The Budget Lies that Haunt Us

Mitch Daniels and Lawrence Lindsey are footnotes who continue to kick us from behind. Lindsey was the chief economic policy adviser to President Bush who predicted in 2002 that invading Iraq would cost $100 billion to $200 billion.

It is largely forgotten that Lindsey said this not to warn Americans that this would blow a hole in the domestic agenda of the United States. He said this to make the president look good, swatting away fears that a war even at that level would hurt the economy. As the Wall Street Journal wrote, Lindsey "dismissed the economic consequences of such spending, saying it wouldn't have an appreciable effect on interest rates or add much to the federal debt, which is already about $3.6 trillion."

The Journal quoted Lindsey asking himself what one year of war spending would mean. Lindsey said, "That's nothing."

To Lindsey's surprise, his service to the president was considered a betrayal. Two days later, Daniels, the director of the Office of Management and Budget, called Lindsey's estimate "likely very, very high." Within a week, the Washington Post further quoted Daniels as saying that whatever Bush decided about Iraq, it could be managed by "rotating resources from things that are of less than life and death importance to meet the life and death imperatives of the moment."

It was political death for Lindsey, who was hounded into resigning within a few weeks. It did not matter that Yale economist William Nordhaus subsequently published a 50-page study that determined that a long war could cost up to $1.9 trillion and "claim the scarce resources and attention of the United States for many years."

By Dec. 31 of that year, Daniels - now governor of Indiana - conveniently replaced Lindsey's $100 billion to $200 billion estimate with one of $50 billion to $60 billion. Daniels told The New York Times that his estimate was based on "prudent contingency planning."

That set the table for the lies to come from the more well-known architects of the unprovoked invasion for weapons of mass destruction that did not exist. On Jan. 19, 2003, before the March invasion, ABC's George Stephanopoulos asked Defense Secretary Donald Rumsfeld what the war would cost.

Rumsfeld responded, "The Office of Management and Budget estimated it would be something under $50 billion."

Stephanopoulos countered with, "Outside estimates say up to $300 billion."

Rumsfeld shot back, "Baloney."

That same day, Rumsfeld was asked in a media availability, "Mr. Secretary, on Iraq, how much money do you think the Department of Defense would need to pay for a war with Iraq?"

Rumsfeld responded, "Well, the Office of Management and Budget has come up with a number that's something under $50 billion."

Deputy Defense Secretary Paul Wolfowitz would eventually and famously chime in that any high cost or large troop estimates for Iraq were "wildly off the mark."

This is all important to remember because this week, the Congressional Budget Office estimated that a deep and prolonged occupation of Iraq and Afghanistan could total $2.4 trillion by 2017. In presenting the report to the House Budget Committee, CBO director Peter Orszag said, "We are on an unsustainable fiscal path and something has to give."

The White House refuses to give up its delusions. Asked about the CBO report, White House press secretary Dana Perino rejected it as "a ton of speculation" and "pure speculation."

She added, "We just don't think that it's appropriate to wildly speculate and throw out a number like $2.4 trillion that is based on just hypotheticals. It's not a smart way to run a railroad."

Perino, of course, could not counter with figures from the White House. The wars are about to cost $800 billion since 2001. Another year and another $200 billion, and the war will pass the costs of the Korean and Vietnam wars combined, according to the Center for Strategic and Budgetary Assessments.

Five years ago, Lawrence Lindsey told us "That's nothing." Daniels said Lindsey's "nothing" was "very, very high." Today, Perino says $2.4 trillion is a ton of speculation. The footnotes to war continue to march us along the unsustainable path.

(c) Copyright 2007 The Boston Globe