REFINING WAR COST ESTIMATES - ADDING 'STRUCTURAL COSTS'
- THE GI BILL
We can add $52 billion for the GI Bill, which is the CBO's projection. It appears that costs will be included in the war-time "supplemental":But the new GI Bill has been deployed in a nasty political war. The Democratic congressional leadership attached it to President Bush's $108-billion emergency supplemental spending measure for the Iraq and Afghanistan wars, along with a 2009 deadline for troop withdrawal from Iraq, a requirement that Iraq match U.S. reconstruction spending, a 13-week extension of unemployment benefits, and money for the Census Bureau, a military hospital in Guam and levees for New Orleans.
With the price tag at $184 billion and counting, Blue Dog Democrats added to the House's smorgasbord version a "millionaire's tax" of 0.5% for people earning more than $500,000. House Republicans balked and defeated the measure Thursday.
But the GI Bill and unemployment components were passed and sent to the Senate as amendments, leaving hope that they will eventually win final approval. However, Bush has threatened to veto any supplemental bill containing non-war spending. - EXPAND THE ARMY
We can add $162 billion as the cost over ten years to expand the army. (see comments to Table 1). - EXPAND MEDICAL BENEFITS
I don't have a full list of these. But the VA budget request indicates, "Veterans deployed to combat zones are entitled to two years of eligibility for VA health care services following their separation from active duty... The 2008 Defense Authorization bill proposes to extend the 2-year window of eligibility to 5-years." -p. 1A-7
Non-STRUCUTRAL MEDICAL & DISABILITY COSTS
These continue to be a great source of discrepancy among estimates.
The CBO has been using "bottom-up" run-rates from the VA. Professor Bilmes has been using "top-down" assumptions about the number and average cost of claims to make projections.
The detail to compare estimates is not yet available to me, but the obvious first step is to calibrate the Bilmes year-by-year estimates (not available) to what is actually happening (not available).
The VA reports:
VA will treat about 333,000 OIF/OEF veterans in 2009, a 14 percent increase over the estimated 2008 figure. Medical care funding for these patients will climb to nearly $1.3 billion in 2009, or 21 percent more than in 2008.
Unfortunately, it is impossible to calibrate the Bilmes assumptions from this statistic alone. Her assumptions are based on unique number of troops deployed, a claim rate, and a claim approval rate. At 1.4M million, 44%, and 87%, they suggest about 535K claims/treatments, to date. [Update: the figures in this paragraph are for disability claims. The Bilmes estimate for medical treatment in 2009, as she constructed it in 2007, is just 30K higher than the VA's 333K estimate. That's not bad for forecasting...]
The same is going on for disability estimates. Orzag has more guesses at what may be leading to differences.
In the rub are perhaps $200-300 billion in total, discounted cost estimates.
CLEAN-UP
We can now guess what the FY2008 supplemental nation-building cost will be. I will update that and strip out the non-OIF costs on the table in column.
