 In this case, the 10 years of emergency spending, even after we had been involved in the wars for a long time, meant that there was very little oversight on the war. But it also meant that every single year, whichever administration, whatever president was in power, was able to essentially pretend that the war was about to be over because we were never budgeting for it for the next year. And also to minimize the deficit for the year ahead because war spending, even though we knew we'd be spending another $100 billion on the war next year. It wasn't in the projections, it wasn't in the budget, so it made it appear as if the deficit was less than it would actually be. My name is Linda Bilms and I am the Daniel Patrick Moynihan senior lecturer chair at Harvard Kennedy School at Harvard University. In the early 2000s, Joe Stiglitz and I began looking at the costs of the war in Iraq and Afghanistan, which we discovered was much larger than was being officially published. And over the years we published a number of articles, book chapters, book, and so on, looking at the costs of the war. But as the war went on year after year and the amount of money was getting into, you know, $3 trillion, $4 trillion, $5 trillion. One of the questions I began to think about was why was it that the wars were being paid for very differently than previous wars. So going back to the Spanish American war, the war of 1812, the Civil War, World War I, World War II, the Korean War, the Vietnam War, they were all characterized by being paid for essentially through taxes and cuts to non-military spending. And they were budgeted through the regular defense budget after the initial phase of the war. So after the first year in which there would be some emergency kind of spending, they were gradually brought into the defense budget. And the post-911 wars, the Iraq and Afghanistan wars and related conflict were paid for entirely differently. They were paid for entirely by debt, which was the first time this had ever happened, without any tax increases. And in fact, taxes were cut three times, twice under Bush and once under Trump during this period. And they were actually budgeted for completely differently. They were budgeted for outside of the regular budget for 10 years through emergency funding and for the second decade through OCO or through, you know, non-budget special kind of hybrid budgetary mechanism. So the research that I have been doing that is contained in my forthcoming book, The Ghost Budget, is looking at why did this happen and how did this happen. And I did an enormous number of interviews, data mining of papers and so on to try and figure out, first of all, to confirm that this was in fact the difference that we thought it was, and secondly to try and figure out why it happened. The United States has always used contractors in wars, but in the post-911 wars, contractors constituted a much, much larger percentage of the operational forces. And at many times, the number of contractors who were deployed exceeded the number of US troops. And the contractors were deeply embedded into every single military activity. So you couldn't have actually functioned in these wars and operated them without contractors. Contractors were not only doing work that had been done in previous wars by troops who were usually being on a sort of lull period, you know, like driving trucks and cooking and cleaning and doing all kinds of construction work. But, I mean, contractors were also in charge of repairing most equipment, maintaining equipment. They were embedded with pretty much every unit. They were in some cases, as we saw in the Abu Ghraib prison debacle. I mean, we saw they were actually guarding prisoners and making very significant decisions. And I think that the fact that the military relied so heavily on this blended workforce as they saw it has many implications because having worked in the private sector myself, however dedicated and certainly private contractors took very heavy losses during these wars. But the incentive structure for contractors is different than the incentive structure for regular deployed troops. And this had a very distortionary effect on the cost of the war. And, arguably, it made it easier to continue the war for a long time without a draft. The financing of the war is very much related to the use of contractors. In my research, I was trying to understand why it was that we had financed and budgeted for these wars so differently than we had in previous wars. And I examined a wide range of factors that could have contributed to this difference. And through the research, I interviewed most of the presidential chiefs of staff during the 20-year period, all of the inspector generals at the Pentagon and the special inspector generals who were involved, a large number of congressional and OMB budget staff, fiscal committee staff, and a wide range of budget experts and others who were involved. So in total, about 90 senior individuals or elite interviews as they're called. And the conclusions that I reached with it, there were three main factors that led to the war being financed and budgeted for so differently. First was the essential breakdown in the budget process in Congress, the dysfunctional budgeting process, which has resulted in 26 shutdowns since the budget reforms of 1973, the constant reliance on continuing resolutions, the breakdown of the committee structure, and so on and so forth. So the fact that it was very difficult to wage a war from the Pentagon's perspective without being able to rely on the budget coming through in Congress meant that there was an incentive for the wars to be sort of paid for outside of the regular budget process. And secondly, the Pentagon was coming out of a period in the 90s in which the Pentagon budget had, relatively speaking, declined as the Clinton administration, which I was part of, was trying to realize a peace dividend. And so there was a very strong feeling that they were underfunded, the religious projects that were underfunded. And the money for the war, first of all, the emergency spending during the first 10 years of the war was a way to not only replenish all of this spending, but the emergency money and then the overseas contingency operation, or OCO, went primarily into the most flexible account within the Pentagon budget, the operation, the so-called O&M account, which is the account that, among other things, pays for contractors primarily. And because we were so heavily reliant on contractors and in a government shutdown, this created another strong incentive to pay for these wars totally differently in this kind of flexible account that received less oversight and so forth. And further incentivize the Pentagon to try and push for the war to be funded in this way. As part of this whole desire on behalf of the, we could call it the military-industrial complex, but people who were involved in the operations of the war to maintain the very unusual, unprecedented financial and budgetary structure for the war was the fact that the funding received almost no oversight. This was partly because of the kind of ways that we paid for it. So emergency spending, by definition, is supposed to be used for emergencies like earthquakes or hurricanes where the objective is you just want to get the money as fast as possible out to the emergency, to people. And so you don't want to spend a lot of time kicking the tires and looking at it and you sort of accept, okay, it's not going to be perfect, we want to get it out very, very fast. So the oversight requirements are minimal. In this case, the 10 years of emergency spending, even after we had been involved in the wars for a long time, meant that there was very little oversight on the war. But it also meant that every single year, whichever administration, whatever president was in power, was able to essentially pretend that the war was about to be over because we were never budgeting for it for the next year and also to minimize the deficit for the year ahead because war spending, even though we knew we'd be spending another $100 billion on the war next year, it wasn't in the projections, it wasn't in the budget. So it made it appear as if the deficit was less than it would actually be. The third reason was that in the financial crisis, it is now fairly widely known that the stimulus package was insufficient after the 2008 financial crisis. But at that point, interest rates went down to historically low levels. And the spending on the wars became a kind of backdoor stimulus package. So all of a sudden you had this sort of spending. It was something that you could sort of, from an economic standpoint, turn a blind eye to because we needed the stimulus. And the fact that we were in this funny economic moment where interest rates were so low meant that all of the debt, of course, wasn't really showing up in terms of the slice of the budgetary pie on debt servicing. So you had this strange economic moment in which it was possible to keep borrowing all this money for the war and in which extra stimulus was welcomed in many quarters. So there was no real reason to kind of turn off the spigot. So these three factors, the congressional dysfunction, the needs of the Pentagon and the sort of unusually benign economic environment which facilitated all this came together to make it possible to have 20 years of trillions of dollars being spent on these wars with almost no oversight. The president spent a lot of time talking in their state of the union addresses, in their budget transmittal memos, and so far talking about the fact that there was a war, we needed to raise taxes for the war, people needed to do their duty to pay for the war, etc. So during the Korean War, President Truman had raised top marginal rates to 92%. During World War II, President Roosevelt had raised top marginal rates in the 90 plus percent. And so this trade-off was very much said at the presidential level. In addition, there was extensive congressional oversight. I datamined all of the hearings for previous wars and for these wars in the House and Senate fiscal committees and the appropriations committees. And what we found was a tiny fraction of the committee hearings during the last 20 years were devoted to these issues of how do we pay for the wars, whereas quite a considerable percentage of the hearings during previous wars was devoted specifically to discussing how the wars would be financed and budgeted for and paid for. I chose the titled Ghost Budget because one of the words that comes up very frequently in the reports of the Pentagon Inspector Generals, the Special Inspector General for Afghan Reconstruction and Special Inspector General for Iraqi Reconstruction is the word ghost, as in ghost soldiers, ghost troops, ghost schools, ghost buildings, ghost operations, which means this is not a case of corruption or profiteering where the school was painted and it should have cost $10,000 and we paid $25,000 or the school didn't get painted and we paid for them anyway. But this is a case where there is no school. It's a ghost school. And so there are thousands of places in all of these reports in which this issue of ghost comes up. There was ghost soldiers. There was nothing there. There were no soldiers. So the ghost budget, in addition to capturing this idea of something that was there but not there and the disappearing of the money, captures one of the realities of the spending in this war, which is that we spent a great deal of money on things that actually didn't exist. Understanding the implications of 20 years of war spending in America's longest and most expensive wars with minimal oversight is something that I think we will be unpacking for a long time in the future. I mean, to channel the Chinese leader who was asked about the French Revolution, about what was the impact of it and he said, well, it's only 200 years. It's too early to know. I'm not sure we fully understand what the long-term impact will be of so much spending with so little oversight. But I suspect that there are a number of implications. One of the implications was that it made it easier to prolong the wars because we were not fighting the wars and we were not paying for the wars and we were not feeling the pain of all the funding that was spent. So normally people are feeling the pain and if taxes were 75% at the top marginal rate or 92% and we had Congress holding hearings on the cost of the war and we had the president talking about paying for the war, I think that the public mood would have been very different and there would have been an agitation to think about what we were doing earlier. One of the inspector generals who I spoke to at the Pentagon who was a former Rhodes scholar and who I thought was particularly insightful and he said, you know, there was some more oversight that was classified. There was this oversight, you know, maybe not enough. He said, but in all of this time, what we haven't really done is really step back to ask is it worth it? Is this use of resources worth it for society? And I think that the fact that the money was spent kind of under the table or around the side of the table and it was financed by debt and so forth and that nobody talked about it and that this was considered very distasteful made it much easier not to ask a big question. We accrued an enormous amount of long-term obligations for those who fought in the wars. So in these wars, I have done a great deal of work on veterans issues over the years and have written many, many papers on the veterans issues. Those who were deployed in these wars, troops actually were deployed more intensely, saw more firefights, had longer deployments and came back for a variety reasons with a much wider range of conditions. So that we have more than 50% of those who were fought in the wars have some form of life long, disabling condition. Now that doesn't mean that they are not fully functioning members of society in most cases because many of these conditions are not visible. But we have already obligated and promised to millions of veterans lifetime stream of benefits and in many cases health care. But there has not been any set aside at any point during the war for how we're going to pay for this. So it's just another long-term debt. I have recommended for a long time we set up a veterans trust fund. This has not happened with many demands on the US purse. It is certainly possible that when veterans cost for these wars peak and veterans costs always peak many years later. Veterans benefit costs for World War I peaked in 1969, more than 50 years later. When these veterans are in the greatest need, it will be a long time from now, it will be decades from now. And I think it is not at all impossible that at that point we may renege on some of those promises. So I think that is another potential implication, long-term implication of how we have paid for and it or rather ignore the cost of these wars.