Council on Foreign Relations Brief: Making Sense of the Afghan Peace Dividend
July 20, 2011
The debate raging on Capitol Hill over how to avoid fiscal calamity has collided with the discussion about the U.S. troop drawdown in Afghanistan. Around Washington, policymakers argue (Nation) that scaling back America’s commitments abroad will allow the country to focus on pressing priorities at home. President Barack Obama also linked the two.
“Over the last decade, we have spent a trillion dollars on war, at a time of rising debt and hard economic times,” Obama said in his June speech on Afghanistan. “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.”
The Congressional Research Service estimated recently that the president’s troop withdrawal plan would cut spending on the war in Afghanistan by between $7.6 billion and $10.5 billion from the $107.3 billion requested for the 2012 fiscal year. Those savings are expected to be greater in fiscal year 2013, since troop levels will be thirty-three thousand lower for the entire year.
Yet while these numbers are significant, they may not produce the kind of peace dividend that many in Congress and the public now expect. Bringing the troops home does not take soldiers off the payrolls. Danger pay will decrease and there will be fewer troops to supply, but more than sixty thousand U.S. troops will remain Afghanistan. And those who return home must still be paid their salaries.
A Center for Strategic and Budgetary Assessments analysis notes the FY2012 budget requests $676 billion for the Department of Defense (PDF), of which $553 billion is discretionary funding not directly related to the war in Afghanistan. Personnel costs accounted for roughly $250 billion or 45 percent of this figure, with healthcare costs climbing more than 80 percent over the past decade.
The argument that Afghanistan is the linchpin to a renewed sense of fiscal sanity is not borne out by numbers.
Still, defense spending–in particular the costs for the Afghanistan war–is expected to decline, while Social Security and Medicare costs will burgeon. According to the Congressional Budget Office’s (CBO) baseline projections (PDF), defense outlays would be 3.6 percent of GDP as of 2021 if funding for overseas operations remain at 2011 levels; under a scenario in which military personnel in Afghanistan and Iraq decreased “from an average of about 180,000 in 2011 to 45,000 by 2015, outlays for defense would amount to $716 billion in 2021, or 3.0 percent of GDP,” which would be “the lowest percentage of GDP since the beginning of World War II.” By contrast, “The high costs of the major healthcare programs and Social Security mean that total outlays apart from interest on the debt are projected to be 20.5 percent of GDP in 2021, nearly 2 percentage points above the forty-year average,” according to the CBO’s projections.
There are many good arguments for withdrawing from Afghanistan, first among them questions about the rationale for remaining and risking young lives, as well as grave concerns about the sustainability of the strategy driving the war. But the argument that Afghanistan is the linchpin to a renewed sense of fiscal sanity is not borne out by numbers.
“It is time to focus on nation-building here at home,” Obama said in his June speech, and his words are persuasive. But if he is looking to the Afghanistan savings to provide a “peace dividend”–or even a “draw-down dividend”–he is likely to be disappointed. The Afghanistan pullback will not be a policy piggy bank that saves the day–unless, of course, the Afghanistan drawdown signifies a start to a new era in Pentagon budgets and a dramatically scaled-down approach to overall defense spending that favors domestic priorities, including an effort to contain skyrocketing Social Security and Medicare bills.
Promising the public that “nation-building here at home” is possible because nation-building abroad is over, the president has offered pleasing rhetoric and clever mathematics while avoiding near-term fiscal reality. Yet in the face of a looming debt-ceiling debacle and after a decade of war, reality may be what the American public craves most.