency spending in 2003 for the fiscal year that will end next week, but a report by the congressional Government Accountability Office in July said the Pentagon would face a $12.3-billion shortfall in war expenses by the end of September.

Congress approved the extra $25 billion as spending for fiscal 2005, but made it available for immediate use.


If you want other stories on this topic, search the Archives at latimes.com/archives.