Will Obama's war strategy produce a peace dividend?

When The father of President George W. Bush was in the White House, the end of the cold war in the early 1990s gave him a "peace dividend" – a drop in military spending that opened the door to fund more constructive federal programs.

President-elect Obama probably hopes for the same advantage should he manage to wind down the war in Iraq as promised during the election.

The savings are potentially substantial. A back-of-the-envelope estimate earlier this month by Lawrence Korb and other experts at the Center for American Progress in Washington calculates a total savings of $370 billion through 2013 if operations in Iraq are shrunk dramatically.

But if more troops are sent to Afghanistan, as Mr. Obama has signaled is likely, the extra cost could reach $54 billion. So the net saving for those years would drop to $316 billion.

At a time when the financial crisis has led Washington to spend more than $1 trillion in rescue efforts this year, that $316 billion spread over several years might seem minor. If normality returns to the federal budget, however, that sum could be useful for, say, launching Obama's plan to improve the nation's healthcare system.

It remains unclear what the new president will want to do, other than his promise to remove combat troops from Iraq in 16 months – and what he will actually do after consulting with key generals and other advisers.

Any savings are "very uncertain," cautions Winslow Wheeler, director of the Straus Military Reform Project at the Center for Defense Information, another Washington think tank. He adds that it's "plausible" there will be no change in costs.

Any savings depend in large degree on how fast Obama can draw down the troop levels in Iraq, says Steven Kosiak of the Center for Strategic and Budgetary Assessments in Washington. At present, about 200,000 armed services members are in the Middle East, some 150,000 in Iraq and 35,000 in Afghanistan.

Mr. Korb's savings estimate is buried in a footnote on page 58 of a long study, "Building a Military for the 21st Century: New Realities, New Priorities," which looks at defense spending and policies as a whole. Department of Defense spending alone, it notes, is more in inflation-adjusted dollars than at any other time since the end of World War II.

Mr. Kosiak, in a study that came out last week, puts the total cost of the wars in Iraq and Afghanistan through fiscal 2009 at $904 billion in 2008 dollars.

Beyond that, the Korb study speaks of "runaway cost growth" that has "paradoxically failed to create a larger, more ready force." It also makes budget recommendations that, the analysts reckon, could save $38.6 billion over the next four years.

The footnote on Iraq-Afghanistan spending assumes Obama can actually decrease the number of combat troops in Iraq by about 50,000 by April 2010. That would reduce Iraq spending from approximately $10 billion a month to about $7 billion by mid-2010.

If an equal number of support troops can be withdrawn, the monthly cost shrinks to $4 billion. Then, if all American troops are taken out by the end of 2011 (as called for by the Status of Forces Agreement mandate that has been negotiated by the Iraqi government and the US), the Iraq costs would fall to zero by mid-2012.

In Afghanistan, costs would escalate from about $2 billion a month now to $3.5 billion if another 20,000 troops are moved into that nation, as urged by General David McKiernan.

There are a lot of "ifs" in such calculations. Another more immediate question is the cost of the wars in the current fiscal year, which began in October.

The Defense Department got $66 billion from Congress last summer for the wars. One of the decisions Obama and Congress face in the next several months is how much more money to provide for 2009.

Kosiak estimates another $80 billion will be needed. Depending on what happens with the wars, another $416 billion to $817 billion could be spent through 2018, he notes.

So the total cost of the wars, up to now and beyond, could reach as high as $1.72 trillion.

To get those figure, Kosiak relies, to some extent, on a Congressional Budget Office projection of war costs for the next 10 years and another study by the Congressional Research Office.

Nongovernment analysts, such as economists Joseph Stiglitz of Columbia University and Linda Bilmes of Harvard University, say costs will exceed $2 trillion over time. They include interest on debt resulting from the war and higher veteran costs.

Whatever the assumptions, war is always an expensive proposition, both in dollars and in loss of life.