[Joint House and Senate Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-785

     FIGHT NOW, PAY LATER: THE FUTURE COSTS OF FUNDING THE IRAQ WAR

=======================================================================

                                HEARING

                               before the

                        JOINT ECONOMIC COMMITTEE
                     CONGRESS OF THE UNITED STATES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 12, 2008

                               __________

          Printed for the use of the Joint Economic Committee


                        JOINT ECONOMIC COMMITTEE

    [Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]

SENATE                               HOUSE OF REPRESENTATIVES
Charles E. Schumer, New York,        Carolyn B. Maloney, New York, Vice 
    Chairman                             Chair
Edward M. Kennedy, Massachusetts     Maurice D. Hinchey, New York
Jeff Bingaman, New Mexico            Baron P. Hill, Indiana
Amy Klobuchar, Minnesota             Loretta Sanchez,  California
Robert P. Casey, Jr., Pennsylvania   Elijah Cummings, Maryland
Jim Webb, Virginia                   Lloyd Doggett, Texas
Sam Brownback, Kansas                Jim Saxton, New Jersey, Ranking 
John Sununu, New Hampshire               Minority
Jim DeMint, South Carolina           Kevin Brady, Texas
Robert F. Bennett, Utah              Phil English, Pennsylvania
                                     Ron Paul, Texas

                  Michael Laskawy, Executive Director
             Christopher J. Frenze, Minority Staff Director








                            C O N T E N T S

                              ----------                              

                                Members

Hon. Jon Tester, a U.S. Senator from Montana.....................     1
Hon. Carolyn B. Maloney, Vice Chair, a U.S. Representative from 
  New York.......................................................     2
Hon. Kevin Brady, a U.S. Representative from Texas...............     4
Hon. Baron P. Hill, a U.S. Representative from Indiana...........     5
Hon. Maurice D. Hinchey, a U.S. Representative from New York.....     6
Hon. Charles E. Schumer, Chairman, a U.S. Senator from New York..     7

                               Witnesses

Statement of Hon. Brian Schweitzer, Governor of Montana, Helena, 
  MT.............................................................    10
Statement of Christine Eibner, Economist, RAND Corporation, 
  Washington, DC.................................................    12
Statement of Tom Tarantino, Policy Associate, Iraq and 
  Afghanistan Veterans of America (IAVA), Washington, DC.........    14
Statement of William W. Beach, Director, Center for Data 
  Analysis, The Heritage Foundation, Washington, DC..............    17

                       Submissions for the Record

Prepared statement of Hon. Charles E. Schumer, Chairman, a U.S. 
  Senator from New York..........................................    32
Prepared statement of Hon. Carolyn B. Maloney, Vice Chair, a U.S. 
  Representative from New York...................................    34
Prepared statement of Hon. Sam Brownback, a U.S. Senator from 
  Kansas.........................................................    35
Prepared statement, and attachments, of Hon. Brian Schweitzer, 
  Governor of Montana............................................    37
Prepared statement of Christine Eibner, Economist, RAND 
  Corporation....................................................    40
Prepared statement of Tom Tarantino, Policy Associate, Iraq and 
  Afghanistan Veterans of America (IAVA).........................    47
Prepared statement of William W. Beach, Director, Center for Data 
  Analysis, The Heritage Foundation..............................    49
Chart, ``Current GI Education Benefits Fall Short''..............    54
Chart, ``Foreclosure Rates Near Military Bases Surpass the 
  National Average by 37 Percent''...............................    55

 
     FIGHT NOW, PAY LATER: THE FUTURE COSTS OF FUNDING THE IRAQ WAR

                              ----------                              


                        THURSDAY, JUNE 12, 2008

             Congress of the United States,
                          Joint Economic Committee,
                                                    Washington, DC.
    The Committee met at 10:07 a.m. in room 106 of the Dirksen 
Senate Office Building, the Honorable Charles E. Schumer, 
Chairman of the Committee and the Honorable Vice Chair Carolyn 
B. Maloney, presiding.
    Senators present: Schumer, Klobuchar, and Tester.
    Representatives present: Maloney, Hinchey, Hill, and Brady.
    Staff members present: Christina Baumgardner, Heather 
Boushey, Stephanie Dreyer, Chris Frenze, Tamara Fucile, Rachel 
Greszler, Colleen Healy, Michael Laskawy, Jeff Schlagenhauf, 
Marcus Stanley, Annabelle Tamerjan, and Jeff Wrase.
    Vice Chair Maloney [presiding]. I'm going to call the 
meeting to order. Senator Schumer is on his way, and Senator 
Tester has to get to an important Financial Services Committee 
meeting, and he has an important introduction to make, and I 
would grant him the privilege, due to his time constraints, to 
speak now, and then we will make our opening statements.

   STATEMENT OF HON. JON TESTER, A U.S. SENATOR FROM MONTANA

    Senator Tester. Congresswoman Maloney, I appreciate the 
latitude. I appreciate it a bunch, and it's truly an honor to 
be here for this Joint Economic Committee hearing.
    I have the privilege today to introduce to the members of 
this Committee and to the folks who are in the crowd, the great 
Governor of the State of Montana, Brian Schweitzer.
    Governor Schweitzer was elected in 2004, at a time when 
more than 1,500 of our State's National Guard were serving in 
Iraq. That's having more than a third of your State's Guard out 
there in a country with the difficult situations going on in 
Iraq. It's a tough situation to inherit.
    Governor Schweitzer is a rancher. He sees life, he sees 
government through the eyes of a rancher. He's also worked all 
over the world, including several years in Saudi Arabia.
    He is a real leader, and I speak to this personally, 
because I served with him when I was in the State Senate. He is 
a real leader in pushing forth alternative methods and 
alternative energy ideas.
    He is a real leader in the State, period. Montana is first 
in his book and it's at the forefront of his work.
    I know he hates to leave Montana. When I left Montana on 
Sunday to come back here, the temperature was about 65 above, 
and I walked into a wall of humidity here. I'm sure it was very 
similar when the Governor got in last night.
    We share the honor of working for and serving some 958,000 
people in the State of Montana. About 10,000 of them have 
served in Iraq and Afghanistan, and we have about 11 percent of 
our constituents that are veterans. So, in Montana, we know 
what it means to send our kids to war.
    We know the sacrifices of service members and their 
families, and we know the sacrifice for Montanans, through the 
loss of our National Guardsmen and Reservists.
    Madam Chairman, Governor Schweitzer is a great speaker and 
a strong voice for Montana, and what he has to say, will be an 
important part of this discussion about the true cost of the 
war in Iraq.
    I want to thank you for this chance and for this 
opportunity to introduce Governor Schweitzer. He truly is a 
good friend of mine, and I know you'll look forward to what he 
has to say today. Thank you.

  OPENING STATEMENT OF HON. CAROLYN B. MALONEY, VICE CHAIR, A 
               U.S. REPRESENTATIVE FROM NEW YORK

    Vice Chair Maloney. Thank you for that great introduction. 
I look forward to his testimony and that of all of the 
witnesses today.
    First of all, I'd like to thank our Chairman Schumer for 
holding this hearing to examine the economic cost of the Iraq 
war, and I want to welcome our distinguished panel and thank 
the for being here today.
    If the current Emergency War Supplemental is passed, 
Congress will have approved a total of over $600 billion for 
direct spending on this war. That's more than ten times the 
Bush administration's initial estimate of the cost of the war.
    But as we learned during our February hearing on this 
issue, the full economic cost of the Iraq war, go well beyond 
the hundreds of billions of dollars allocated by Congress.
    We heard from witnesses about the economic burdens created 
by Federal borrowing to fund the war; the impact of the war on 
oil prices, and the cost in security, due to our overstretched 
Armed Forces.
    Last year, at my request, the Joint Economic Committee 
prepared a report showing that by the end of 2008, the full 
economic cost of the war will total $1.3 trillion, with no 
clear direction for ending the war and no plan to bring the 
troops home.
    War costs will only grow higher. Nobel Laureate, Joseph 
Stiglitz, testified before this Committee and estimated that if 
we continue to remain in Iraq, the total economic price tag for 
the war, will reach between $3 trillion to $5 trillion over the 
next decade.
    Meanwhile, the President continues to balk at supporting 
measures to boost our economy here at home, such as extending 
unemployment insurance to those who have been unable to find a 
job in this economic downturn.
    American families are feeling the squeeze of high gasoline 
prices, high food prices, falling incomes, and declining home 
values. We can ill afford to add to their burden by asking them 
to continue funding this war.
    To do so means sacrificing other important priorities, such 
as investing in jobs, healthcare, green technologies and 
infrastructure.
    Our witnesses today will give us more perspective on some 
of the hidden costs of the war. Governor Schweitzer will tell 
us how in his great State of Montana, where one in six adults 
is a veteran, local communities and State resources have been 
severely strained by long military deployments.
    Dr. Eibner will discuss RAND's groundbreaking study which 
found that hidden health costs and problems caused by the war, 
are leading to billions of dollars in additional economic 
costs.
    Tom Tarantino will discuss just how hard it is for our 
veterans who are returning to adjust to civilian life, and the 
cost this poses for their families and our society.
    Looking forward, what concerns me most, is that there is no 
end in sight to our commitment in Iraq. The cost of the war has 
mounted each and every year.
    We must not repeat the mistakes made at the start of the 
war, when Congress was not properly informed about the long-
term costs of our commitment. A productive discussion of the 
current and future economic impacts of this war, is long 
overdue.
    It is unfortunate, but no surprise, that this is a debate 
the Bush administration would rather hide from. I want to join 
Senator Schumer--I know that he's expressed to me several 
times, his disappointment at the absence of our invited 
administration witness, OMB Director Nussle.
    This is the third time Director Nussle has refused our 
invitation to testify before this Committee on these important 
issues. I would state that since the President is passing the 
war costs on to the next administration, who we should be 
inviting, is Senator Obama and Senator McCain, on how they are 
going to confront these costs.
    Maybe at our next hearing, we can have them there.
    Even if we do not agree on the direction of the war, we can 
surely all agree on the need to support the veterans who have 
suffered its greatest impacts. Congress has moved forward to 
help veterans cope with the cost of reentering civilian life, 
by passing the GI Bill, which guarantees veterans the full 
support they need to attend a 4-year university.
    Iraq veterans deserve the same level of assistance received 
by veterans of earlier wars. As you can clearly see from this 
chart, they do not have this support today.
    [The chart entitled ``Current GI Education Benefits Fall 
Short'' appears in the Submissions for the Record on page 54.]
    President Bush should sign this bill and guarantee that 
veterans have the resources they need to get a college degree.
    Mr. Chairman, we hope to see you soon, but we really do 
thank you for this hearing, and I yield to my colleague on the 
other side of the aisle, my distinguished colleague, 
Congressman Brady.
    [The prepared statements of Representative Maloney and 
Senator Brownback appear in the Submissions for the Record on 
pages 34 and 35, respectively]

 OPENING STATEMENT OF HON. KEVIN BRADY, A U.S. REPRESENTATIVE 
                           FROM TEXAS

    Representative Brady. Thank you, Madam Chairwoman. I 
appreciate it very much. Governor, welcome to Washington, as 
well. I used to play American Legion Baseball during the 
summers in Billings and other cities in Montana. You've got a 
great State.
    I also appreciate your leadership on the potential of 
turning coal into super-clean liquid fuels for our cars and our 
trucks. We wish you had a vote up here in Washington these 
days. We think we could do some good with that.
    Madam Chairwoman, I question whether it is appropriate to 
hold this hearing at all. Here we are within 72 hours of 
running out of the payroll account to fund our Army and Marines 
who are fighting for us in Iraq and Afghanistan.
    On June 15th, that payroll account goes to zero, and those 
who are fighting and sacrificing for us, will know that this 
Congress has fiddled around with everything from global warming 
to, this week, discussing the International Year of Sanitation, 
rather than stopping what they are doing and funding our men 
and women who are sacrificing for us.
    By the way, the good news is, they won't--Army and Marines 
will not fight without a paycheck, because Secretary Gates is 
being forced to rob the payroll accounts of the Navy and the 
Air Force, in order to pay our Army and Marines.
    I know there are urgent matters in Congress, but it seems 
to me, immoral, that we are spending time in made-for-TV 
hearings, rather than really supporting the troops who deserve 
it, and our whole support today.
    I would also point out that what is missing today, is the 
question, what is the price of living in terror? We know from 
9/11, that we lost not only many lives, but two million jobs in 
the aftermath.
    I don't know a business in America that wasn't affected in 
some way. I don't know a person in America who wasn't affected 
in some way.
    Since that day, there have been 417 terrorist attacks 
across this world, everywhere from subways to hotels and 
schools and weddings. The U.S., through a lot of hard work, has 
thwarted attacks against us, but the question is, not just what 
is the price of this war, but what is the price for this 
country and future generations of living in fear, in fear of 
going to work in the morning and your spouse coming home at 
night; the fear of sending your children to school, hoping that 
they'll come back off the school bus that afternoon; the fear 
of going to a football game on a Friday night or a mall on a 
weekend, and worrying about a bomb going off, because we have 
been shortsighted in our national security.
    It seems clear to me the surge is working, and it's clear 
we have a great deal at stake. I met with a 20-year-old marine 
officer here last week, who told me the difference between his 
first and second tours in Fallujah were dramatic, and that 
within 24 hours of us withdrawing prematurely, we would lose 
that city and be in a worse mess than we are today.
    So, because of the timing, we have not funded our troops 
and because we are not contemplating the price of living in 
terror, while this hearing will be interesting, it is certainly 
not the highest urgency for this Congress.
    With that, I'll yield back.
    Vice Chair Maloney. Congressman Hill?

OPENING STATEMENT OF HON. BARON P. HILL, A U.S. REPRESENTATIVE 
                          FROM INDIANA

    Representative Hill. Thank you, Madam Chair. I don't have 
any prepared remarks, but I would like to respond to some of 
the remarks that have already been made, and I want to begin by 
thanking all of the panelists for appearing today, and 
especially you, Governor Schweitzer, for making the long trip 
across the country to Washington, D.C., to give us your 
perspective on how this war is affecting the great State of 
Montana.
    We were told at the beginning of this war, that the 
estimated cost of it would be $50 to $60 billion. It's now 
exceeded $660 billion.
    And the American people are going to be listening to a 
great debate over whether or not we should continue this war or 
get out, and the two Presidential candidates could not have 
more starkly different positions on this war.
    But one of the concerns that I hear constantly from my 
constituents back home, is the cost of this war. My 
understanding is that it costs about $2 billion a week.
    In November of 2007, in a report to the Joint Economic 
Committee, it has been estimated that the full economic cost of 
the war to the United States, would reach $1.3 trillion by the 
close of 2008. That's this year.
    That's $1.3 trillion, and potentially $2.8 trillion through 
fiscal year 2017.
    In a February 2008 hearing by the Joint Economic Committee, 
Nobel Prize winning economist Joseph Stiglitz estimated total 
economic impacts of the war on the U.S., through 2017, that 
ranged from a low-end estimate of $2.7 trillion, to a high-end 
estimate of $5 trillion.
    So, there are those on this Committee that think that this 
hearing should not be held at all, but I couldn't disagree 
more. The American people need to know what the cost of this 
war is.
    And as we go through this Presidential race this year, the 
American people are going to be listening and making their 
choices, come November, as to whether or not this war is worth 
it.
    And I am especially interested in what you have to say, 
Governor Schweitzer, as to how this war is impacting the 
economic conditions in your State, but I'm also interested in a 
very important issue, as it relates to the condition of our 
soldiers as they come back from Iraq.
    Many members of the Indiana National Guard have served on 
multiple deployments in Iraq, some as many as four times. I've 
talked to these soldiers, and they're not very optimistic.
    The soldiers on the ground are not very optimistic about 
what's going on in Iraq. Eric Hall, a former Marine from New 
Albany, Indiana, suffered PTSD. Several months ago, he 
experienced an extended flashback, which led him to believe 
that he was in combat in Iraq.
    Mr. Hall was found dead in a drainage pipe, where he found 
shelter in response to these flashbacks that he was 
experiencing.
    Many of the counties that I represent, have been declared 
disaster areas, due to flooding.
    My concern is that the response could have been aided by 
the 76th Battalion Combat Team troops. This is the largest 
deployment of Indiana National Guard troops since World War II.
    The National Guard's multiple deployments leave many 
Hoosiers vulnerable during natural disasters.
    So, this war and its cost, is having other consequences, as 
well. I've talked to Eric Hall's dad, who has told me that he 
was not getting the kind of treatment that he deserved, that he 
was basically given a pill and left to his own resources.
    It's going to cost money to take care of the Eric Halls of 
the World, and I'm disturbed that we're not making the kind of 
financial commitments to take care of our soldiers as they come 
back from Iraq.
    It's going to take money to make sure that we have National 
Guardsmen that are on the ground when we do have natural 
disasters like we had just recently back in my home State of 
Indiana, and, in particular, in my own neighborhood.
    And so this hearing is important to address these very 
important issues. I again, congratulate and thank every panel 
member for making a contribution to this very important issue. 
Thank you, Madam Chair.
    Vice Chair Maloney. Mr. Hinchey.

     OPENING STATEMENT OF HON. MAURICE D. HINCHEY, A U.S. 
                  REPRESENTATIVE FROM NEW YORK

    Representative Hinchey. Well, thank you, Madam Chairman. 
I'll be very brief.
    First of all, I just want to express my appreciation to all 
four of you finalists for joining us here today, to address 
this very important subject, with which this Congress has to 
deal.
    And just to point out how the estimated cost of the illicit 
and illegal invasion of Iraq, followed by this subsequent 
disastrous military occupation, was like all the other 
information put forward to justify that invasion, in that it 
was based upon completely falsified information, intentionally 
and purposefully falsified information.
    And it's very clear that the cost was also engaged in that 
way, when, internally, the administration was told that the 
cost would be at least $200 billion or $300 billion, when they 
insisted it was only going to be, at most, $50 billion or $60 
billion. We now know, based upon experience, that it is more 
than ten times what they alleged the cost would be.
    And that illicit invasion and the subsequent kind of 
propaganda situation that we're experiencing, both of which 
were based upon this culture of fear, which was promulgated by 
this administration, and continues to be promulgated by Members 
of the Congress and others, is something that we have to 
overcome.
    We're going to have to deal with this situation in an open, 
honest and knowledgeable way. Your testimony today, I'm sure, 
will help us engage in it in just the way it has to be engaged.
    So, again, I appreciate your being here, and I anxiously 
look forward to what you have to say. Thank you very much.

OPENING STATEMENT OF HON. CHARLES E. SCHUMER, CHAIRMAN, A U.S. 
                     SENATOR FROM NEW YORK

    Chairman Schumer (presiding). Well, thank you. I want to 
thank everyone for coming and I want to apologize for being 
late. I was scheduled to speak on the floor at a quarter of 10, 
but when you're just a regular peon member around here and the 
leadership decides to debate with one another, you have to 
wait, so I apologize for being late.
    I want to thank everyone for coming, and particularly thank 
Vice Chair Maloney for taking over in my stead. I will have to 
say that I'm needed to make a quorum at the Judiciary Committee 
at certain points this morning, so if I run in and out while 
you're testifying, I apologize.
    But I want to thank everyone for coming to the Joint 
Economic Committee's second hearing on the costs of the war in 
Iraq, ``Fight Now, Pay Later.''
    Last year, we issued a report revealing that the economic 
costs of this war are in the trillions of dollars. Our findings 
were corroborated and almost doubled by a subsequent study by a 
Nobel-winning economist, Joseph Stiglitz, who we invited to 
testify at our first hearing on this subject in February.
    Since that time, little has changed in Iraq or in the 
administration's posture on changing the course there. In fact, 
the only new information we have about the future costs of Iraq 
is that the Republican Presidential nominee sees no need to 
bring the troops home, and admitted that, in his view, American 
troops could be in Iraq for a hundred years.
    I don't think anyone could conceive of the economic toll 
that that would take on our country.
    I want to extend a special thank you to Governor Brian 
Schweitzer from Montana. He traveled a long way to be here 
today, but part of the reason he has been such a successful 
Governor has been his ability to manage the State's economy.
    Montana has one of the lowest unemployment rates in the 
country and has one of the fastest-growing State economies, as 
well.
    Now, I wish I could say the same thing for the rest of our 
country. For the last 6 months, the economy has been stalled; 
300,000 jobs have been lost; unemployment jumped to 5.5 
percent; and, of course, gasoline prices are over $4 a gallon. 
Homeowners who haven't lost their homes have lost billions of 
dollars in equity.
    While average American families are squeezed like never 
before, our veterans and our military families are dealing with 
a host of similar problems, and some are especially hard-hit by 
the housing crisis and the bleak jobs market.
    Today, we're going to hear from Mr. Tarantino, who will 
talk a bit about his personal and very difficult experience 
looking for a job after he finished serving his country.
    But I want to share with you, some new figures that our 
Joint Economic Committee staff developed with data from Realty-
Track, a company that closely monitors filings around the 
country. Now, if you look at that chart, it says it all.
    [The chart entitled ``Foreclosure Rates Near Military Bases 
Surpass the National Average by 37 Percent'' appears in the 
Submissions for the Record on page 55.]
    We wanted to know if housing markets in areas where 
military bases are located have been hit harder than expected 
by the severe downturn in the housing market. By looking at the 
areas surrounding 24 military bases with the highest personnel 
populations, we found substantially higher foreclosure rates.
    While the national average for the increase in foreclosures 
was 59 percent, the average for these 24 areas around military 
bases, was over 80 percent. From 2007 to 2008, that's a 37-
percent higher increase in the rate of foreclosure for areas 
populated by military families.
    Military families are already shouldering heavy burdens to 
care for and support families, while their loved ones are 
serving abroad or recovering at home. Knowing that so many more 
are losing their homes to foreclosure is heartbreaking and it's 
just plain wrong.
    This administration, which has manhandled economic policy, 
has done the same with the war in Iraq. Their mistakes on the 
Iraq war have cost thousands of lives and cost billions of 
dollars so far.
    Our Committee and a Nobel Prizewinning economist has 
estimated the cost in trillions, and that cost will grow 
exponentially if we continue to stay the course in the war. We 
have always been aware of the high cost of this war in lives 
lost, but the cost in terms of dollars and cents, is also far 
too high.
    The White House suggested the war might cost $60 to $100 
billion in 2003, and just after the fifth anniversary, we've 
spent ten times that amount. We've asked Jim Nussle, the 
Director of the Office of Management and Budget, to come to the 
Joint Economic Committee a number of times, including today's 
hearing, and he declined once again.
    Since the OMB has repeatedly denied our requests to appear 
before our Committee, let me recount some of the truly absurd 
statements from the Bush administration over the last 6 years, 
regarding the cost of the war. Here they are:
    ``The likely economic effects of the war in Iraq, would be 
relatively small, and, under every plausible scenario, the 
effect will be quite small, relative to economic benefits.'' 
That was Larry Lindsay in 2002.
    Kenneth Pollack, in 2002: ``It's unimaginable that the 
United States would have to contribute hundreds of billions of 
dollars, and highly unlikely we'd have to contribute even tens 
of billions of dollars.''
    These people were in Never-Never Land. It's just amazing.
    ``The United States is committed to helping Iraq recover 
from the conflict, but Iraq will not require sustained aid.'' 
That's from Mitch Daniels, who was the head of OMB, and that 
was on April 21st, 2003.
    And, finally, a few weeks ago, Director Nussle, Daniels's 
successor at OMB, said in response to our invitation to 
testify, quote, ``There is no price tag that can be put on the 
immeasurable value of preventing a terrorist attack.'' Wrong in 
three places.
    There's no proof that this prevents a terrorist attack. 
Many have disputed any relationship to the war on terror.
    There is a large price tag, when we don't have healthcare 
and people are sick or even die, because we don't have that at 
home, because we're spending it in Iraq, or we don't have 
schools that are up to snuff and our kids can't compete in 
jobs.
    Of course, there's a price tag. Everything is a tradeoff, 
and I guess what OMB is saying is, even if we spent the entire 
budget on the war in Iraq and spent nothing on anything else, 
that would be OK, because there's no price tag. It's appalling.
    I'm going to just submit--is there a price tag on curing 
serious diseases like diabetes or cancer? Is there a price tag 
on educating our children or keeping them healthy? Those have 
price tags, but the war in Iraq doesn't? This is voodoo 
economics of the highest order.
    I'm going to ask unanimous consent that the rest of my 
statement be added to the record, and just conclude by saying 
that it's long past time for the administration to come clean 
and account for the real costs of the war in Iraq. It's their 
responsibility to be clear about what we've spent, and, for 
once, to be honest about what we have to spend.
    The fact that no one will show--we've asked not just 
Director Nussle, but anyone from the administration to come, 
shows that they are afraid to address this question.
    [The prepared statement of Senator Schumer appears in the 
Submissions for the Record on page 32.]
    Chairman Schumer. Now I'd like to recognize our witnesses 
and thank them for their patience here. First, Governor 
Schweitzer has already been introduced by Senator Tester. It 
was Governor Schweitzer who introduced me to Senator Tester, 
who was, then, I think, State Senator Tester, several years 
ago. It's great to have you here, Governor, and whatever John 
Tester said, I would echo, and I'm sure it was all very 
positive.
    Our second witness is Christine Eibner. She is an economist 
at RAND. She was the lead author and study co-leader for the 
Economic Analysis chapter included in the recent RAND report 
entitled ``Invisible Wounds of War: Psychological and Cognitive 
Injuries, Their Consequences and Service to Assist Recovery.''
    Tom Tarantino is a Policy Associate for the Iraq and 
Afghanistan Veterans of America, IAVA, and an Iraq veteran 
himself. He enlisted in the U.S. Army Reserves in 1997, served 
in Bosnia in 2000.
    He assisted the repatriation of over 3,000 refugees, and in 
Iraq in 2005, where he served as both a Cavalry and Mortar 
Platoon Leader with the 11th Armored Cavalry Regiment. As a 
Cavalry Platoon Leader, his primary mission was to lead 
security patrols through North Baghdad, providing stability and 
support to the Iraqi people trying to rebuild their country, 
and he conducted over 500 mortar missions in West Baghdad, and 
was awarded the Bronze Star.
    After 10 years of service, he left the Army as a Captain in 
2007. Mr. Tarantino, I think we would all like to thank you for 
your service to our country. You're in the great tradition of 
Americans who have stepped up to the plate throughout our 
history.
    Finally, William Beach is the Director of the Heritage 
Foundation Center for Data Analysis. He oversees Heritage's 
original statistical research on taxes, trade, and a host of 
other issues. He's testified before us before, and done a very 
good job.
    Before joining Heritage, he held a variety of posts in the 
public, private, and academic sectors, including serving as 
President of the Institute for Humane Studies at George Mason.
    Governor Schweitzer, you're first and you may begin. Thank 
you.

    STATEMENT OF HON. BRIAN SCHWEITZER, GOVERNOR OF MONTANA

    Governor Schweitzer. Thank you very much, Mr. Chairman and 
Member of the Committee. I'm, I guess, a little nervous that 
Jon Tester is gone, because, while he was here, there would 
have been at least two of us that would have known how to 
grease a combine, adjust the clutch on a tractor, and brand, 
vaccinate, and castrate a calf. It looks like I'm kind of on my 
own right now.
    Since I'm only going to be in town for a short period--I 
just got in last night and I'm leaving today--I can afford to 
be completely honest here today.
    So, I am going to focus on the effects of this war on a 
rural State. Now, if we were to overlay the map of Montana on 
the Northeast, it would run from Washington, D.C. to 
Indianapolis, and yet we only have 950,000 people living there.
    So when we're trying to find ways of treating our returning 
heroes, it is much more difficult with these distances. Let me 
give you a story about what it means for a family in Scobey, 
trying to find professional help for their son, a veteran of a 
National Guard Infantry deployment, who suffers from post 
traumatic stress disorder symptoms.
    The family lives in the far northeast part of Montana, 720 
miles round trip to Billings, a city of 100,000, Montana's 
largest; a 440-mile trip to Miles City, a city of 8,500; 260 
miles round trip to Sidney, a town of 5,000; 88 miles round 
trip to Plentywood, a town of 2,000, on a good night, and 
nearly a thousand-mile round trip from our capital, Helena, 
where Montana's National Guard is actually headquartered, and 
where Montana's only Veterans Hospital is located--one thousand 
miles round trip.
    One in six Montanans age 18 and older, is a veteran, a per-
capita number second only to Alaska. Montanans are warriors and 
we have fought in every war, proudly.
    Montana's Veterans Affairs Division has seen a 41-percent 
increase in veterans disability compensation claims for 
military service connected with disabilities from that veterans 
population.
    The great majority of that increase, is due to the return 
of combat veterans from Iraq and Afghanistan. The signature 
characteristics of those claims, includes a higher quantity of 
disabling and more complex conditions, including PTSD and 
traumatic brain injury.
    The division requested and was authorized three additional 
service officers in 2003; two in 2007, and will request three 
more in the coming legislation of 2009. If approved in 2009, 
the State's investment would then total nearly $300,000 in 
personnel service expenditure, due in part to the global war on 
terror.
    Montana's National Guard of over 3,500 members, serve in 22 
armories and facilities scattered across this State. They would 
run from Washington, D.C. to Indianapolis.
    In the Army National Guard, our men and women average 31 
years old, and just less than half are married, and they have 
an average of 1.8 dependents. I don't know what the .8 looks 
like.
    Some 412 have bachelor's degrees or higher; 500 are full-
time Guard and over 2,100 are traditional citizen soldiers. The 
Montana National Guard Adjutant General Randy Mosley, has a 
daunting challenge to ensure that all of his soldiers and 
airmen scattered across those 147,000 square miles of Montana, 
are trained and ready to be called for State or Federal 
service, and ensuring those returning home from any deployment, 
are fully reintegrated into their family, their community, and 
their unit.
    Our failure at meeting that second challenge, the 
successful reintegration of the deployed soldiers, resulted in 
the suicide of a young Montanan named Chris Dana. Let me read 
the first few lines of a December 2007 news service story.
    You can only believe about half of what you read in the 
newspaper, but I think this one's probably true:
    ``Chris Dana came home from the war in Iraq in 2005 and 
slipped into a mental abyss so quietly that neither his family 
nor the Montana National Guard noticed. He returned to his 
former job, a job at the Target store, nights in a trailer 
across the road from his father's ranch house, and when he 
started to isolate himself, missing family events and football 
games, his father urged him to get counseling.
    ``When the National Guard called his father to say that he 
had missed weekend duty, Gary Dana pushed his son to get back 
in touch with his unit. 'I can't go back, I can't do it,' Chris 
Dana responded, and things went downhill from there.
    ``He blew through all his money, and, last March, alone, he 
shot himself in the head with a .22 caliber rifle. He was 23 
years old.
    ``As Gary Dana, his father was collecting his son's 
belongings, he found a letter indicating that the National 
Guard was discharging his son under what was known as `other 
than honorable conditions.' The move was due to his skipping 
drills, which his family said was brought on by the mental 
strain of his service in Iraq.
    ``The letter was in the trash near the Wal-Mart receipt for 
the .22 caliber rifle shells.''
    Following the tragic death of his step-brother, Matt Kuntz, 
a Helena lawyer and graduate of West Point, demanded action to 
ensure that other Montana soldiers did not suffer and die as 
Chris had done. He wrote a compelling piece for Montana's 
newspapers, that generated hundreds of calls from across the 
State to my office.
    The result was the Post Deployment Health Reassessment Task 
Force (PDHRA) and the subsequent PDHRA Campaign to implement 
the recommendations of that Task Force and more. So far, the 
Montana National Guard estimates that their campaign 
implementation has cost over $200,000. An outline of that 
effort is attached in my written testimony.
    We can't put a value on the cost of losing Chris Dana, nor 
can we easily quantify the cost to our families and communities 
and the economy, of soldiers and airmen unable to return to 
their jobs at the fire station, fearful of leading their son's 
Boy Scout Troop, or attending the 4th of July parade or too 
depressed to enjoy a normal evening out with their spouse.
    As you know, Montana's fire seasons can be brutal. Last 
year, we burned around a million acres. This year is a little 
wet and we may get off lucky; we may only lose a few hundred 
thousand acres.
    And we spend millions of dollars a year protecting our 
families. A key part of Montana's response, is our reliance on 
the National Guard, both for human resources, equipment, and 
materiel.
    This war on terror has and will continue to impact the 
ability of the National Guard to meet that commitment to 
domestic emergency preparedness. Additional information on this 
issue is also attached, but, in summary, General Mosley states 
that to bring Montana's National Guard back to equipment 
readiness, 100 percent, would cost about $28 million for 
Montana alone.
    With your permission, I will submit the names that appear 
on the memorial, for the record, of those who have given all in 
this war, from Montana, and they include Montana's Senior 
Senator, Max Baucus's nephew.
    I'm proud of their service and I simply say, if we believe 
this war is important enough to fight, then let us be sure that 
we are paying the full costs of that war today. Thank you very 
much for this opportunity.
    [The prepared statement and attachments of Governor 
Schweitzer appear in the Submissions for the Record on page 
37.]
    Chairman Schumer. First, without objection, the list will 
be submitted to the record. Thank you for your powerful and 
compelling testimony. Really, you did a fine job and I 
appreciate your traveling a long distance. I know it's because 
you care so much about this issue. I think we're all proud of 
you.
    Dr. Eibner?

  STATEMENT OF CHRISTINE EIBNER, ECONOMIST, RAND CORPORATION, 
                        WASHINGTON, D.C.

    Ms. Eibner. Thank you. Chairman Schumer, Vice Chair 
Maloney, and distinguished Members of the Committee, thank you 
for inviting me to testify and to discuss our analysis. It is 
an honor and pleasure to be here.
    My testimony will summarize the results of a study 
quantifying the economic costs of post traumatic stress 
disorder, or PTSD, depression, and traumatic brain injury, or 
TBI, among military service members returning from Iraq and 
Afghanistan.
    I will then discuss several recommendations for reducing 
these costs and for better understanding the magnitude of these 
costs over time.
    The bottom line is, given the mix of treatment that is 
currently being provided to returning service members, we 
estimate that the 2-year cost of depression and PTSD, could 
range from $6,000 to $26,000 per case.
    Applying these figures to the estimated number of service 
members returning from Iraq and Afghanistan with PTSD or 
depression, total cost incurred with in the first 2 years 
following deployment, could range to $4 billion to $6 billion 
dollars.
    We also estimate that 1-year, post-deployment cost for 
service members returning from Iraq or Afghanistan with TBI. 
These costs could range from $590 million to $910 million.
    Let me describe how we went about our study. We developed a 
mathematical model to estimate 2-year, post-deployment costs 
associated with PTSD and depression for military service 
members returning from Iraq and Afghanistan.
    The model accounted for mental health treatment costs, the 
cost of reduced employment and lower wages, and the cost of 
lives lost due to suicide. We included costs to all members of 
society, including DoD, the VA, service members, and their 
families.
    Individuals in the model could receive three types of 
treatment: proven evidence-based care, usual care, or no care. 
Outcomes in the model such as the probability of recovering 
from a mental health condition following an episode of 
treatment were based on published literature.
    For our analysis of TBI, we accounted for treatment costs, 
lost productivity, and premature mortality. We developed cost 
estimates for returning service members who accessed the health 
care system and received a formal diagnosis. For this group, 1-
year costs could range from $27,000 to $33,000 for those with 
milder injuries, and from $270,000 to $410,000 for those with 
moderate or severe injuries.
    Applying these figures to the approximately 2,700 
individuals identified as having TBI by the President's 
Commission on Care for America's Returning Wounded Warriors, we 
estimate the total 1-year cost for individuals with TBI could 
range from $590- to $910 million.
    For all three conditions, lost-productivity and premature 
mortality were large drivers of cost. For example, lost 
productivity accounts for about 55 percent of costs related to 
depression and PTSD. Mental health treatment, in contrast, 
accounts for only 3 to 5 percent of PTSD and depression costs.
    Due to lack of data our estimates omit costs of several 
important consequences of PTSD, depression, and TBI, including 
substance abuse, homelessness, domestic violence, and family 
strain.
    Despite these caveats, our research suggests that if we 
increase the share of individuals in our model who receive 
evidence-based treatment, total costs fall. Although evidence-
based care is more expensive than usual care, providing 
evidence-based care to all service members returning with PTSD 
or depression could reduce costs by as much as 27 percent.
    These savings come from improved labor market outcomes and 
fewer suicides.
    Because data on TBI are more limited, we were unable to 
estimate the cost savings associated with providing evidence-
based care for TBI.
    In our report we outlined several strategies for increasing 
access to evidence-based care. One recommendation is to change 
policies to encourage service members to seek needed care.
    A survey we conducted found that over 40 percent of service 
members who might need treatment were deterred by perceived 
negative career repercussions. In addition, policies could be 
changed to ensure higher availability of providers and to 
ensure that evidence-based care is delivered to all service 
members who seek treatment regardless of whether this treatment 
is provided by the DoD, the VA, or the civilian sector.
    Our final recommendation calls for investing in research to 
close information gaps related to the long-term economic 
consequences of PTSD, depression, and TBI.
    A coordinated Federal research agenda could improve our 
understanding of labor market outcomes and other downstream 
costs such as substance abuse. Understanding the full magnitude 
of the cost and consequences of PTSD, depression, and TBI is 
critical so that we can make fiscally responsible investments 
in care.
    In conclusion, I emphasize that the costs for service 
members returning from Iraq and Afghanistan with mental health 
and cognitive conditions are high and far exceed the immediate 
cost of treatment provision. We as a society can save money by 
investing in evidence-based treatment for these individuals.
    Thank you again for the opportunity to testify and to share 
our research recommendations and findings.
    [The prepared statement of Ms. Eibner appears in the 
Submissions for the Record on page 40.]
    Chairman Schumer. Thank you for your good testimony. You 
are the first witness who finished exactly when the 5-minute 
clock went out.
    (Laughter.)
    Chairman Schumer. You have an exquisite sense of timing.
    Mr. Tarantino.

    STATEMENT OF TOM TARANTINO, POLICY ASSOCIATE, IRAQ AND 
    AFGHANISTAN VETERANS OF AMERICA (IAVA), WASHINGTON, D.C.

    Mr. Tarantino. Mr. Chairman, Ranking Member, and 
distinguished Members of the Committee:
    I thank you for the opportunity to testify today regarding 
the economic challenges facing our Nation's veterans and the 
long-term costs of veterans' unemployment.
    I began my career in 1997 when I enlisted in the U.S. Army 
Reserves as a civil affairs specialist. In 2003, I was 
commissioned a 2nd Lieutenant in the Armor Branch and deployed 
to Iraq as a platoon leader from 2005 to 2006.
    My story serves as a good example of the challenge that 
many NCOs and officers face when leaving the service. During my 
tenure as a civil affairs specialist I was trained in populace 
resource control, disaster and emergency management, civil 
defense planning, and humanitarian relief operations.
    I graduated from the University of California at Santa 
Barbara with a degree in Global Studies and International 
Relations. For the next 4 years I served as a combat arms 
officer holding several jobs across many functional 
disciplines.
    In addition to leading two platoons through combat, I, on a 
monthly basis, conducted and participated in the most complex 
training the military has to offer while assigned to the 
opposition forces of the National Training Center.
    As a headquarters executive officer at the National 
Training Center, I was responsible for the logistics and 
administration of a company of over 400 soldiers with 3 multi-
million dollar budgets.
    As a public relations officer, I was the public face of the 
entire regiment that not only was responsible for training the 
force but prepared themselves to redeploy. I had a long and 
honorable service.
    I gained skills and accomplished tasks that many of my 
civilian peers would not face until much later in their 
careers.
    Conventional wisdom and the rhetoric from the Army's 
Transitional Assistance Programs told me that I should have no 
problems finding employment in the civilian world.
    This however turned out not to be the case. After putting 
my belongings into storage and returning home after 10 years of 
service, I began what would be a 10-month journey of shock, 
disappointment, and education as to the disposition of the 
civilian work force toward members of our military.
    I learned that in the civilian world military achievements 
and equivalent skills are misunderstood and undervalued. In 
many positions I had practical experiences that matched or far 
exceeded any prospective job, yet employers didn't seem to 
understand or were not interested in learning how experience as 
an officer and a soldier translates into their particular 
industry.
    Additionally, I found that there was fear attached to 
hiring a former combat soldier with the stigma surrounding 
combat stress making employers view me as a potential liability 
to their company.
    My difficult experience in the civilian job market is not 
unique. According to a recent report prepared for the 
Department of Veterans Affairs, recently separated service 
members are more likely to be unemployed and tend to earn lower 
wages than their non-military peers.
    Among veterans who have completed their service in the last 
one to 3 years, 18 percent were unemployed and a full 25 
percent earned less than $21,840 a year.
    College-educated veterans suffer the largest wage gap, 
earning almost $10,000 a year less than their nonmilitary 
peers. I think we can all agree that veterans of Iraq and 
Afghanistan, as well as veterans everywhere, deserve better.
    Over time the lost economic opportunities of this 
generation of 1.7 million Iraq and Afghanistan vets will have 
an untold cost, not only for our military and their families 
but for the economy as a whole.
    IAVA has made a number of policy recommendations to help 
veterans transition to civilian life, and to forestall the dire 
economic consequences of a generation of under- and unemployed 
veterans.
    These suggestions include, but are not limited to:
    Tax credits for patriotic employers who support their 
deployed Reservists. Meaning, when Reserve component employees 
are called to duty for over 90 days, the employers who pay the 
difference from their civilian salary to their military salary 
deserve tax credits.
    Additional tax credits for employers who hire homeless 
vets;
    As well as better protections under the USERA and Service 
Members Civil Relief Act.
    You can see the complete policy recommendations in our 
Legislative Agenda.
    While IAVA believes that these issues present a road map to 
better the lives for veterans, there is one issue that is 
immediate and before you now as Members of Congress.
    You see, the World War II GI Bill was never designed as a 
first-rate economic stimulus plan, and it was never designed to 
be the most effective recruitment tool in military history. 
These are just welcome side effects.
    The GI Bill was and is the single most important 
readjustment tool to the 1.7 million veterans of this conflict. 
We are reducing the long-term strain on veterans services while 
providing them with an opportunity at a first-class future.
    It is for these reasons that I would like to discuss the GI 
Bill. The GI Bill has benefited more than just a handful of 
America's leaders and luminaries, although they have and many 
Senators, which I am sure you know, are beneficiaries.
    Eight million veterans attended a college or a university 
on the WWII GI Bill. It was estimated that almost half a 
million of these veterans would not have been able to go to 
college at all without it.
    An additional 3.5 million veterans went to vocational 
schools; 1.5 million vets got on-the-job training; and 700,000 
more received farm training.
    The GI Bill produced 238,000 teachers, 91,000 scientists, 
67,000 doctors, 450,000 engineers, and a million assorted 
lawyers, nurses, businessmen, artists, actors, writers, and 
pilots. Although the vast majority of the beneficiaries were 
men, the GI Bill put 64,000 women through college.
    This Congress has shown tremendous foresight in passing the 
new GI Bill as part of the Emergency Supplemental Funding for 
the war. More than any other single piece of legislation, the 
GI Bill would make a difference in the economic futures of 
troops returning every single day from Iraq and Afghanistan.
    We look forward to this legislation being quickly passed 
and signed into law. The battle for the new GI Bill highlights 
a key gap in our accounting for the Iraq war. All of the care 
and support for our veterans, including programs to help them 
reintegrate into civilian life, should be understood and 
categorized as an unavoidable cost of this war, and yet the 
cost of the GI Bill is not typically accounted for in the war's 
budgets.
    In the long term, budgeting should reflect all the support 
that our troops deserve before, during, and after combat. I 
thank you for your time and for your attention.
    [The prepared statement of Mr. Tarantino appears in the 
Submissions for the Record on page 47.]
    Chairman Schumer. Well thank you, Mr. Tarantino, for really 
excellent, powerful testimony and for your service to your 
country, to our country.
    Mr. Beach.

   STATEMENT OF WILLIAM W. BEACH, DIRECTOR, CENTER FOR DATA 
      ANALYSIS, THE HERITAGE FOUNDATION, WASHINGTON, D.C.

    Mr. Beach. Mr. Chairman and Members of the Joint Economic 
Committee, I am very pleased to be here today and thank you for 
the invitation.
    I do not present myself this morning as an expert on the 
battlefields in the global war on terror. Others are here 
today--Capt. Tarantino especially--or have testified before you 
and wear the badges of experts in these wars.
    I like most citizens have my own views on these and related 
conflicts, but those views are not what move me to accept this 
Committee's invitation to testify today.
    Rather, I present myself as an economist who has followed 
the debate over the cost of the global war on terror, and now 
is worried that this discussion, like so many others, has 
become a victim of the increasingly bitter partisanship 
surrounding this war.
    My testimony briefly touches on three topics, though I 
probably will only do two.
    First, the frequent absence of an appropriate cost/benefit 
analysis when we're looking at costs; and two, the costs of the 
Iraqi conflict and the tendency of some leading cost analysts 
to ignore offsetting factors, and to unfortunately exaggerate 
the long-term, war-related outlays of the Federal Government. 
And this goes directly to the Veterans Administration costs.
    So let me go to cost/benefit analysis briefly and look 
specifically at the estimates which were produced by Professor 
Stiglitz. Professor Stiglitz presents two sets of cost 
estimates in his now-famous book, one called Best Case and one 
called Realistic and Moderate.
    Assuming for the moment that each of these cost estimates 
is reasonable--which is an assumption I am actually not willing 
to support, except for this illustration--then the U.S. will 
spend between $1.7 trillion and $2.7 trillion dollars 
specifically on war fighting operations in Iraq.
    This sounds to anyone like a very large amount, especially 
when we think about how much good these same sums would do to 
rebuild our highways, provide low-income health insurance, and 
so forth.
    However, these are presented by the authors as accounting 
costs, the sort of things that we would look for in an 
accounting exercise and not economic costs.
    Economic costs have benefits associated with the costs. It 
may be Professor Stiglitz's view that there are no benefits, or 
it may be that they are large, but citizens have to know what 
the benefits are in order to make choices between how the same 
amount of money would be spent in two or three or more 
different directions.
    For example, if Professor Stiglitz had presented economic 
costs to the people who read his book, one way of doing this 
would have been to take the 9/11 episode and to suggest perhaps 
we would have had an additional 9/11 episode for every 
subsequent year except for the fighting in Iraq and 
Afghanistan.
    I think that is an extreme view of the benefits, but it 
nevertheless allows people then to quantify what those benefits 
would be.
    However the authors would have done this would have been a 
good service to the citizens who are relatively untrained in 
making these kinds of decisions except if they have the 
benefits in front of them.
    Now let me go to the war and the actual costs involved with 
that war.
    As of March of this year, Congress had appropriated 
somewhere in the neighborhood of about $850 billion for 
military operations, reconstruction, embassy costs, enhanced 
security at U.S. bases, and foreign aid programs in the global 
war on terror specifically, and mostly in Iran--Iraq and 
Afghanistan.
    Due to the increase in military personnel and operations 
since the surge, the burn rate in Iraq has increased from $4.4 
billion in 2003 to $12 billion or so today.
    However, the benefits of the current increase in activity 
are present across a wide spectrum of metrics, particularly in 
the decline of battle-related casualties.
    Some critics, such as Professor Stiglitz and others, expand 
their war-fighting estimates by ignoring the improvements of 
2007 and 2008.
    Pre-surge cost ratios are extended into the distant future. 
Casualty rates continue at pre-surge levels, and long-term 
outlays for Veterans Administration programs blossom by the 
expansion of the base.
    For example, the monthly average casualty rate in 2007 
stood at 75. But that rate fell during the last 3 months of the 
year to an average of 33. During the early months of 2008 the 
monthly casualty rate was half that of 2007 at 40 per month. 
Professor Stiglitz, however, assumes that ``the rate of death 
and injuries per soldier continues unchanged into the future 
over this forecast period.''
    These higher than supportable estimates of casualties 
produce a large base of VA outlays than it appears will be the 
case.
    Furthermore, Professor Stiglitz assumes that the 
utilization rates for Veterans of Iraqi Freedom will be the 
same as that by Veterans of Desert Storm.
    Obviously that assumption has very little evidence to 
support it since utilization levels have yet to be fully 
established for Operation Iraqi Freedom.
    Moreover, one wonders whether the special circumstances 
that afflicted Desert Storm Troops make their utilization 
profiles unique. We have yet to fully trace the full medical 
effects of exposure to burning petroleum that so famously 
confronted our military during the first gulf war.
    The strong views surrounding--and I will conclude--the 
strong views surrounding the war in Iraq, and particularly its 
future, color the analysis of costs. Perhaps that is 
unavoidable. After all, forecast requires assumptions, and 
assumptions frequently spring out of beliefs and not science.
    Even so, the citizens of this country have before them one 
of the most important questions that have faced them in several 
generations: Whether to declare this war a mistake from the 
start that deserves a swift and certain conclusion; or to 
persist in the Middle East by continuing to bring the global 
war on terror to the enemy's territory.
    However one feels about this justification for the war, its 
costs play a role in making this decision. The importance of 
this question means that those who do the work of accounting 
for the conflict's fiscal and economic effects must treat the 
public with respect and prepare their analysis with the highest 
professional standards fully in view.
    Thank you.
    [The prepared statement of Mr. Beach appears in the 
Submissions for the Record on page 49.]
    Chairman Schumer. Thank you, Mr. Beach. I would just start 
my questions, I would say I am not going to ask you a question, 
but I would say it is a profound method of cost/benefit 
analysis to say, as Director Nussle did: There is no price tag 
that can be put on immeasurable value of preventing terrorist 
attacks.
    Mr. Beach. You are absolutely right about that, Mr. 
Chairman. That is a strong statement indeed.
    Chairman Schumer. First, Governor Schweitzer. And I want to 
thank the witnesses. I thought the testimony was great, just 
great, and will help us in measuring the costs.
    We are not here to measure cost/benefit analysis. That is 
the job of ourselves and our constituents: do you spend a 
dollar here? Do you spend a dollar here? What we are trying to 
do is just get at the costs and a real measure of the costs.
    The first question I have is for Governor Schweitzer. It is 
clear that this war in Iraq has had tremendous opportunity 
costs, forcing us to spend billions of dollars on military 
operations rather than using those limited funds for important 
priorities such as health care, education, or housing. In your 
opinion, Governor, how would Montana use its resources 
differently if it did not have to allocate some of its budget 
to cover the expenses you outlined associated with the war in 
Iraq?
    Governor Schweitzer. Thank you very much. I've got to tell 
you, I was trying to understand. Of course I am not an 
economist, but now I know why old Harry Truman said he liked 
his economists with just one arm; because every time they would 
come in they would say: On the one hand; on the other hand. And 
then you would just get one opinion.
    But let me say this. Opportunity costs: After 9/11, it was 
an interesting response. It was kind of like in Montana if you 
run a bunch of sheep, and a couple of coyotes get in and they 
start killing some of your lambs, and you wake up the next 
morning and you say: My God, we've got to do something about 
it!
    So you drive 150 miles away, get your rifle out and shoot 
somebody else's wolf.
    Now that is kind of what we did in Iraq. I mean, my God, we 
were already in Kuwait keeping an eye on things. You could not 
back a pickup out of a garage without us having an eye in the 
sky. For the last 30 years, the whole time I lived in Saudi 
Arabia in the 1980s, we had AWACs in the air. We're flying the 
whole region. We knew what was going on, who was coming, who 
was going. We have had military in the Middle East, and they 
will be there as long as we are depending on that foreign oil.
    Right after 9/11, had we here in Washington, D.C., said we 
are going to fix this problem; said we are not going to drive 
150 miles away and shoot some dang wolf. We've got a problem 
with coyotes. And the problem is our addiction to this oil.
    If we would have said at that time: We will invest. We will 
do what we have done in the past. When we were attacked at 
Pearl Harbor, in less than 4 years--that is less time than we 
have been in Iraq--we designed, we built, and we deployed the 
largest military industrial complex in the history of mankind 
and we defeated the tyrants in both Asia and Europe.
    When we decided we wanted to split the atom, we didn't know 
splitting an atom from Adam and Eve, and yet we knew it was 
important. We invested, and we did it.
    When President Kennedy challenged us to go to the Moon, we 
did not know how we would get to the Moon and how we would get 
back, but all Americans worked together and we achieved that 
goal.
    On 9/11, if we had had leadership that said we will not 
import oil; we will no longer send money to these dictators who 
would like to destroy our way of life; we would be well on our 
way to energy independence with coal gasification in Montana, 
with wind power all across the prairie, with electric plug-in 
hybrids, with solar cars, with hydrogen power.
    We have now lost six or 7 years worth of investment. I 
don't know whether it is $12 billion a month, or it is $1.3 
trillion, or up to $5 trillion we've spent on this war, but I 
can tell you this: If you had spent $1 trillion on alternative 
energy in this country, we would right now be within 10 years 
of energy independence.
    So those are the real opportunity costs. We had a problem 
with some coyotes killing sheep, and we went over and shot some 
wolves that were killing calves. Thank you.
    Chairman Schumer. Governor, it is not the way we would put 
it in Brooklyn, but it is extremely well put.
    (Laughter.)
    Chairman Schumer. I just want to ask Mr. Tarantino a 
question and we will move on. Thanks for your eloquent 
testimony about the GI Bill of rights, or the GI Bill that we 
have. There are some who say, the argument the administration 
has been making is, that this will encourage people to leave 
and increase de-enlistment. All the powerful arguments you make 
in its favor I think we agree with.
    Tell me what your answer is to that argument. I think 
that's the number one thing holding us up right now, in terms 
of argument, not in terms of politics.
    Mr. Tarantino. Well, Senator, there are a few things wrong 
with that argument, the least of which being that the current 
GI Bill system and the alternatives that have been proposed, 
would encourage people to leave service much earlier than the 
GI Bill that is going through Congress, simply because it is 
not tied to the cost of education.
    When you give someone a benefit that is tied to an index 
that does not rise with the cost of education, they'll figure 
out that their benefit loses value the longer they wait. 
Soldiers aren't stupid. They understand that if I leave the 
service now, I will get more money for college, than if I leave 
in 10 years.
    Why? Because my GI Bill is tied to the CPI, not to the cost 
of education. The cost of education rises dramatically higher 
than CPI almost every year.
    Second, when you talk about soldiers that are leaving after 
their first term, when we talk about retention, that's what 
we're talking about, the first term. We're talking about that 
two to 6 years of your initial enlistment.
    You're talking about a projected 16-percent reduction. 
You're also talking about a 16-percent increase in recruitment.
    Now, those numbers aren't equal, because that's 16 percent 
of a much higher population of recruits entering service. So, 
when you hear people talking about the GI bill encouraging 
service members to leave the military, remember that in 
reality, there is a net gain in numbers.
    I think, but I don't know, but off the top of my head, it's 
a 20-percent net gain of soldiers, sailors, airmen, and marines 
in that first term. So I don't know whether the argument was 
made up, or they're doing selective math, but it just don't 
hold true and it doesn't stay with the facts.
    Chairman Schumer. Thank you. Congressman Brady?
    Representative Brady. Thank you, Mr. Chairman. Dr. Eibner, 
thank you for your testimony. Clearly, with this war, we're 
seeing far more concussive injuries and mental health issues 
that we have to dramatically ramp up funding for. Thank you for 
your testimony, and, Captain, for your service, we all thank 
you. I like your ideas on job training and incentives for 
hiring veterans. It's excellent.
    Mr. Beach, I think you illustrate how difficult it is to do 
cost/benefit analysis, even the basis of this hearing on the 
price of the war; it is just tough to measure it in dollars and 
cents, and I appreciate you at least struggling to put your 
arms around it and identify sources for that.
    And, Governor, thank you very much. I understand you're 
being considered as a potential nominee for this ticket, a Vice 
Presidential nominee, and I know you love Montana most of all, 
but I wish you the best with that.
    Recently, I met with a group of veterans in Montgomery 
County, Texas, from all walks of life and all the services. We 
were doing a sort of 6-month checkup with them on our local VA 
healthcare clinic that I worked to obtain.
    And they had two major concerns: One of them was that they 
could not believe this Congress continued to play politics 
instead of funding our troops.
    Then it was 2 weeks ago, around Memorial Day--before we 
would run out of funding for payroll for our Army and Marines, 
and they just could not understand how Democrats and 
Republicans, together, couldn't call a timeout from all this 
foolishness and whether they believe in the war or not, and 
provide funding to our troops in Afghanistan and Iraq.
    Their second concern was that traveling to and from that 
veterans clinic--we have one local and we have one down in 
Houston that's about an 80-mile round trip--they were just 
saying the hardship, because of the cost of fuel has risen so 
much, both for them and their families, and they're worried, 
too, about our troops or families back home, who don't have 
high salaries or paychecks, trying to afford gas.
    When Speaker Pelosi took office, she said that she and her 
Democrat colleagues had a common-sense plan to lower gas 
prices. Gas then was $2.33 a gallon. Today, we know it's over 
$4 and diesel is near $5.
    And so my question to you, Governor, is, you are a strong 
advocate of turning coal into super-clean liquid fuels, the 
technology that's been around an awful long time. Some 
countries use it for as much as a third of their entire vehicle 
fuels.
    What advice would you give? We are focused, instead of on 
real sources of affordable sources like that, things like suing 
OPEC up here. That's apparently our answer to fuel prices.
    What advice do you have to this Congress, about the need to 
move and use coal as a liquid fuel for our Nation?
    Governor Schweitzer. Dang, I like that question. All right, 
look, let's just do a little math here.
    Montana alone has 120 billion tons of coal. We have about 
30 percent of the coal in America, about 10 percent of the coal 
on the planet.
    If we were to covert just Montana's coal to various energy 
sources--electrons through coal gasification, syngas, through 
the gasification process, or liquid fuels, we could fuel all of 
the energy needs for this entire country for 60 years.
    But I'll tell you, during the last hundred years, the 
development of coal has consisted of some basic old technology. 
You did that coal, you crush it, you light a match to it, you 
burn it, you super-heat some water, you put that stream of 
steam on a turbine, you turn the turbine, and you generate 
electricity.
    That's the way we've been doing it for a hundred years, 
haven't changed much of the technology. Then the master problem 
of the whole system, is, you've got a great big smokestack. And 
it runs high enough so that all the bad stuff runs over to 
somebody else's backyard.
    Well, the problem is, we ran out of backyards in this 
world. In fact, now in California, about half of the non-
naturally occurring mercury, comes from China, because they 
learned to build these coal-fired plants, from us.
    We're not suggesting developing coal in that way; we're 
suggesting you put coal in a pressurized chamber, and, under 
high pressure and high temperature, you will get CO2 gas and 
methane gas to come off. You peal the CO2 off and you either 
build an industrial product with it, or you pump it right back 
into the earth, or you use it for enhanced oil recovery.
    We can develop more oil in the West, if we just have more 
CO2 and then that syngas, as I say, can produce electricity 
that would run electric cars in this country, or it can produce 
a liquid fuel that we can run our jets with.
    And if we were to invest in wind power, in the grid system, 
in plug-in hybrids, if we were to invest in coal gasification 
and hydrogen, 10 years from now, we could let the dictators 
boil in their own oil.
    But we're not. We continue to be dependent on these dang 
dictators, and we're funding both sides of this war. It's got 
to stop.
    Now, you asked me, what can Congress do? We don't ask you 
to do much, out in the States, you know. We know you've got a 
lot of speechifying to do back here and everything.
    Representative Brady. And we meet your expectations.
    Governor Schweitzer. Well, we're seldom disappointed.
    Here's what I'd ask you to do: Just pass us two pieces of 
legislation. Here's the first one: Now, you're going to get in 
trouble with a bunch of the skunks that run around here. The 
lobbyists aren't going to like some of this stuff, but just do 
two things. If you want to change the world, here's the first:
    You give a 15-percent tax credit to anybody in America that 
buys a plug-in hybrid, one that gets the first 40 miles on 
battery storage, and then with that transportation fleet, the 
light trucks, the SUVs and the cars in this country, we could 
replace 83 percent of the oil that we use, because, you know, 
93 percent of the cars in America, including most of the cars 
you drive, drive less than 40 miles every day.
    So now we're going to replace 83 percent of the fuel, and 
that means all of the imported oil.
    Second--now, this is where you get in trouble with the 
lobbyists. I want you to pass legislation that tells the 
utilities that they must buy energy from anybody on their 
system they sell energy to, so those of us who have these plug-
in hybrids, once I've stored up some energy in that battery, if 
I don't need to drive 40 miles in the middle of the day, at 10 
in the morning, when the grid needs electricity, I'm going to 
sell that electricity back into the market at a real-time 
capitalist price.
    And I'll make every consumer in America, a better 
capitalist. I'll get consumers saying, boy, I'm going to be a 
big shot utility guy, because I'm going to keep my car in the 
garage tomorrow and sell electricity right back into the grid, 
and it's worth three or four times as much in the middle of the 
day, as it was in the middle of the night.
    Now, you pass me those two pieces of legislation, you'll 
change the world and we'll be energy independent in 15 years. 
Thank you.
    Representative Brady. Governor, thank you for being here. 
By the way, you said it would cost $28 million to replenish the 
Montana National Guard?
    Governor Schweitzer. To get the equipment back into Montana 
that's been deployed in Iraq.
    Representative Brady. Let me just tell you where we can 
find that money. Two weeks ago, the U.S. House of 
Representatives passed a bill, a new Federal program to protect 
exotic cats and dogs in foreign countries, a $20 million new 
Federal program.
    The next day, we passed a nearly identical bill to protect 
six species of cranes in foreign countries, so I've got $40 
million from Washington that can help replenish the Montana 
National Guard.
    We don't have tradeoffs between the war and what we need; 
we have foolish spending tradeoffs against our real priorities, 
which is our Veterans and our Guard. I yield back.
    Chairman Schumer. Thank you again, Congressman Brady and 
Governor Schweitzer. Vice Chair Maloney?
    Vice Chair Maloney. I join the Chairman in thanking all of 
you for your really insightful testimony.
    Governor, you mentioned in your opening statement, that 
your State was having difficulty coping with the large absence 
of Reservists and National Guard, and I wish you would 
elaborate a little more.
    I understand that they help with the forest fires and other 
natural disasters, and how is your State dealing with this? Are 
you hiring more civilians to help with these kinds of 
emergencies? Or is the State potentially unprepared to cope 
with a crisis with this drain on personnel?
    Governor Schweitzer. Well, we've got about 90 million acres 
in Montana and about 25 million of it owned by the Federal 
Government; five million by the State of Montana, and a good 
part of the Federal Government's land is forest land. So we 
usually fight fires and send you the bill and you pay about 
half of it and you still owe us a little bit.
    But let me tell you a little history on this thing. Back in 
about February of 2005, I got to looking around, and I thought, 
my gosh, you know, I am the Governor of this dang State, and if 
something goes wrong, I'm ultimately responsible in an 
emergency.
    What can go wrong? Well, we don't have hurricanes, or not 
recently; we seldom have tornadoes. Well, every once in awhile, 
we get an earthquake, so we've got to be concerned about our 
dams.
    But almost every year, we've got forest fires. And when our 
private resources are exhausted, we turn to our National Guard.
    We look to those Blackhawk helicopters to haul 660 gallons 
of water and dump it on those fires. We've got those CH-47s 
that can haul up to 2,000 gallons of water on those fires.
    And so we were having a real tough winter, just about no 
snow, real dry, and I'm kind of anticipating that when we get 
out to about August or September, the whole dang State might be 
on fire.
    So I sent a letter up to the Secretary of Defense, and I 
said to him, you've got about 40 percent of Montana's National 
Guard deployed and you've got all my Blackhawk helicopters and 
you've got all the crews, except for one, that can fly the CH-
47s, and so in February, I made a proposition: Why don't you 
redeploy a little larger number of the Montana National Guard, 
back to Montana during August and September, when I can already 
anticipate I'm going to need their help, and then, of course, 
we'll redeploy them back to Iraq, and, I don't know, maybe some 
other Governors have got hurricanes or tornadoes or something 
where they can anticipate they need their National Guard at 
home for.
    So I sent that letter off, and, of course, when you're a 
Governor and you send a letter off to Washington, D.C., you 
seldom hear back, and I didn't. But what we did get is, by the 
time we got to August and September, when our fires were 
burning, they had actually deployed more of our National Guard 
to Iraq, not less, and we still didn't have our Blackhawks home 
and we didn't have our crews to fly the CH-47s.
    So, what I would suggest to the administration is consider 
the Governors as your partners. The National Guard has a dual 
role. They are responsible for homeland security, and, when 
called, they will be ready to defend this country.
    But please be prepared to work with us as partners; don't 
just come out there take our equipment away so we can't train 
our National Guard, and deploy our National Guard in times that 
we can already anticipate that we're going to have an 
emergency. Kind of listen every once in awhile to the 
Governors, because we're kind of on the ground and we have to 
deal with these things on a day-to-day basis. Thank you.
    Vice Chair Maloney. Thank you very much. Mr. Tarantino, 
your testimony was very moving, about the obstacles that 
returning veterans face, and even though they are very highly 
qualified and highly trained and have great experience, why are 
employers unwilling to offer good jobs to veterans? Why do you 
think that is, when they have the skills that could complete 
the jobs?
    Mr. Tarantino. Well I think there is a general lack of 
understanding between how military skills translate. I found 
through my own job search, with the exception of my current 
position, every job that I looked for on my own I did not have 
any access to. I never heard back from corporate America.
    The only way I was able to interview with corporate America 
was to go to one of the military recruiting companies--the 
Bradley Morris's, the Lucas groups, the Soar Consultings--where 
they provide an access to corporate America.
    Now they get you in the door, but trying to convince 
companies that my service as an officer translates very well 
into their high-tech manufacturing industry, or their bottling 
plant, or their homeland security contracting company, was 
almost like you are speaking French to someone who does not 
speak French.
    They kind of understand it. They can read your resume. They 
almost think they know what you are saying. Especially when you 
have people who have never been in the military. They do not 
understand what being an executive officer of a headquarters 
company of an armor battalion means. And it is very difficult 
to try to get them to pull the relevant skill sets out of the 
military occupation.
    And so I think there needs to be built into the Transition 
Assistance Programs better tools for senior NCOs and officers 
to be able to translate their skills. There are a lot of those 
for young enlisted men, and young service members. There are a 
lot of those where you can type in your MOS and it will tell 
you exactly what civilian jobs qualify, but for officers and 
for NCOs there really isn't that.
    These are programs that need to be developed. The 
transition assistance programs offered by the military are all 
right. They are good programs. But they are geared toward the 
largest population of people leaving service, which are people 
in those first terms, and that is not wrong. That is not wrong 
at all.
    But there is a huge population of senior managers and 
senior leaders that are leaving the service that are pretty 
much on their own once they drive off that post. And those are 
the programs that we need to start building. Especially if we 
want to start transitioning from combat service to civilian 
service without seeing a lot of the post-combat service 
problems that we have seen in generations past.
    Vice Chair Maloney. My time has expired. Thank you.
    Chairman Schumer. Senator Klobuchar.
    Senator Klobuchar. Thank you, Chairman Schumer.
    Thank you to all of you for being here, and Governor 
Schweitzer welcome. You have welcomed me into Montana a few 
times recently, and I enjoyed that very much. So now I want to 
thank you for your leadership on the energy issue, not only 
with the clean coal but also some of the renewable and climate 
change work.
    I also liked how you were able to make that bridge to this 
war, and how by developing some of these alternatives and going 
into a new direction we could actually save some of the money 
that we are talking about here.
    But I wanted to follow up on your moving story about the 
young man who committed suicide. Montana, like Minnesota, has a 
huge number of Guard and Reserve. We have the longest serving 
Unit, the Red Bulls, of the National Guard in Iraq. Many of 
them were supposed to go for 3 months; they went for a year, 
then 2 years. Then they came home and found out they were going 
to be denied their full education benefits, Mr. Tarantino, 
because of some paperwork problems.
    So we saw firsthand some of the problems that they 
encounter. I wonder if you could just--and then I am going to 
have Mr. Tarantino follow this up--talk about some of the 
unique problems for our soldiers in rural areas.
    What we have found is, because we don't have--we have a few 
bases, but no big base in Minnesota--all of our Guard and 
Reserve go home to little towns, like Thief River Falls, 
Minnesota, and Lanesboro, and they don't have that kind of 
support system. And so what we have set up is this Beyond The 
Yellow Ribbon Program, which has allowed them to--in fact our 
General Shallato makes them come in, and he has sort of gotten 
around the rules, to check in every few months after they come 
home.
    We are now going to expand that program nationally, But 
could you talk about some of the issues with the rural part of 
Montana?
    Governor Schweitzer. First of all, it is a great deal of 
outreach. In Montana we have the largest percentage in the 
country of our employees who work for an employer with 10 or 
fewer employees. Montana is a place of small businesses.
    If you have got 1,000 employees and 1 or 2 of them go off 
to war, well you can hold that slot open for 1 or 2. But if you 
have got 3 employees and 1 goes off to war, it is a little 
tough.
    So we work with those employers. We do whatever we can as 
the State of Montana to help them backfill. We help them when 
the soldier is being trained. We help them when they are gone. 
And the other thing we do is we spend a great deal of time, 
emotional time, with the families before they are deployed.
    In this country we do not send a warrior to war, we send a 
warrior and a family that is backing up that warrior. And for 
every warrior that is in Iraq or Afghanistan, there is a wife, 
there is a child, there is a mother, there is a brother that is 
a support mechanism.
    So in this country we support our warriors, and that 
support system starts with the family. So before they deploy, 
we talk to them about some of the feelings that they are likely 
to encounter while they are gone, both in the family and that 
individual.
    We talk about some of the dreams, some of the sleep loss, 
some of the ideas that will be in both the family and that 
warrior's mind while they're separated. While the warrior is 
gone, we counsel the warrior before he returns home that now 
you have been in a war zone; you have encountered this 
adrenalin rush 24 hours a day 7 days a week for 6 solid months; 
and when you get back the food does not taste as good, you do 
not have that adrenalin rush. So you will have an urge to ride 
a motorcycle too fast without a helmet, you will have an urge 
to drink too much, you will have an urge to get in a bar and 
take a poke at somebody.
    So we counsel them before they return. And then after they 
return, we reach out to the families. We reach out to the 
communities. Because those returning warriors that come back to 
a military base, all the spouses are living next door to one 
another. They are serving with other military people. But when 
you go back to being a teacher, it is a little tougher.
    We are the greatest country in the world of converting 
citizens to warriors, but we have not figured out how to 
convert a warrior to a citizen yet, and we are working on that 
in Montana.
    Distance is a little bit of a problem, but it starts very 
early and, like I say, you counsel the family because they are 
the support system for the warrior.
    Senator Klobuchar. Thank you. That is one of the things 
about this war. The average age in Vietnam was 19 of our 
soldiers over there, and the average age of the Minnesota 
National Guard over there is 33. And at any one point we have 
had something like 40 percent of the soldiers serving in Iraq 
and Afghanistan, Guard and Reserve.
    So it is a very different situation, and I think it is 
really important to have Governors like you that come out from 
these rural States to explain that as we look at the GI Bill 
and the things that we need to do.
    Mr. Tarantino, I was just struck by the unemployment 
statistics you had. We had a hearing on this with this 
Committee about a month ago, and I had a chart that showed 
these numbers. And I have to tell you, as I looked at the chart 
I was shocked myself, as I'm describing it to people.
    Could you describe that a little? And one other thing I 
wanted to know, too, we have a bill. One of our guys that came 
back wanted to be a paramedic. He had been a paramedic in Iraq, 
and he came back to Ortonville, Minnesota, and he found out he 
would have to start the whole program again for 2 years, 
despite his on-the-job training that he had had, and he would 
have to move away from his town and his family to do that.
    So we actually have a bill to start developing curriculum 
with Senator Enzi around the country so that they can get 
credit for some of the service. And I wonder if you could talk 
about the reasons for the unemployment that you see, and then 
second this kind of idea of giving credit not necessarily just 
for the paramedic training but in other areas so that our 
soldiers when they signed up there wasn't a waiting line, and 
when they come back here and they need a job they should not be 
shunted to the end of the line.
    Mr. Tarantino. Thank you, Senator.
    Well first of all, the unemployment statistics I talked 
about were from the VA's employment histories of recently 
separated service members that was prepared for the VA on 
September 28, 2007.
    What we find with soldiers who recently separate, and the 
Governor really hit the nail on the head. After combat the 
volume gets turned down on everything. The volume on life 
becomes much, much lower. And so you find it hard to 
reassimilate into regular society.
    In the active duty component, the greatest tool we have are 
those junior NCOs and lieutenants because we live with our 
soldiers. We live with each other. We're best friends. We're 
comrades. And we can see when people are having problems. When 
you have guys in the National Guard and the Reserves, and 
speaking from a former Reservist, once you are out of that 
formation it is pretty much see 'ya next month. And that is 
about all you get. Which is why Minnesota's Beyond the Yellow 
Ribbon Program is so critical.
    I think the experiences of Reservists and National 
Guardsmen, as well as the experience of veterans leaving the 
service and going into the job market, are very similar. 
Because you are suddenly going from a job where you had a 
mission in life, it was not a paycheck, it was a lifestyle. To 
go from working at a job with such an important mission to 
running something like Joe's pencil factory is a huge 
perspective shift that is very difficult to assimilate.
    Additionally there is the stigma of combat stress. Why 
these numbers are so much higher now, is that there is a stigma 
in the American public and in the zeitgeist that combat stress 
is dangerous. There is a fear that you've got crazy guys out 
there who could snap at any moment. That is not true.
    Combat stress is a wound. It's like getting shot on the 
battlefield. You go to a medic when you get shot. You need to 
go get treatment.
    So I think the thing that we can really do to stem all 
these inflations in statistics across the board, is to de-
stigmatize combat stress and make it OK for people to seek 
medical treatment.
    If I can speak for a moment about the issue of rural 
veterans. One thing that we can do, is make outreach go beyond 
the VA.
    I was lucky, because my family home is a 15-minute drive 
from the San Francisco VA Medical Center, an outstanding VA 
Hospital. I live within five blocks of a Medical Center in 
Columbia Heights. I'm cool, I'm taken care of.
    But when you have soldiers, sailors, marines, and airmen 
who have to drive hours, just to get a prescription filled, 
it's debilitating.
    We should let the VA outsource their mental health care. I 
get calls every day from mental health professionals, asking to 
volunteer for the VA, and the VA doesn't accept volunteers.
    I know that there are medical professionals who are willing 
to partner and provide care to local soldiers. All it takes, is 
a program, and we can do it. It's like the Governor said; we 
went to the moon in the 1960s; we administered eight million 
people in the GI Bill in the 1940s, without computers.
    We can take care of this. It's all a matter of coverage, 
will and foresight, and that's really what we need.
    Senator Klobuchar. Thank you very much, and thank you to 
all four of you.
    Chairman Schumer. Thank you, Senator Klobuchar, for your, 
as usual, excellent questions.
    I have just a couple more, and this is for Dr. Eibner. Dr. 
Eibner, in your testimony, you mentioned that you were only 
able to examine economic costs resulting from psychological and 
brain disorders for the first one or 2 years following a 
veteran's release from the service.
    But given the nature of these types of injuries, isn't it 
likely that many of the veterans will require sustained care in 
a serious way, for more than 2 years, and wouldn't that mean 
that your study underestimates the costs?
    Ms. Eibner. Absolutely, I agree with that. We believe that 
they would probably require care for beyond the 2-year period, 
and there are also other downstream costs that we couldn't 
include in our model, including the cost of substance abuse 
treatment that may be required for people who develop that 
following their mental health illness, as well as other 
downstream costs.
    Chairman Schumer. And, Mr. Beach, you focused on cost/
benefit. This hearing is not on the benefit side, that's 
probably the Armed Services Committee's jurisdiction. Cost is 
something here, and, obviously, every Government expenditure is 
supposed to have a benefit.
    Do you have serious disagreement with--your main thrust has 
been that the benefits weren't included in these studies. I 
don't think that was their intent.
    Do you have serious disagreement with, say, Dr. Stiglitz's 
characterization of the cost, per se?
    Mr. Beach. Well, yes. I think there are a number of points 
of which the assumptions that Dr. Stiglitz has been making, are 
not as supportable as he says they are or believes they are, or 
are simply just not supportable.
    Now, the main core of his estimates, the war fighting 
costs, seem very solid, and in my written testimony, Senator, 
which you may not have seen yet, I supply my own estimates of 
what I think the war fighting costs are.
    While they are smaller than Dr. Stiglitz's, they are in the 
same range of magnitude. I mentioned benefits because of this: 
If you're going to present to the citizens of this country, an 
argument that the war is costing too much, then it's too much 
relative to what?
    And that's what we always have to do when we talk about 
costs. Too much, because we're not as safe or safer? Too much 
because we could have spent the money doing something much 
better for their security and safety?
    I don't know what the benefit side is, but I am struck 
repeatedly, as this debate has gone forward, that the cost side 
is not being properly connected to the other part, which is 
central for the citizens to make decisions about the 
sustainability of the conflict.
    Chairman Schumer. Right. OK, well, I want to thank all four 
witnesses. You all did an excellent job.
    This is clearly an important issue. Again, I want to 
reiterate that it's appalling to me that the Administration 
doesn't want to send somebody here, but sort of indicative.
    I particularly want to thank Governor Schweitzer for coming 
the long distance that he did, and for bringing his homespun 
wisdom to a little less homespun place, Washington, D.C., and I 
want to thank Captain Tarantino for his service and his 
persistence in trying to make it better for others, given the 
tough time he had.
    Thank you all. Dr. Eibner, Mr. Beach, you testimonies were 
excellent, as well. The hearing is adjourned.
    (Whereupon, at 11:34 a.m., the hearing was adjourned.)
                       Submissions for the Record


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Statement of Hon. Charles E. Schumer, Chairman, a U.S. Senator from New 
                                  York
    Good morning everyone. Thank you for coming to the Joint Economic 
Committee's second hearing on the costs of the war in Iraq -- Fight 
Now, Pay Later: The Future Costs of Paying for the Iraq War. Last year, 
we issued a report revealing that the economic costs of this war are in 
the trillions of dollars. Our findings were corroborated and almost 
doubled by a subsequent study by a Nobel Prize winning economist, Dr. 
Joseph Stiglitz, who we invited to testify at our first hearing on this 
subject in February.
    Since that time, little has changed in Iraq or in the 
administration's posture on changing course there. In fact, the only 
new information we have about the future costs of Iraq is that the 
Republican Presidential nominee sees no need to bring the troops home 
and admitted that in his view, American troops could be in Iraq for a 
100 years. I don't think anyone could conceive of the economic toll 
that would be on our country.
    I want to extend a special thank you to Governor Brian Schweitzer 
from Montana who traveled a long way to be here today. Part of the 
reason he has been such a successful Governor has been his ability to 
manage the state's economy. Montana has one of the lowest unemployment 
rates in the country and has one of the fastest growing state economies 
as well.
    I wish I could say the same thing for the economic fortunes of the 
rest of our country.
      For the last 6 months, the economy has been stalled;
      Over 300,000 jobs have been lost;
      The unemployment rate has jumped to 5.5 percent from 5.0 
percent in just a month;
      Oil and gasoline prices have skyrocketed to over $130 a 
barrel and $4.00 a gallon;
      And homeowners who haven't lost their homes entirely have 
lost billions of dollars in equity in their homes.
    While average American families are being squeezed like never 
before, our veterans and military families are dealing with a host of 
similar problems--some are especially hard hit by the housing crisis 
and the bleak jobs market. We'll hear from Mr. Tarantino, who will talk 
a bit about his personal and very difficult experience looking for a 
job after he finished his military service.
    But I want to share with you some new figures that my Joint 
Economic Committee staff developed with data from RealtyTrac--a company 
that closely monitors foreclosure filings around the country.
    We wanted to know if the housing markets in areas where military 
bases exist have been hit harder than expected by the severe downturn 
in the housing market. By looking at the areas surrounding 24 military 
bases with the highest personnel populations, we found substantially 
higher foreclosure rates.
    While the national average for the increase in foreclosures was 59 
percent, the average for these 24 areas around military bases was over 
80 percent from 2007 to 2008. That's a 37 percent higher increase in 
the rate of foreclosures for areas populated by military families.
    Military families are already shouldering heavy burdens to care for 
and support families while their loved ones are serving abroad or 
recovering at home. Knowing that so many more are losing their homes to 
foreclosure is heartbreaking--and its just plain wrong.
    This administration, which has manhandled economic policy, has done 
the same with the war in Iraq. Their mistakes on the Iraq War have cost 
thousands of lives, have cost taxpayers hundreds of billions of dollars 
so far, and our committee and a Nobel Prize winning economist has 
estimated that it has cost our economy trillions already and that 
number will grow exponentially if we stay the course with the Bush-
McCain war plan.
    We have always been aware of the high cost of this war in lives 
lost; but the costs of this war in dollars and cents is also far too 
high. The White House suggested the war in Iraq might cost $60-100 
billion tops in 2003. Just after the fifth anniversary in March, we've 
spent nearly 10 times that amount. Justifying this war from the start, 
the Bush administration ignored the possibility that this war could 
cost taxpayers and our economy billions, if not trillions of dollars.
    We have asked Jim Nussle, the Director of the Office of Management 
and Budget, to come to the Joint Economic Committee a number of times, 
including today's hearing, which he declined. Since the OMB has 
repeatedly denied our requests to appear before our committee, let me 
take a moment to recount some of the truly absurd statements from Bush 
Administration officials over the last 6 years regarding the costs of 
the war:
      ``The likely economic effects [of the war in Iraq] would 
be relatively small. . . Under every plausible scenario, the negative 
effect will be quite small relative to the economic benefits.''--
Lawrence Lindsey, White House Economic Advisor, 9/16/02
      ``It is unimaginable that the United States would have to 
contribute hundreds ofbillions of dollars and highly unlikely that we 
would have to contribute even tens of billions of dollars.''--Kenneth 
M. Pollack, former member of the National Security Council, 9/02
      ``The United States is committed to helping Iraq recover 
from the conflict, but Iraq will not require sustained aid.''--Mitchell 
Daniels, Director, White House Office of Management and Budget, 4/21/03
    And finally, a few weeks ago, Daniels successor at OMB, Director 
Nussle said in a response to our invitation to testify, ``there is no 
price tag that can be put on the immeasurable value of preventing 
terrorist attack. . . ''
    But is there a price tag that can be put on educating our children 
or keeping them healthy? Is there a price tag on curing serious 
diseases like Diabetes or Cancer?
    The Administration would like to spend more than $430 million per 
day on this war; for 1 week--$3 billion; for a month--more than $13 
billion; and for a year--over $160 billion! Let's go over what could be 
done with those funds here in the U.S.:
      For ONE DAY of spending in Iraq--we could enroll an 
additional 155,350 children in Head Start per year; enroll over a 
million for a week of spending in Iraq; and enroll over 4.7 million for 
a month in Iraq.
      For ONE DAY of spending in Iraq--we could put an 
additional 9,100 police officers on the streets per year; hire more 
than 64,000 for a week's spending in Iraq; and hire 278,000 for a month 
in Iraq.
      For ONE DAY of spending in Iraq--we could make college 
more affordable for 152,900 students through Pell Grants per year; 
1,073,400 more Pell Grants for a week's spending in Iraq; and over 4.5 
million for a month's funds spent in Iraq.
     For ONE DAY of spending in Iraq--we could help over 
155,000 American families to keep their homes with foreclosure 
prevention counseling this year; for a week in Iraq we could help over 
a million families; and for a month in Iraq, we could probably erase 
the foreclosure crisis entirely by helping more than 4.7 million 
families keep their homes.
      For ONE DAY of spending in Iraq--we could provide health 
insurance for over 330,000 low-income children through CHIP per year; 
for a week we could get more than 2.3 million kids into CHIP; and for a 
month, we could get health care for over 10 million American kids.
      For ONE DAY of spending in Iraq--we could hire another 
11,000 Border patrol agents per year; for a week we could put almost 
88,000 new border patrol agents on duty; and for a month's spending in 
Iraq, we could put more than 337,000 agents on the borders.
    It is long past time for the administration to come clean and 
account for the real costs of the war in Iraq. It is their 
responsibility to be clear about what we've spent and honest about what 
we have yet to spend. We have already invited them three times to 
testify, and they have refused. If they want to disagree with our 
estimates or with other experts like Dr. Joe Stiglitz, fine--they 
should come and explain why.
    But to simply pretend that the costs of the war don't exist--that's 
not acceptable to us or the American people.
    Today, we are going to take a good look at how some states like 
Montana are dealing with the spillover and hidden costs of the war and 
how higher than anticipated injuries and cases of PTSD are impacting 
the care our veterans are getting. And with that, I would like to 
introduce our distinguished panel of experts. Let me first turn to 
Senator Jon Tester of Montana to introduce his friend, Montana 
Governor, Brian Schweitzer.

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 Statement of Carolyn Maloney, Vice Chair, a U.S. Representative from 
                                New York
    Good morning. I would like to thank Chairman Schumer for holding 
this hearing to examine the economic costs of the Iraq war. I want to 
welcome our distinguished panel and thank them for testifying here 
today.
    If the current emergency war supplemental is passed, Congress will 
have approved a total of over $600 billion for direct spending on this 
war. That's more than ten times the Bush Administration's initial 
estimate of the costs of the war.
    But as we learned during our February hearing on this issue, the 
full economic costs of the Iraq war go well beyond the hundreds of 
billions of dollars allocated by Congress. We heard from witnesses 
about the economic burdens created by Federal borrowing to fund the 
war, the impact of the war on oil prices, and the costs in security due 
to our overstretched armed forces.
    Last year, at my request, the Joint Economic Committee prepared a 
report showing that by the end of 2008, the full economic cost of the 
war will total $1.3 trillion. With no clear direction for ending the 
war and no plan to bring the troops home, war costs will only grow 
higher. Nobel Laureate Joseph Stiglitz estimates that if we remain in 
Iraq, the total economic price tag for the war will reach between three 
to five trillion dollars over the next decade.
    Meanwhile, the President continues to balk at supporting measures 
to boost our economy here at home, such as extending unemployment 
insurance to those who have been unable to find a new job.
    American families are feeling the squeeze of high gasoline prices, 
high food prices, falling incomes, and declining home values. We can 
ill-afford to add to their burden by asking them to continue funding 
this war. To do so means sacrificing other important priorities, such 
as investing in jobs, health care, green technologies, and 
infrastructure.
    Our witnesses today will give us more perspective on some of the 
hidden costs of the war.
    Governor Schweitzer will tell us how in his state of Montana, where 
one-in-six adults is a veteran, local communities and state resources 
have been severely strained by long military deployments.
    Dr. Eibner will discuss RAND's groundbreaking study, which found 
that hidden health problems caused by the war are leading to billions 
of dollars in additional economic costs.
    Tom Tarantino will discuss just how hard it is for returning 
veterans to readjust to civilian life and the costs this poses for 
families.
    Looking forward, what concerns me most is that is that there is no 
end in sight to our commitment in Iraq. The cost of the war has mounted 
each and every year. We must not repeat the mistakes made at the start 
of the war, when Congress was not properly informed about the long-term 
costs of our commitment. A productive discussion of the current and 
future economic impacts of this war is long overdue.
    It's unfortunately no surprise that this is a debate the Bush 
administration would rather hide from. I want to join the Chairman in 
expressing my disappointment at the absence of our invited 
Administration witness, OMB Director Nussle. This is the third time 
Director Nussle has refused our invitation to testify before this 
Committee on these issues.
    Even if we do not agree on the direction of the war, we can surely 
all agree on the need to support the veterans who have suffered its 
greatest impact. Congress has moved forward to help veterans cope with 
the costs of reentering civilian life by passing the GI Bill, which 
guarantees veterans the full support they need to attend a 4-year 
university. Iraq veterans deserve the same level of assistance received 
by veterans of earlier wars. As you can clearly see from this chart, 
they do not have this support today.
    President Bush should sign this bill and guarantee veterans have 
the resources they need to get a college degree.
    Mr. Chairman, thank you for holding this important hearing.

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              Prepared Statement of Senator Sam Brownback
    Thank you, Mr. Chairman, and welcome and thank you to all of the 
witnesses and for their work dedicated to helping ensure that we 
continue to fortify our efforts to support the men and women who put 
themselves on the line for our country, both while they are in service 
and afterward.
    Some of the testimony that we will hear today involves support for 
members of the Armed Forces and veterans in the area of mental health 
care. We know that post-traumatic stress disorder is real and that war 
efforts unfortunately also lead to traumatic brain injuries. I support 
efforts to improve mental health care and other benefits available to 
members of the Armed Forces and to veterans, as is evident from my 
support of ``The HONOR Warriors Act (S. 3008)'' introduced in the 
Senator by my colleague, Senator Bond.
    Some of the testimony that we will hear today involves research by 
Dr. Eibner on post-traumatic stress disorder, depression, and traumatic 
brain injuries that, unlike physical wounds of war, are often difficult 
to detect and remain tragically hidden from other service members, 
family, and society in general. I am anxious to learn what we know 
about how extensive these conditions are and how we can best address 
the conditions with proper treatments.
    Some of the testimony that we will hear today involves support for 
members of the Armed Forces and veterans in the area of education 
benefits, in the form of what has been referred to by many as a ``new 
GI Bill'' for those who serve and have served in Iraq, Afghanistan, and 
elsewhere. We know that the ``Servicemen's Readjustment Act,'' signed 
into law in 1944 and best known as the ``GI Bill'' made higher 
education affordable for roughly eight million Americans and provided 
great benefits in the form of a productive work force for our Nation. 
There is no reason not to provide solid education benefits to service 
members today, given the tremendous sacrifices that they make for our 
country and our security.
    We have recently, both in the House and in the Senate, taken 
actions toward providing a new GI Bill to continue our commitment to 
improving the economic futures of our service members and our veterans. 
There has been debate about elements of the educational provisions in 
the new GI Bill, such as whether eligibility for a full set of benefits 
should be granted to anyone who served a certain amount of time or 
more, as in legislation sponsored by my colleague on this Committee, 
Senator Webb, or whether those benefits should be granted on a sliding 
scale, as in legislation sponsored by Senators Graham and McCain which 
I support. Under the McCain and Graham bill, benefits would correspond 
to length of service to eliminate some of the adverse retention effects 
found Senator Webb's Bill. There has also been debate about whether 
education benefits should be transferable from service members to their 
family members, as in the Graham-McCain bill, or not, as in Senator 
Webb's bill. I personally support extending these educational benefits 
to family members who play a crucial role in supporting our service 
members. I hope that we resolve these matters soon and adopt a new GI 
Bill.
    Finally, we will hear testimony today concerning the costs of the 
war in Iraq, and perhaps the cost of the war in Afghanistan as well. 
This is not the first time this Committee has addressed the costs of 
the Iraq war. The JEC held a hearing on precisely that topic on 
February 28, just before the release of a book by Linda Bilmes and 
Joseph Stiglitz containing what most analysts view as exaggerated and 
inflated cost estimates.
    As was the case back in February, I'd like to again note that the 
reports on war costs examined by those on the other side of the aisle 
totally ignore what might have been the state of the world had we not 
invaded Iraq. That is, what is considered are costs alone, normally 
exaggerations of costs, with no accounting for any possible benefits.
    It is not hard to imagine economic savings and benefits resulting 
from possible prevention of attacks or disruptions that may have arisen 
from our efforts in Iraq and Afghanistan. Note that, according to some 
estimates, the economic costs to the U.S. associated with the tragic 
attacks on 9-11 amounted to loss of life, well over half a trillion 
dollars of economic activity, and millions of lost jobs. The loss of 
economic activity alone is more than the costs of direct spending in 
Iraq and Afghanistan to date. If our war efforts prevent another 
tragedy like 9-11, tremendous benefits are obtained.
    While it is not hard to imagine possible economic savings or 
benefits associated with efforts in Iraq and Afghanistan, and it is 
possible to look at those savings or benefits by weighting them 
according to likelihoods or probabilities, the war cost analyses 
brought before this Committee have not done so. It is difficult to 
imagine that Professor Stiglitz cannot calculate probabilistic 
benefits. Rather, his loose analysis seems geared mostly at making 
political points against an administration that he has abhorred from 
day one.
    I look forward to hearing from our witnesses and again thank the 
Chairman.

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


        Statement of Hon. Brian Schweitzer, Governor of Montana
    Mr. Chairman and Members of the Committee:
    Fight Now, Pay Later? I'll say. It is my belief we are only now 
seeing the tip of an iceberg, ``The Future Costs of Funding the Iraq 
War'' and unless we collectively deal with that iceberg, it will indeed 
sink us.
    I'm going to focus today on some of the often unseen costs in my 
very rural state. Montana's land mass of 147,000 square miles is an 
enormous gift, and a bigger challenge. If we were to overlay Montana's 
map on a map of this area of the country, Montanans live in an area 
stretching from this table in Washington, DC to the kitchen table of a 
family in Bangor, Maine.
    Let me tell you what that means for a family in Scobey trying to 
find professional help for their son, a veteran of a National Guard 
infantry deployment who suffers severe Post-traumatic Stress Disorder 
symptoms. The family lives in far North East Montana:
    720 miles round trip to Billings, a city of 100,000--Montana's 
largest
    440 miles round trip to Miles City, a city of 8,500
    260 miles round trip to Sidney, a town of 5,000
    88 miles round trip to Plentywood, a town of 2,000
    . . . and nearly a thousand mile round trip from our capital, 
Helena, where Montana's National Guard is headquartered and where 
Montana's only Veterans Administration Hospital is located.
    Outside of Billings, Eastern Montana is served by one psychiatrist, 
who does not accept Medicare, Medicaid or VA patients. There are no 
psychologists in far eastern Montana, just a few dedicated and over 
worked mental health counselors. The travel to see these professionals 
presents the additional burden of time away from work and expensive 
gasoline, food and motel rooms.
    These are the ``Costs of Funding the Iraq War'' that won't appear 
on any government spreadsheet or in any of your budget documents.
    One in six Montanans age 18 and older is a veteran, a per capita 
number second only to Alaska. Since late 2002, Montana's Veterans 
Affairs Division has seen a 41 percent increase in veteran's disability 
compensation claims for military service connected disabilities from 
that veteran's population. The great majority of that increase is due 
to the return of combat veterans from Iraq and Afghanistan. The 
signature characteristics of those claims include a higher quantity of 
disabling and more complex conditions including Post-Traumatic Stress 
Disorder and Traumatic Brain Injury. The Division requested and was 
authorized three additional service officers in 2003, two in 2007 and 
will request three more in the coming legislative session in 2009. If 
approved in 2009, the state's investment would then total nearly 
$300,000 in personnel service expenditure due, in very large part, to 
the Global War on Terror.
    Montana's National Guard of over 3500 members, serve in 22 armories 
and facilities scattered across the state. In the Army National Guard 
our men and women average 31 years of age, just less than half are 
married, and have an average of 1.8 dependents. Some 412 have a 
Bachelors' Degree or higher, over 500 are full time Guard, and over 
2100 are traditional citizen soldiers. Montana now records 1954 Army 
deployments and 724 Air tours.
    Montana National Guard Adjutant General Randy Mosley has a daunting 
challenge: to ensure all his soldiers and airmen scattered across those 
147,000 square miles of Montana are trained and ready prior to being 
called for state or Federal service, and ensuring those returning home 
from any deployment are fully reintegrated into their family, their 
community and their unit.
    Our failure at meeting that second challenge, the successful 
reintegration of deployed soldiers resulted in the suicide of a young 
Montanan Chris Dana. Let me read the first few lines of a December 2007 
McClatchy News Service story:
    HELENA, Mont.--Chris Dana came home from the war in Iraq in 2005 
and slipped into a mental abyss so quietly that neither his family nor 
the Montana Army National Guard noticed.
    He returned to his former life: a job at a Target store, nights in 
a trailer across the road from his father's house.
    When he started to isolate himself, missing family events and 
football games, his father urged him to get counseling. When the 
National Guard called his father to say that he'd missed weekend duty, 
Gary Dana pushed his son to get in touch with his unit.
    ``I can't go back. I can't do it,'' Chris Dana responded.
    Things went downhill from there. He blew though all his money, and 
last March 4, he shot himself in the head with a .22-caliber rifle. He 
was 23 years old.
    As Gary Dana was collecting his dead son's belongings, he found a 
letter indicating that the National Guard was discharging his son under 
what are known as other-than-honorable conditions. The move was due to 
his skipping drills, which his family said was brought on by the mental 
strain of his service in Iraq.
    The letter was in the trash, near a Wal-Mart receipt for .22-
caliber rifle shells.
    Following the tragic death of his step-brother, Matt Kuntz, a 
Helena lawyer and graduate of West Point, demanded action to ensure 
other Montana soldiers did not suffer and die as Chris had done. He 
wrote compelling pieces for Montana newspapers that generated hundreds 
of calls from across the state to my office.
    The result was a Post Deployment Health Reassessment Task Force and 
subsequent PDHRA Campaign Plan to implement the recommendations of that 
Task Force. . . .and more.
    So far, the Montana National Guard estimates their Campaign Plan 
implementation has cost over $200,000. An outline of that effort is 
attached (Attachment 1) in my written testimony for your review.
    We can't put a value on the cost of losing Chris Dana. Nor can we 
easily quantify the cost to our families, communities and economy of 
soldiers and airmen unable to return to their job at the fire station, 
fearful of leading their son's Boy Scout Troop or attending the Fourth 
of July parade, or too depressed to enjoy a normal evening out with 
their spouse.
    As you know, Montana's fire seasons can be brutal; the state and 
Federal Government spend millions of dollars protecting homes, families 
and resources every summer. A key part of Montana's response is our 
reliance on the National Guard, both for human resource and equipment 
and material. The Global War on Terror has and will continue to impact 
the ability of the National Guard to meet that commitment to domestic 
emergency preparedness.
    Additional information on this issue is also attached, but in 
summary, General Mosley states that to bring the Montana Army National 
Guard equipment readiness to 100 percent would require nearly $28 
million.
    The greatest cost to Montana from the Global War on Terror, is, of 
course the immeasurable loss of soldiers, marines and sailors. Chief, 
National Guard Bureau, Lt. General Steven Blum was recently in Montana 
and helped us dedicate a memorial to those young men who lost their 
lives. The inspirational memorial was created by the step-father of one 
of the casualties. With your permission, I submit the names that appear 
on that memorial for the record. They represent Montana's finest, among 
them the nephew of your colleague, Montana's Senator Max Baucus. They 
died as young as 18, as old as 42. I am proud to remember them all here 
today.
montana casualties--operation iraqi freedom, operation enduring freedom
    US Army 1 LT Edward Saltz, 27, Big Fork, MT who died December 22, 
2003 when an improvised explosive device struck his convoy in Baghdad, 
Iraq.
    US Army PFC Owen D. Witt, 20, Sand Springs, MT who died May 24, 
2004 in Ad Dwar, Iraq.
    US Marine Corps CPL Dean Pratt, 22, Stevensville, MT who died 
August 2, 2004 due to an enemy action in Al Anbar Province, Iraq.
    US Marine Corps LCPL Kane Funke, 20, Kalispell, MT died August 13, 
2004 from hostile action in Anbar Province.
    US Army SSG Aaron Holleyman, 26, Glasgow, MT who died August 30, 
2004 in Iraq when his vehicle hit an improvised explosive device.
    US Marine Corps CPL Raleigh Smith, 21, Troy, MT who died December 
23, 2004 in Fallujah, Iraq.
    MT Army National Guard MSG Robbie McNary, 42, Lewistown, MT who 
died March 31, 2005 during combat operations in Hewijah, Iraq.
    US Marine Corps LCPL Nicholas Bloem, 20, Belgrade, MT who died 
August 3, 2005 while conducting combat operations in Iraq.
    US Army 1 LT Josh Hyland, 31, Missoula, MT who died August 21, 2005 
when a bomb detonated near his Hummvee.
    MT Army National Guard SGT Travis Arndt, 23, of Great Falls, MT who 
died September 21, 2005 in Kirkurk, Iraq.
    US Marine Corps LCPL Andrew Bedard, 19, of Missoula, MT who died 
October 4, 2005 while conducting combat operations against enemy forces 
in Iraq.
    US Army CPT Michael McKinnon, 30, of Helena, MT who died October 
27, 2005 in Baghdad, Iraq when an improvised explosive device detonated 
near his Hummvee.
    US Marine Corps CPL Philip E. Baucus, 28, of Wolf Creek, MT who 
died July 29, 2006 while conducting combat operations in Anbar 
Province.
    US Marine Corps LCPL Jeremy Sandvick Monroe, 20, of Chinook, MT who 
died October 8, 2006 while conducting combat operations against enemy 
forces in Anbar Province.
    US Navy PO2 Charles Komppa, 35, Belgrade, MT who died October 25, 
2006 while conducting combat operations in Anbar Province.
    US Army PFC Shawn Murphy, 24, died December 10, 2006 when a 
makeshift bomb exploded hear his Hummvee in Baghdad, Iraq.
    US Army SGT Scott Dykman, 27, Helena, MT who died December 20, 2006 
from injuries suffered from a makeshift bomb in Iraq.
    US Army PVT Mattthew Zeimer, 18, Glendive, MT died February 2, 2007 
when he came in contact with enemy forces using small arms fire in 
Ramadi.
    US Army Staff SGT Shane Becker, 35, Helena, MT died April 3, 2007 
when his unit came in contact with enemy forces using small arms fire 
in Baghdad, Iraq.
    US Army PFC Kyle Bohrnsen, 22, Philipsburg, MT died April 10, 2007 
when his vehicle hit a makeshift bomb in Baghdad.
    US Army SPC Michael Frank, 36, Great Falls, MT died May 10, 2007 
when a makeshift bomb detonated hear his Hummvee during combat 
operations in Baghdad, Iraq.
    US Army SPC James Riekena, 22, Missoula, MT died January 14, 2007 
when a makeshift bomb exploded near his vehicle in Baghdad, Iraq.
    US Army PFC Kristofor Stonesifer, 28, Missoula, MT died October 19, 
2001 when his Black Hawk helicopter crashed in Pakistan.
    Christopher Michael Dana, 23, MT Army National Guard Helena, MT 
died March 4, 2007 from a self inflicted gunshot wound after serving in 
Iraq.
    US Army Staff Sergeant Travis W. Atkins, 31, Bozeman, MT died June 
1, 2007 when and IED detonated near his unit in Al Yusufiyah.
    US Army Specialist Donald M. Young, 19, Helena, MT died Aug 8, 2007 
during a roadside bombing in western Baghdad.
    US Army Staff Sergeant Yance T. Gray, 29, Ismay, MT died Sept 9, 
2007 in the deadliest of vehicle accidents in which seven soldiers died 
and 11 were wounded.
    US Army Private Daren A. Smith, 19, Helena, MT died Dec 13, 2007 
from non-combat related injuries.
    US Army Captain Andrew Pearson, 32, Billings, MT died April 30, 
2008 from wounds suffered when his vehicle encountered an IED in 
Baghdad, Iraq.
    US Marine Corps Lance Cpl Nick J. Palmer, 19, Great Falls, MT died 
Dec 16, 2006 from a gun shot wound in Fallujah, Iraq.
                pdhra reintegration/reconstitution costs
    The Montana National Guard (MTNG) has implemented numerous program 
enhancements to improve and enhance its reconstitution and 
reintegration programs to better care for returning Soldiers, Airmen, 
and their families. To date in excess of $206,740 has been expended 
using existing Federal resources for these events. Other program 
enhancements, while having no direct impact to the MTNG, produce costs 
that are incurred by the Federal Government and Office of the Secretary 
of Defense that support our MTNG Post Deployment Health Reassessment 
(PDHRA) Deployment Cycle Support (DCS) program efforts. A summary of 
these items follows:
 mtng costs expenditures made by the mtng related to redeployment and 
                        reconstitution programs.
    Hired a full time PDHRA DCS Program Manager. $75,000
    Conducted Statewide Post Traumatic Stress Disorder (PTSD) Training. 
$15,000 Conducted Community Outreach in 20 Montana Communities. $22,240
    Resource Guide $2,500
    Expanded Family Resource Centers Staff in Billings and Kalispell. 
$52,000
    Military Child Education Coalition (MCEC) Contract for Deployment 
Teacher Education $15,000 Staff Training and Conferences $20,000
    Public Service Announcements incurred by MT Veteran Affairs cost 
$5,000 state funds
                             indirect costs
    The following events do not produce direct costs for the MTNG but 
do have indirect costs incurred by the Federal Government to support 
our PDHRA program.
    Pilot Project with TRIWEST--TRIWEST Healthcare Alliance executed a 
pilot with Montana that places a behavioral health provider in Helena 
and Great Falls during monthly drill periods to assist with and augment 
the period health assessment process. The provider will see any Soldier 
or Airmen who self assesses or has been deployed for an OIF, OEF, or 
ONE rotation. The pilot runs from June 08 through Dec 08. Costs are 
associated with reimbursement of BH providers.
    2nd PDHRA--The DOD/NGB authorized the MTNG to conduct a second 
PDHRA. Costs are associated with onsite teams and contract fees 
associated with increased call volume through the call center.
    Joint Family Support Assistance Program (JFSAP)--Montana is in the 
final stages of confirming its participation in the JFSAP program. The 
program extends three new family program resources to the state. Costs 
are incurred by DoD/NGB on behalf of the state.
    In recent presentations to Montana's Congressional delegation in 
support of the National Guard Bureau's equipment appropriations 
request, Montana Adjutant General Randy Mosley presented some startling 
numbers.
      General Mosley states that to bring the Montana Army 
National Guard equipment readiness to 100 percent would require nearly 
$26 million as indicated below.

        MTARNG Equipment Shortfall--$25.7 Million

        Larger items in order of priority:

          Chinook-47D--2 EA- $10,000,000.
          HEMMT Fuelers--13 EA--$3,499,000.
          UpArmored HMMWV's--45 EA--$6,615,000.
          HMMWV's w/shelters--26 EA--$1,587,000.
          HEMMT PLS/CGO -- 5 EA--$1,801,000.
          Dump Trucks--16 EA--$1,168,000.
          Trac Whld Excav -- 5 EA--$550,000.
          Grader Road -- 5 EA -- $490,000.

      Some equipment shortages are the direct result of Montana 
National Guard overseas deployments, equipment left behind upon return 
to Montana; others can be attributed indirectly to the overall demand 
for and loss of equipment and material for Operation Iraqi Freedom and 
Operation Enduring Freedom and last the transformation of numerous 
Montana units.

      The equipment shortage includes two Chinook helicopters, 
equipment that was and is vital to our firefighting operations during 
Montana's severe fire seasons; basic construction equipment for our new 
Engineer units; and HMMWVs, fuelers and tactical truck loading systems 
-- a total of some 1607 pieces of equipment.

      The equipment shortage will continue to compromise the 
ability of our Soldiers to accomplish both current and future missions 
successfully.

      We need the equipment to do necessary training. If units 
train regularly at home station with the best equipment, then little 
training is needed in the pre-mobilization period immediately prior to 
deployment. A 100 percent optimally equipped Montana Army National 
Guard will allow training, possible homeland missions, and deployments 
to all occur simultaneously.
                               __________
     STATEMENT OF CHRISTINE EIBNER\1\, ECONOMIST, RAND CORPORATION
    Chairman Schumer, Vice Chair Maloney, Ranking Member Brownback, and 
distinguished members of the committee, thank you for inviting me to 
testify and to describe our analysis. It is an honor and pleasure to 
present this information.
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    \1\ The opinions and conclusions expressed in this testimony are 
the author's alone and should not be interpreted as representing those 
of RAND or any of the sponsors of its research. This product is part of 
the RAND Corporation testimony series. RAND testimonies record 
testimony presented by RAND associates to Federal, state, or local 
legislative committees; government-appointed commissions and panels; 
and private review and oversight bodies. The RAND Corporation is a 
nonprofit research organization providing objective analysis and 
effective solutions that address the challenges facing the public and 
private sectors around the world. RAND's publications do not 
necessarily reflect the opinions of its research clients and sponsors. 
This testimony is available for free download at http://www.rand.org/
pubs/testimonies/CT309/.
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    My testimony will discuss the costs and consequences of PTSD, 
depression, and TBI among servicemembers returning from Operations 
Enduring Freedom and Iraqi Freedom, as well as several recommendations 
for better understanding and reducing these costs. These 
recommendations stem from a large study conducted at the RAND 
Corporation entitled Invisible Wounds of War: Psychological and 
Cognitive Injuries, Their Consequences, and Services to Assist Recovery 
(Tanielian and Jaycox [Eds.], 2008). I served on the management team 
for this report, and co-led the analysis of economic costs undertaken 
for the study.
                               background
    Since October 2001, approximately 1.64 million U.S. troops have 
deployed as part of Operation Enduring Freedom (OEF; Afghanistan) and 
Operation Iraqi Freedom (OIF; Iraq). The pace of deployments in these 
current conflicts is unprecedented in the history of the all-volunteer 
force (Belasco, 2007; Bruner, 2006). Not only is a higher proportion of 
the armed forces being deployed, but deployments have been longer, 
redeployment to combat has been common, and breaks between deployments 
have been infrequent (Hosek, Kavanagh, and Miller, 2006). At the same 
time, episodes of intense combat notwithstanding, these operations have 
employed smaller forces and have produced casualty rates of killed or 
wounded that are historically lower than in earlier prolonged wars, 
such as Vietnam and Korea. Advances in both medical technology and body 
armor mean that more servicemembers are surviving experiences that 
would have led to death in prior wars (Regan, 2004; Warden, 2006). 
However, casualties of a different kind are beginning to emerge--
invisible wounds, such as mental health conditions and cognitive 
impairments resulting from deployment experiences.
    The costs of these invisible wounds go beyond the immediate costs 
of mental health treatment. Adverse consequences that may arise from 
post-deployment mental and cognitive impairments include suicide, 
reduced physical health, increased engagement in unhealthy behaviors, 
substance abuse, unemployment, poor performance while at work, 
homelessness, marital strain, domestic violence, and poor parent-child 
relationships. The costs stemming from these consequences are 
substantial, and may include costs related to lost productivity, 
reduced quality of life, substance abuse treatment, and premature 
mortality.
    To quantify these costs, RAND undertook an extensive review of the 
literature on the costs and consequences of post-traumatic stress 
disorder (PTSD), depression, and traumatic brain injury (TBI). Our 
analysis included the development and use of a micro-simulation model 
to estimate 2-year post-deployment costs associated with PTSD and 
depression for military servicemembers returning from OEF and OIF. The 
more limited literature on TBI led us to use a somewhat different 
approach to estimate the costs associated with TBI. Our analyses use a 
societal cost perspective, which considers costs that accrue to all 
members of U.S. society including government agencies (e.g., DoD and 
VA), servicemembers, their families, employers, private health 
insurers, taxpayers, and others.
    In conducting the micro-simulation analysis for PTSD and 
depression, our analysis also estimated the costs and potential savings 
associated with different levels of medical care, including proven, 
evidence-based care, usual care, and no care. Because information on 
effective treatments for TBI is limited, we did not attempt to 
distinguish between evidence-based and usual care in the TBI analysis.
             the consequences of ptsd, depression, and tbi
    The literature suggests that the three conditions we examined--
PTSD, depression, and TBI--have wide ranging negative implications for 
those afflicted. Below, we summarize some of the key negative outcomes 
that have been linked to PTSD, depression, and TBI in prior studies. 
For a more thorough discussion of these issues, please see Tanielian 
and Jaycox [Eds.], 2008, Chapter Five.
    Suicide: Depression, PTSD, and TBI all increase the risk for 
suicide, as shown by evidence from studies of both military and 
civilian populations. Psychological autopsy studies of civilian 
suicides have consistently shown that a large number of civilians who 
committed suicide had a probable depressive disorder. One study showed 
that approximately 30 percent of veterans committing suicide within 1-
year had a mental health disorder such as depression, as did 
approximately 40 percent of veterans attempting suicide. Although not 
as strongly associated with suicide as depression, PTSD is more 
strongly associated with suicidal thoughts and attempts than any other 
anxiety disorder and has also been linked to elevated rates of suicide 
among Vietnam veterans. Studies of civilian populations have 
consistently shown that persons with TBI have a higher risk of suicide 
than persons without TBI.
    Physical Health: Depression, PTSD, and TBI have all been linked to 
increased morbidity. With respect to physical health, cardiovascular 
diseases are the most frequently studied morbidity outcome among 
persons with psychiatric disorders. Both PTSD and depression have been 
linked to higher rates of heart disease in military and civilian 
populations. Depression also affects conditions associated with aging, 
including osteoporosis, arthritis, Type 2 diabetes, certain cancers, 
periodontal disease, and frailty. In the long-term, individuals with 
TBI are at risk for developing Alzheimer's disease, Parkinson's 
disease, and other brain-related disorders.
    Health-compromising Behaviors: The link between depression and PTSD 
and negative physical health outcomes may be partly explained by 
increases in health-risk behaviors that influence health outcomes. For 
example, research on civilian populations has shown a clear link 
between PTSD and depression and smoking, as well as a link between 
symptoms of depression and PTSD and sexual risk taking.
    Substance Abuse: Rates of co-occurring substance use disorders with 
PTSD, depression, and TBI are common and are often associated with 
more-severe diagnostic symptoms and poorer treatment outcomes. Several 
studies have examined the relationship between mental disorders and 
alcohol and drug abuse. The results have varied, depending on the 
specific condition studied. Studies of Vietnam veterans showed that 
PTSD increases the risk of alcohol and substance abuse, while other 
studies of civilian populations have found that depression, by 
contrast, tends to be a consequence of substance abuse rather than a 
cause. Veterans with TBI were much more likely than other veterans to 
be discharged from the military for reasons associated with alcohol and 
drug use.
    Labor Market Outcomes: PTSD, depression, and TBI all influence 
labor-market outcomes. Specifically, there is compelling evidence 
indicating that these conditions will affect servicemembers' return to 
employment, their productivity at work, and their future job prospects. 
Studies of Vietnam veterans have also found that those with a diagnosis 
of depression or PTSD had lower hourly wages than Vietnam veterans 
without a diagnosis. In civilian populations, TBI has been similarly 
linked to lower wages.
    Homelessness: Few studies have examined the rates of homelessness 
among individuals with PTSD, depression, or TBI; rather, most studies 
have studied the prevalence of mental disorders among homeless 
individuals. Compared with non-homeless persons in the general 
population, homeless people have higher rates of mental disorder, 
including traumatic brain injury, and are more likely to experience a 
severe mental disorder. One study found that 75 percent of homeless 
individuals with PTSD had developed the condition prior to becoming 
homeless. However, evidence in this area is not strong, and the 
prevalence of mental disorders among homeless people may be overstated, 
possibly the consequence of studies relying on poor sampling methods or 
flawed assumptions.
    Marriage and Intimate Relationships: The effects of post-combat 
mental and cognitive conditions inevitably extend beyond the afflicted 
servicemember. As servicemembers go through life, their impairments 
cannot fail to wear on those with whom they interact, and those closest 
to the servicemember are likely to be the most severely affected. 
Studies of Vietnam veterans, whose results parallel those among 
civilian populations, have linked PTSD and depression to difficulties 
maintaining intimate relationships, and these deficits account for a 
greatly increased risk of distressed relationships, intimate-partner 
violence, and divorce among those afflicted. Although there is 
relatively scant research on TBI and intimate partner relationships, 
several studies of the civilian population have linked TBI to 
difficulties resolving relationship conflict, aggression, and intimate 
partner violence.
    Child Outcomes: In addition, the interpersonal deficits that 
interfere with emotional intimacy in the romantic relationships of 
servicemembers with these PTSD and depression may interfere with their 
interactions with their children. In particular, interviews with 
spouses of veterans from several conflicts (World War II, Korea, and 
Vietnam) have all revealed a higher rate of problems among children of 
veterans with symptoms of PTSD. Rates of academic problems, as well as 
rates of psychiatric treatment, were also higher in children of 
veterans with PTSD compared to children of veterans without PTSD. The 
implications of a parent's depression on children's outcomes has not 
been studied directly in military populations, but numerous studies of 
civilian populations have shown that the children of depressed parents 
are at far greater risk of behavioral problems and psychiatric 
diagnoses than children of non-depressed parents. The cross-
generational effects of TBI have yet to be studied.
    A limitation of the research summarized above is that virtually 
none of the studies we reviewed were randomized controlled trials, and 
thus may not be able to detect causal relationships between these 
disorders and subsequent adverse consequences such as homelessness, 
substance abuse, or relationship problems. Further, the majority of 
studies reviewed drew from data on Vietnam-era veterans or from data on 
civilians. Nevertheless, these studies are important for understanding 
the range of co-morbidities and behavioral outcomes likely to be 
associated with PTSD, depression, and TBI, and this information is 
relevant for determining the required resources for treating 
servicemembers and veterans with these conditions. Effective treatments 
for PTSD, depression, and TBI exist (Tanielian and Jaycox [Eds.), 2008, 
Chapter 7), and can greatly improve functioning. With adequate 
treatment and support, some servicemembers may avoid negative outcomes 
altogether.
             two-year societal costs of ptsd and depression
    To understand the consequences of these conditions in economic 
terms, we developed a microsimulation model. Using data from the 
literature (which had limited information on specific populations and 
costs), we estimated the costs associated with mental health conditions 
(PTSD and major depression) for a hypothetical cohort of military 
personnel deployed to Afghanistan and Iraq.
    We defined costs in terms of lost productivity, treatment, and 
suicide attempts and completions, and we estimated costs over a 2-year 
period (see Tanielian and Jaycox [Eds.], 2008, Chapter Six). Other 
studies of the medical costs of the conflicts in Afghanistan and Iraq 
(Bilmes, 2007; CBO, 2007) have been able to analyze longer timeframes 
because they considered average costs per patient across a wide range 
of conditions and projected this number over time, adjusting for 
expected number of patients, inflation, and other factors. However, for 
this analysis, we focus specifically on the costs of PTSD and 
depression, and we considered the costs associated with different types 
of treatment and different patterns of co-morbidity, allowing for 
remission and relapse rates to be influenced by treatment type. The 
data available to conduct this type of detailed analysis for specific 
mental health conditions, however, did not support projecting costs 
beyond a 2 year time horizon.
    For each condition, we generated two estimates--one that included 
the medical costs and the value of lives lost due to suicide, and one 
that excluded such costs. We were unable to estimate the costs 
associated with homelessness, domestic violence, family strain, and 
substance abuse because reliable data are not available to create 
credible dollar figures for these outcomes. If figures for these 
consequences were available, the costs of having these conditions would 
be higher. Our estimates represent costs incurred within the first 2 
years after returning home from deployment, so they accrue at different 
times for different personnel. For service members who returned more 
than 2 years ago and have not redeployed, these costs have already been 
incurred. However, these calculations omit costs for servicemembers who 
may deploy in the future, and they do not include costs associated with 
chronic or recurring cases that linger beyond two years. (Details of 
our model assumptions and parameters can be found in Tanielian and 
Jaycox [Eds.], 2008, Chapter Six).
    Our microsimulation model predicts that 2-year post-deployment 
costs to society resulting from PTSD and major depression for 1.64 
million deployed servicemembers could range from $4.0 to $6.2 billion 
(in 2007 dollars), depending on how we account for the costs of lives 
lost to suicide. For PTSD, average costs per case over 2 years range 
from $5,904 to $10,298; for depression, costs range from $15,461 to 
$25,757; and for PTSD and major depression together, costs range from 
$12,427 to $16,884. The majority of the costs were due to lost 
productivity. Because these numbers do not account for future costs 
that may be incurred if additional personnel deploy and because they 
are limited to 2 years following deployment, they underestimate total 
future costs to society.
    The costs associated with PTSD and major depression are high, but 
our model predicts that savings can be attained if evidence-based 
treatments are provided to a higher percentage of the population 
suffering from these conditions. Providing evidence-based care to every 
individual with the condition would increase treatment costs over what 
is now being provided (a mix of no care, usual care, and evidence-based 
care), but these costs can be offset over time through increased 
productivity and a lower incidence of suicide. Relative to the status 
quo based on prior literature showing that approximately 30 percent of 
those with PTSD and major depression receive treatment and 30 percent 
of this treatment is evidence-based (Hoge et al. 2004; Young et al., 
2001; Wang et al., 2005), our microsimulation model predicts that we 
could save money by increasing the use of evidence-based treatment, 
particularly when we include the costs of lives lost to suicide in our 
estimates. Estimated costs, as well as potential savings associated 
with providing evidence-based care to all service members in need, are 
shown in Table 1:

  Table 1.--Approximate Societal Costs for All Returning Service Members, and Potential Savings Associated with
                                               Evidence-Based Care
----------------------------------------------------------------------------------------------------------------
                                                                Costs for 1.6 million   Potential savings if all
                                                                      returning          servicemembers in need
                                                               servicemembers, status    received evidence-based
                                                                        quo*                      care
                                                             ---------------------------------------------------
                                                                Cost per                Savings per     Total
                                                                  case      Total cost      case       savings
----------------------------------------------------------------------------------------------------------------
PTSD only...................................................      $10,298        $1.2B       $2,306       $0.28B
Co-morbid PTSD and depression...............................      $16,884        $2.0B       $2,997       $0.36B
Depression only.............................................      $25,757        $2.9B       $9,240        $1.1B
Total.......................................................  ...........        $6.2B  ...........        $1.7B
----------------------------------------------------------------------------------------------------------------
* Status quo assumes 30 percent of servicemembers in need get treatment, and 30 percent of care is evidence
  based. Table is based on Table 6.11 in Tanielian and Jaycox [Eds.], 2008, and reports only estimates that
  include the cost of lives lost due to suicide. Costs for co-morbid PTSD and depression are lower than costs
  for depression alone due to timing. Consistent with prior literature, individuals in the model can develop
  late onset PTSD and depression. Thus, some individuals with co-morbid illness do not begin to accrue costs
  until very late in the 2 year model time horizon. See Tanielian and Jaycox [Eds.], 2008, chapter 6 for more
  details.

    By ensuring that 100 percent of those with PTSD or major depression 
receive evidence-based treatment, we could save $2,306 per person with 
PTSD, $2,997 per person with PTSD and depression, and $9,240 per person 
with depression alone. When we account for lives lost to suicide in our 
model, we predict that we could have saved as much as $1.7 billion by 
providing evidence-based treatment to all servicemembers who returned 
from Iraq or Afghanistan with PTSD or depression. Projected cost 
savings are highest for those with major depression; for those with 
PTSD or co-morbid PTSD and depression, the finding that evidence-based 
treatment saves money is sensitive to whether or not we include the 
cost of lives lost due to suicide in our estimates. The weaker findings 
for PTSD reflect a relatively limited evidence on the benefits of PTSD 
treatment (IOM, 2007), as well as a more limited literature on the 
relationship between PTSD and employment outcomes.
    Given that costs of problems related to mental health, such as 
homelessness, domestic violence, family strain, and substance abuse, 
are not factored into our economic models and would add substantially 
to the costs of illness, we may have underestimated the amount saved by 
providing evidence-based care. However, a caveat is that we did not 
consider additional implementation and outreach costs (over and above 
the day-to-day costs of care) that might be incurred if DoD and the VA 
attempted to expand evidence-based treatment beyond their current 
capacity. An additional caveat is that, at times, we found that the 
literature needed to project costs over time was relatively thin. In 
particular, information is lacking on the consequences of PTSD and 
depression for career outcomes within the military (including 
promotions and productivity), and information on the relationship 
between PTSD and employment outcomes among civilians is relatively 
scant. Data on remission and relapse rates over time was not sufficient 
for us to project costs beyond 2 years. In addition, for many of the 
costly outcomes that have been associated with PTSD and depression 
(substance abuse, homelessness, domestic violence, etc.), available 
data is insufficient to assert a causal relationship. While we left 
these outcomes out of our cost model, better information on the causal 
association between mental health conditions and these outcomes could 
improve out understanding of the cost of deployment related mental 
health conditions.
           one-year societal costs of traumatic brain injury
    A challenge for building a micro-simulation model is the 
availability of information to estimate key parameters, such as the 
probability of developing a mental health condition, the probability of 
getting treatment conditional on having a condition, and the 
probability of experiencing secondary outcomes such as unemployment. 
Because these parameters must come either from published literature or 
secondary data analysis, the literature and available data must be 
relatively well-developed to ensure that the probabilities used in the 
model are credible. We found that while the literature on PTSD and 
major depression is reasonably well-developed (although, at points, it 
is thin), the literature on TBI is much less comprehensive. As a 
result, we cannot include TBI in our micro-simulation model and instead 
calculate the costs of TBI using a prevalence-based cost of illness 
approach. While the cost of illness approach enables us to predict 
costs associated with TBI in a particular year (in this case, 2005), we 
cannot use this methodology to evaluate policy changes, such as an 
increase in evidence-based treatment.
    Our cost-of-illness analysis for TBI takes into account hospital 
acute care costs, in- and out-patient rehabilitation costs, costs due 
to TBI related deaths and suicides, and lost productivity. Because 
there is a high level of uncertainty around many of the parameters 
needed for TBI analysis, we develop different assumptions and generate 
estimates for both a low and high-cost scenario. We estimate that the 
cost of deployment-related TBI ranged from $96.6 to $144.4 million, 
based on a total of 609 cases of diagnosed TBI reported in 2005. These 
costs are based on data reported by DoD (Medical Surveillance Monthly 
Report, 2007), and are applicable to servicemembers who have accessed 
the health care system and received a diagnosis of TBI; they do not 
reflect costs for all individuals who have screened positively for 
probable TBI. Importantly, even those labeled as having mild TBI in our 
analysis accessed the health care system at least twice, and were given 
a formal diagnosis related to TBI. Thus, even the mild cases captured 
in our cost analysis are likely to be relatively severe. Costs and cost 
drivers vary substantially by severity of the injury. As a result these 
costs cannot be generalized to the thousands of servicemembers who may 
have experienced a less severe mild TBI in theater but did not receive 
medical treatment or a diagnosis.
    Estimated annual costs for servicemembers who have accessed the 
health care system and received a diagnosis of mild TBI range from 
$27,259 to $32,759 in 2007 dollars. Productivity losses account for 47 
to 57 percent of the total costs, whereas treatment accounts for 43 to 
53 percent in these estimates. Costs are much higher for moderate to 
severe cases, with per-case costs ranging from $268,902 to $408,519 in 
2007 dollars. In moderate to severe cases, TBI-related death is the 
largest cost component (70 to 80 percent of total costs); productivity 
losses account for only 8 to 13 percent, and treatment costs, 7 to 10 
percent. Suicide, which we consider separately from TBI-related death, 
can account for up to 12 percent of total costs. We estimated the total 
cost of deployment-related TBI by applying an adjusted per-case cost 
for 2005 to the total number of TBI cases reported in Serve, Support, 
Simplify: The Report of the President's Commission on Care for 
America's Returning Wounded Warriors (President's Commission on Care 
for America's Returning Wounded Warriors, 2007, p. 2). From this 
calculation, we estimate that 1-year costs for diagnosed TBI range 
between $591 and $910 million. As with the cost estimates for PTSD and 
depression, these figures underestimate the total costs that will 
accrue in the future, both because they are 1-year costs and because 
they do not account for TBI cases that may occur as the conflicts 
continue. They also do not account for individuals with mild TBI who 
did not access the health care system or receive a formal diagnosis.
  recommendations for better understanding and addressing these costs
    Our microsimulation model predicts that 2-year post-deployment 
costs resulting from PTSD and major depression for 1.6 million deployed 
servicemembers could range from $4.0 to $6.2 billion, depending on how 
we account for the costs of lives lost due to suicide. One-year costs 
for TBI could range from $591 to $910 million. For all three 
conditions, we find that direct costs associated with treatment are 
only a fraction of the total societal costs. Our quantitative analysis 
shows that lost productivity and premature mortality account for at 
least half of all costs, even within a relatively short time horizon (1 
year for TBI, and 2 years for PTSD and depression). These results 
likely understate the true magnitude of the societal costs, both 
because our timeframe is limited, and because we omit downstream 
consequences such as substance abuse, homelessness, domestic violence, 
and family strain.
    Despite these caveats, our micro-simulation predicts that savings 
can be attained if we provide evidence-based treatments to a higher 
percentage of the population suffering from these conditions. Providing 
evidence-based care to every individual with the condition would 
increase treatment costs over what is now being provided (a mix of no 
care, usual care, and evidence-based care), but these costs can be 
offset over time through increased productivity and lower incidence of 
suicide. While our evaluation showed that the most effective treatments 
are being delivered in some sectors of the care systems for military 
personnel and veterans, gaps remain in system-wide implementation 
(Tanielian and Jaycox [Eds.], 2008, chapter 7). Our report identifies 
three recommendations that might be used to insure better access to 
evidence-based care. First, we should increase the cadre of providers 
who are trained and certified to deliver proven (evidence-based) care, 
so that capacity is adequate for current and future needs. Second, we 
should change policies to encourage active duty personnel and veterans 
to seek needed care. Many servicemembers are currently reluctant to 
seek mental health treatment due to fear of negative career 
repercussions. Policies must be changed so that there are no perceived 
or real adverse career consequences for individuals who seek treatment, 
except where functional impairment compromises fitness for duty. 
Finally, we should deliver evidence-based care to servicemembers and 
veterans whenever and wherever they seek treatment. This might require 
strategies that make providers accountable for providing evidence-based 
treatment, as well as providing servicemembers information to enable 
them to judge whether they are receiving appropriate care.
    Our analysis further revealed some gaps in our understanding of the 
long term consequences of PTSD, TBI, and depression. We currently have 
limited information on the full range of problems (emotional, economic, 
social, health, and other quality-of-life deficits) that confront 
individuals with post-combat PTSD, major depression, and TBI. Moreover, 
we do not fully understand how these illnesses develop, remit, and 
recur over time, or how relapse and recurrence are influenced by access 
to evidence based treatments. Policymakers need to be able to 
accurately measure the costs and benefits of different treatment 
options so that fiscally responsible investments in care can be made. 
Addressing these gaps requires a sustained, national research agenda 
aimed at better understanding the long term costs and consequences of 
PTSD, depression, and TBI. An initial strategy for implementing this 
research agenda could include launching a longitudinal study on the 
natural course and consequences of mental health and cognitive 
conditions among OEF/OIF veterans.
    In conclusion, I emphasize that costs for individuals returning 
from OEF and OIF with mental health and cognitive conditions are high, 
and far exceed the direct costs associated with mental health 
treatment. We, as a society, can save money by investing more in 
evidence-based care for these individuals. However, to fully understand 
the magnitude of the long-term costs and consequences of these 
conditions, as well as to improve our understanding of how to provide 
effective care, we need a coordinated national research effort that 
studies returning servicemembers over the long term.
                            references cited
    Belasco, A. The Cost of Iraq, Afghanistan, and Other Global War on 
Terror Operations Since 9/11. Washington, D.C.: Congressional Research 
Service, 2007.
    Bilmes, L. Soldiers Returning from Iraq and Afghanistan: The Long-
Term Costs of Providing Veterans Medical Care and Disability Benefits. 
Cambridge, Mass.: Harvard University John F. Kennedy School of 
Government, 2007.
    Bruner, E. F. Military Forces: What Is the Appropriate Size for the 
United States? Washington, D.C.: Congressional Research Service, 2006.
    Congressional Budget Office. Statement of Matthew S. Goldberg: 
Projecting the Costs to Care for Veterans of U.S. Military Operations 
in Iraq and Afghanistan. Committee on Veterans' Affairs U.S. House of 
Representatives. Washington, DC, October 17, 2007. As of June 10, 2008: 
http://www.cbo.gov/doc.cfm?index=8710.
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and R. L. Koffman. Combat duty in Iraq and Afghanistan, mental health 
problems, and barriers to care. New England Journal of Medicine, Vol. 
351, No. 1, July 2004, pp. 13-22.
    Hosek, J., J. Kavanagh, and L. Miller. How Deployments Affect 
Service Members. Santa Monica, Calif.: RAND Corporation, MG-432-RC, 
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Stress Disorder, Board on Population Health and Public Health Practice. 
Treatment of Posttraumatic Stress Disorder: An Assessment of the 
Evidence. Washington, D.C.: National Academies Press, 2007.
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Armed Forces Health Surveillance Center, Vol. 14., no. 6, September-
October, 2007.
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Christian Science Monitor, November 29, 2004.
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Sallis, and D. Kritz-Silverstein. New onset and persistent symptoms of 
post-traumatic stress disorder self reported after deployment and 
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study. British Medical Journal, January 15, 2008.
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Psychological and Cognitive Injuries, Their Consequences, and Services 
to Assist Recovery. Santa Monica, Calif.: RAND Corporation, MG-720-CCF, 
2008. As of June 10, 2008:
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and R. F. White. Neuropsychological outcomes of Army personnel 
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Kessler. Twelve-month use of mental health services in the United 
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                               __________
  statement of tom tarantino, policy associate, iraq and afghanistan 
                       veterans of america (iava)
    Mr. Chairman, ranking member and distinguished members of the 
committee, on behalf of Iraq and Afghanistan Veterans of America, and 
our tens of thousands of members nationwide, I thank you for the 
opportunity to testify today regarding economic challenges facing our 
nation's veterans, and the long terms costs of veterans' unemployment.
    I began my military career in 1997 when I enlisted in the U.S. Army 
Reserves as a Civil Affairs Specialist. In 2003 I was commissioned a 
2LT in the Armor Branch and deployed to Iraq as a Platoon Leader from 
2005-2006. Currently, I am a Policy Associate for the Iraq and 
Afghanistan Veterans of America; the first and largest nonpartisan 
nonprofit organization for veterans of the current conflict.
    My story serves as a good example of the challenge that many NCOs 
and Officers face when leaving the service. During my tenure as a Civil 
Affairs Specialist, I was trained in populace resource control, 
disaster and emergency management, civil defense planning, and 
humanitarian relief operations. I graduated from University of 
California Santa Barbara with a degree Global Studies and International 
Relations. For the next 4 years I served as a combat arms officer, 
holding several jobs across many functional disciplines. In addition to 
leading two platoons through combat, I, on a monthly basis, conducted 
and participated in the most complex training the military has to offer 
while assigned to the Opposition Force at the National Training Center. 
As a Headquarters Executive Officer at the National Training Center, I 
was responsible for the logistics and administration of a company of 
400 with 3 multi-million dollar budgets. As a public relations officer, 
I was the public face of a regiment that not only trained the force, 
but prepared themselves to re-deploy. I had a long and honorable 
service. I gained skills and accomplished tasks that many of my 
civilian peers would not face until much later in their careers. 
Conventional wisdom, and the rhetoric from the Army's Transitional 
Assistance programs, told me that I should have no problems finding 
employment in the civilian world.
    This, however, turned out not to be the case. After putting my 
belongings into storage and returning home after 10 years of service, I 
began what would be a 10 month journey of shock, disappointment and 
education as to the disposition of the civilian work force toward 
members of the military. I learned that in the civilian world, military 
achievements and equivalent skills are misunderstood and undervalued. 
In many positions I had practical experiences that matched or far 
exceeded the prospective job, yet employers did not understand or were 
not interested in learning how experience as an officer and a soldier 
translated to their industry. Additionally, I found that there was a 
fear attached to hiring former combat soldiers; the stigma of combat 
stress made employers view me as a potential liability to the company.
    My difficult experience in the civilian job market is not unique. 
According to a recent report prepared for the Department of Veterans 
Affairs, recently separated service members are more likely to be 
unemployed and tend to earn lower wages than their nonmilitary peers. 
Among veterans who completed their service within the last 1 to 3 
years, 18 percent were unemployed, and a full 25 percent earned less 
than $21,840 a year. College-educated new veterans suffered the largest 
wage gap--earning almost $10,000 a year less than their nonmilitary 
peers. We can all agree: veterans of Iraq and Afghanistan deserve 
better.
    Over time, the lost economic opportunities of this generation of 
1.7 million Iraq and Afghanistan veterans will have an untold cost not 
only for our military and their families, but for the economy as a 
whole.
    IAVA has made a number of policy recommendations to help veterans 
transition to civilian life, and to forestall the dire economic 
consequences of a generation of underemployed veterans. These 
suggestions include:

          Tax credits for patriotic employers who support their 
        deployed reservists. When reserve component employees are 
        called to active duty for over 90 days, employers who pay the 
        difference between the service members' civilian salary and 
        their military wages deserve tax credits.
          Tax credits for the hiring of homeless veterans.
          Better protections under the Servicemembers Civil 
        Relief Act.

    You can see these complete recommendations in our Legislative 
Agenda. While IAVA believes that these issues present a roadmap to 
better the lives of veterans, there is one issue that is immediate and 
before you now as Members of Congress. The WWII GI Bill was never 
designed as a first rate economic stimulus plan, or the most effective 
recruitment tool in military history. These benefits were welcome side 
effects. The GI Bill was and will be the single most important 
readjustment tool to the 1.7 million veterans of this conflict; 
reducing the long term strain on veterans services while providing them 
with an opportunity at a first class future. It is for these reasons 
that I would like to focus on the GI Bill.
    After World War II, Americans fulfilled their responsibility to the 
millions of troops coming home by helping them readjust to civilian 
life. In 1944, President Franklin Delano Roosevelt signed the 
``Servicemen's Readjustment Act,'' better known as the GI Bill, which 
made higher education affordable for eight million veterans. The 
original GI Bill, which expired in 1956, covered tuition, fees, and 
books, and gave veterans a living stipend while they were students. The 
only requirements were at least 90 days of military service and an 
honorable discharge.
    The GI Bill helped reinvent America after a half-decade of war. The 
GI Bill has given many of our nation's leaders their start, including 
the Senators and combat veterans who are supporting a new GI Bill: Jim 
Webb, John Warner, Chuck Nagel, Frank Lautenberg, and Daniel Akaka.
    But the GI Bill has benefited more than just a handful of America's 
leaders and luminaries. 2.2 million Veterans attended a college or 
university on the original GI Bill. It is estimated that almost half a 
million of these veterans would not have been able to go to college 
without it. An additional 3.5 million veterans went to vocational 
schools, 1.5 million vets got on-the-job training, and 700,000 more 
received farm training. The GI Bill produced ``238,000 teachers, 91,000 
scientists, 67,000 doctors, 450,000 engineers and a million assorted 
lawyers, nurses, businessmen, artists, actors, writers and pilots.'' 
Although the vast majority of beneficiaries were men, the GI Bill also 
put 64,000 women through college.
    Perhaps most impressively, every dollar spent on educational 
benefits under the original GI Bill added seven dollars to the national 
economy in terms of productivity, consumer spending and tax revenue. 
And the effects of the original GI Bill are still being felt today.
    This Congress has shown tremendous foresight in passing the new GI 
Bill as a part of the emergency supplemental funding for the war. More 
than any other single piece of legislation, the GI Bill will make a 
difference in the economic futures of the troops returning every day 
from Iraq and Afghanistan. We look forward to this key legislation 
being quickly signed into law.
    The battle for a new GI Bill highlights a key gap in our accounting 
of the Iraq war. All of the care and support for our veterans, 
including programs to help them reintegrate into civilian life, should 
be understood and categorized as an unavoidable cost of war, and yet 
the cost of the GI Bill is not typically accounted for in the war's 
budgets. In the long term, budgeting should reflect all the support our 
troops deserve--before, during, and after combat.
    Thank you for your time.

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   Prepared Statement of William W. Beach, Director, Center for Data 
           Analysis, The Heritage Foundation, Washington, DC
    My name is William W. Beach. I am the Director of the Center for 
Data Analysis at The Heritage Foundation. The views I express in this 
testimony are my own, and should not be construed as representing any 
official position of The Heritage Foundation.
    Mr. Chairman and members of the Joint Economic Committee, I do not 
present myself this morning as an expert on the battlefronts in the 
global war on terror. Others are here today or have testified before 
you who wear the badges of experts in the wars in Iraq and Afghanistan. 
I like most citizens have my views on those and related conflicts, but 
those views are not what moved me to accept this committee's invitation 
to testify today.
    Rather, I present myself as an economist who has followed the 
debate over the cost of the global war on terror and now is worried 
that this discussion, like so many others, has become a victim of the 
increasingly bitter partisanship surrounding this war. Citizens assume 
that those analysts who argue about the costs of the war in Iraq and 
Afghanistan nevertheless use the standard analytical tools for 
assessing the value of public outlays. They assume that serious 
analysts will seek the truth and avoid temptations to score political 
points by exaggerating their evidence or assuming away data that moves 
against their argument. They believe that a reasonable range of 
estimates exist that permit them, the sovereign power in our system of 
government, to make the necessary decisions about continuing or 
abandoning the Iraqi phase of this conflict.
    Those assumptions are increasingly unfounded. Some of the recent 
estimates violate the fundamental rules for comparative cost analysis. 
In addition, these estimates take a generally worst case view and fail 
to take into account important offsetting factors. Moreover, the 
relentless drive to make the costs as large as reasonably possible 
leads analysts into a series of errors about how the war in Iraq has 
affected the US and world economies. Taken together, these breakdowns 
in analysis produce war related costs that are too high and, worse, 
delay the resolution of America's future role in Iraq and Afghanistan.
    My testimony briefly touches on three topics in the cost debate: 1) 
the frequent absence of an appropriate cost/benefit analysis, 2) the 
costs of the Iraqi conflict and the tendency of some leading cost 
analysts to ignore offsetting factors and to exaggerate the long-term 
war-related outlays of the Federal Government, and 3) the effect of the 
war on world oil prices and macroeconomic performance.
                         cost/benefit analysis
    If there is anything as settled in economics as, say, the 
theoretical structures of supply and demand it would be analyzing costs 
in terms of foregone opportunities. Economists have long understood 
that economic cost differs significantly from the concept of cost used 
by accountants, and they have lectured to generations of undergraduate 
economics students that the difference is crucial to understanding 
economic activity.
    Briefly, economists think about cost as a part of the broader 
discussion of choice. People choose to spend their money in one way 
rather than another because the chosen way produces better benefits 
than they way not chosen. We forego certain opportunities in favor of 
others in order to obtain benefits that are better than others.
    This approach to costs means that not all costs are created equal. 
Suppose that two activities both had the same accounting cost of $100. 
From an accounting viewpoint, both costs are identical and choosing one 
or the other makes no difference. However, imagine that spending $100 
one way saves your daughter's life and spending it the other way lets 
you repaint your kitchen. The first expenditure probably reduces the 
cost of $100 to nearly nothing, since the benefit is so overwhelmingly 
great. The second $100 expenditure probably costs more than $100 amount 
because you will likely add the pain of your own labor to the cost of 
the paint.
    It is particularly important to use the economic concept of cost 
rather than the accounting concept when evaluating the spending for a 
war. It is highly unlikely that the public would support a massive 
buildup of military forces and equipment during times of perfect 
international peace. Clearly, those are times to spend the same amount 
of money on education, health care, or other domestic priorities. 
However, a country reacts totally differently when those domestic 
priorities are endangered by foreign aggression. When attacked or 
threatened with violence, it makes sense to spend on significant sums 
on defense.
    It also makes sense to evaluate ongoing defense or war fighting 
costs in terms of the benefits of security. Clearly, if the costs 
approximate the benefits, then such a dreadful thing as war has an 
economic justification. If not, then citizens will vote to end the 
conflict.
    I hope I'm not belaboring these points, but the absence of these 
considerations in the recently published book by Joseph Stiglitz and 
Linda Bilmes\1\ (Stiglitz and Bilmes) requires that they be made. Let 
me illustrate why.
---------------------------------------------------------------------------
    \1\ Joseph E. Stiglitz and Linda J. Bilmes, The Three Trillion 
Dollar War: The True Cost of the Iraq Conflict (New York: W. W. Norton 
& Company, 2008).
---------------------------------------------------------------------------
    Stiglitz and Bilmes present two sets of cost estimates, one called 
best case and one they call realistic-moderate. In table 4.1 of their 
book, the military outlays under these two scenarios are summed up:\2\
---------------------------------------------------------------------------
    \2\ Ibid, p. 112.

      Table 1.--Principal Cost Components From Stiglitz and Bilmes
------------------------------------------------------------------------
                                                            Realistic-
        Federal Government Outlay          Best Case (In   Moderate (In
                                             Billions)       Billions)
------------------------------------------------------------------------
Total Operations to Date................            $646            $646
Future Operations.......................             521             913
Future Veterans' Costs..................             422             717
Other Military Costs/Adjustments........             132             404
Total Budgetary Costs...................          $1,721          $2,680
------------------------------------------------------------------------

    Assuming for a moment that each of these costs estimates is 
reasonable (which is an assumption I'm unwilling to support except for 
this illustration), then the US will spend between $1.7 and $2.7 
trillion dollars on the war in Iraq. This sounds to anyone like a very 
large amount, especially when we think about how much good these same 
sums would do to rebuild our highways, provide low-income health 
insurance, and so forth. However, these are presented by the authors as 
accounting costs, not economic costs.
    If Stiglitz and Bilmes had presented their readers with economic 
costs, they would have provided a context of competing benefits, one of 
which would be the safety of the United States from violence. I don't 
know how they would have chosen to do this, but one approach 
immediately comes to mind: comparing these military costs to the 
economic damage done by a series of 9/11 size events.
    Some analysts have estimated that the attacks of September 11, 2001 
reduced US economic activity by about $225 billion over the next 12 
months. Let's assume that our enemy would have visited one such attack 
on the US for each of the next 6 years (2003 through 2008) had we not 
taken the battle to the enemy's prime territory. If we increase that 
$225 billion by 2 percent per year to account for overall growth in the 
economy, then the sum over the period of avoided major terrorist 
attacks would be $1,673 billion, or $48 billion less than the estimate 
of current and future outlays under the best case scenario. If we 
believe the counterfactual--that we avoided major terrorist attacks by 
fighting the enemy abroad--then I would imagine most people would 
approve of expenditures of this amount. On the other hand, costs exceed 
benefits by $1,007 billion under the realistic-moderate scenario. . . a 
relatively clear signal that outlays of this magnitude may not be 
justified.
    However the authors had decided to present the economic costs, 
they.should have done so. Simply presenting accounting costs deceives 
readers who are untrained in cost analysis and presents obstacles to 
the ongoing debate over Iraq rather than data to inform our choices.
                      the cost of the war in iraq
    There are a number of leading cost estimates for the war in Iraq. I 
follow the methodology contained in a widely circulated working paper 
from the National Bureau for Economic Research by Steven Davis, Kevin 
Murphy, and Robert Topel, all from the University of Chicago.\3\ Davis, 
Murphy and Topel began their work in 2003 as the debate over 
containment or regime change reached a high point. Their original 2003 
essay presented estimates that the long-run costs of containing 
Saddam's regime were nearly as large as the forecasted costs of 
military intervention and regime change. They significantly updated 
their work in 2006.
---------------------------------------------------------------------------
    \3\ Steven J. Davis, Kevin M. Murphy and Robert H. Topel, ``War in 
Iraq versus Containment'', Working Paper 12092, National Bureau of 
Economic Research (March, 2006).
---------------------------------------------------------------------------
    Their work provides a tightly documented foundation for inflation 
adjusted annual cost estimates of the major moving pieces in the Iraq 
cost debate. In the table below, I have assumed that combat operations 
associated with the occupation of Iraq continue at a diminished rate 
through calendar year 2012, after which the U.S. and allied forces 
adopt a regional military posture on a level with the pre-war 
containment efforts. Any number of alternative assumptions could have 
been made, including immediate withdrawal or occupation lasting beyond 
2012. However, many observers think that the Iraqi domestic situation 
will sufficiently stabilize between now and 2012 that U.S. occupation 
forces will withdrawal to a regional military platform.
    Given that, something like the following costs stemming from the 
Iraqi theater are likely.
---------------------------------------------------------------------------
    \4\ Based on estimates contained in Tables 2, 7, 9 and 10 of Davis, 
et al.

     Table 2.--Ten Year Costs of the Iraq War Assuming an End to the
                          Occupation in 2012\4\
------------------------------------------------------------------------
                                                           10-year Cost
   Principal Cost Category (Billions of 2003 Dollars)       In the Iraq
                                                              Theater
------------------------------------------------------------------------
Major combat operations.................................             $63
Warfare associated with occupation......................             848
Economic cost of fatalities and casualties..............             137
Reconstruction, humanitarian assistance.................              95
Total, 2003 through 2012................................          $1,143
------------------------------------------------------------------------

    As of March of this year, the Congress had appropriated about $845 
billion for military operations, reconstruction, embassy costs, 
enhanced security at U.S. bases, and foreign aid programs in Iraq and 
Afghanistan. Due to the increase in military personnel and operations 
since the surge, the ``burn rate'' in Iraq has increased from $4.4 
billion per month in 2003 to $12.5 today. However, the benefits of the 
current increase in activity are present across a wide spectrum of 
metrics, particularly in the decline in battle related casualties.
    Some critics, such as Stiglitz and Bilmes, expand these war 
fighting estimates by ignoring the improvements of 2007 and 2008. Pre-
surge cost ratios are extended into the distant future, casualty rates 
continue at pre-surge levels, and long-term outlays for Veteran 
Administration programs blossom by the expansion of the base.
    For example, the monthly average casualty rate in 2007 stood at 75, 
but that rate fell during the last 3 months of the year to an average 
of 33. During the early months of 2008, the monthly casualty rate was 
half that of 2007, at 40 per month. Stiglitz and Bilmes, however, 
assume that the ``. . . rate of death and injuries per soldier 
continues unchanged. . . '' over their forecast period.\5\
---------------------------------------------------------------------------
    \5\ Stiglitz and Bilmes, p. 40-41 and 86-87.
---------------------------------------------------------------------------
    These higher than supportable estimates of casualties produce a 
larger base for VA outlays than it appears will be the case. 
Furthermore, Stiglitz and Bilmes assume that the utilization rates for 
veterans of Operation Iraqi Freedom will be the same as that by 
veterans of Desert Storm. Obviously, that assumption has very little 
evidence to support it, since utilization levels are yet to be 
established for OIF vets. Moreover, one wonders whether the special 
circumstances that afflicted Desert Storm troops makes their 
utilization profiles unique. We have yet to fully trace the full 
medical effects of exposure to burning petroleum that so famously 
confronted our military during the first Gulf war.
    Another troubling omission from Stiglitz and Bilmes analysis is an 
estimate of the post-military economic contributions of injured 
veterans. Clearly, not every survivor will live his or her adult life 
under the full-time care of the VA. Indeed, trauma medicine on the 
battle field has advanced so much since the Vietnam era (and indeed 
since the first Gulf War) that many of those injured have a better 
chance of economically productive lives than the predecessors. Dr. Atul 
Gawande published a fascinating description of field trauma techniques 
in the New England Journal of Medicine.\6\ He reminds us of how much 
more likely it is today that a wounded soldier will survive and do so 
in a fashion as to return to a modicum of normal health. In the Korean, 
Vietnam, and first Gulf war, about 24 percent of wounded soldiers died. 
Dr. Gawande reports that the early days of the Iraq war saw that ratio 
drop to 10 percent. Certainly that percentage has risen as the conflict 
intensified after 2005, but it remains below the recent historical 
levels.
---------------------------------------------------------------------------
    \6\ Atul Gawande, ``Casualties of War--Military Care for the 
Wounded in Iraq and Afghanistan,'' New England Journal of Medicine, 
351:24 (December 9, 2004).
---------------------------------------------------------------------------
    Finally, Stiglitz and Bilmes add to the cost of the Iraq war 
between $250 and $375 billion to rebuild the armed forces and return 
our military to ``full strength.'' Even this seemingly reasonable 
addition to costs falls prey to the tendency to exaggerate. Most 
certainly counted in this estimate are normal procurement outlays to 
replace fully depreciated military equipment and infrastructure. They 
could be on similarly shaky grounds by assuming that the personnel side 
will need to grow beyond normal replacement over the next decade. It 
may be that the government decides to increase the size of our military 
forces, but tracing this back to the Iraq war assumes that the war 
itself prompted an intentional downsizing of forces that must be 
rectified following withdrawal. This, like their procurement 
assumption, is highly questionable.
                 what about the increasing cost of oil
    Critics of the Iraq war point to the increasing price of petroleum 
as a clear cost of the conflict. Indeed, the leading critics extend 
this observation to argue that the leading economies of the world have 
all performed well below potential since the war began and oil supplies 
were disrupted. There are so many wrong with this argument that one 
hardly knows where to start, but let me supply a short note.
    World oil supplies today are very tight. Current estimates are that 
the daily difference between supply and demand is a mere 750,000 
barrels. This slim margin, however, is not due to the Iraq war. Rather 
it is due to the explosion in demand for petroleum from the developing 
economies of Asia and from ours and Europe's above average economic 
growth of the past 4 years. Iraq still exports less than its pre-war 
potential: indeed exports remain about 25 percent below that level. 
But, other suppliers, including the OPEC leaders, have more than made 
up for Iraq's missing supplies.
    However, most of the critics do not point to supply as much as they 
point to price. War in Iraq has been the assumed boogey man in oil 
futures markets, relentlessly driving up the benchmark crude prices. 
However, the history of oil prices doesn't appear to support that 
story.
    Well before the war, during the period 1997 through 2000, oil 
prices as measured by the benchmark U.S. index (West Texas Intermediate 
at Cushing, Oklahoma) rose three times the long-run rate of growth over 
the period 1965 through 2008. From 2002 through 2006, West Texas 
Intermediate grew by 2.5 times the long-run rate. However, since 
February of 2007, WTI has been growing by 13 times the long-run rate. 
Doubtless 1 day we will know what has caused this latest and very 
visible surge in petroleum price. One suspect, however, clearly will 
not be in that line-up, and that's the war in Iraq.
                               conclusion
    The strong views surrounding the war in Iraq and particularly its 
future color the analysis of its costs. Perhaps that is unavoidable. 
After all, forecasts require assumptions, and assumptions frequently 
spring out of beliefs and not science.
    Even so, the citizens of this country have before them one of the 
most important questions that has faced them in several generations: 
whether to declare this war a mistake from the start that deserves a 
swift conclusion or to persist in the Middle East by continuing to 
bring the Global War on Terror to the enemy's territory.
    However one feels about the justification for the war, its costs 
play a role in making this decision. The importance of this question 
means that those who do the work of accounting for the conflict's 
fiscal and economic effects must treat the public with respect and 
prepare their analyses with the highest professional standards fully in 
view.
    The Heritage Foundation is a public policy, research, and 
educational organization operating under Section 501(C)(3). It is 
privately supported, and receives no funds from any government at any 
level, nor does it perform any government or other contract work.
    The Heritage Foundation is the most broadly supported think tank in 
the United States. During 2007, it had nearly 330,000 individual, 
foundation, and corporate supporters representing every state in the 
U.S. Its 2007 income came from the following sources:

Individuals................................................          46%
Foundations................................................          22%
Corporations...............................................          13%
Investment Income..........................................          28%
Publication Sales and Other................................          10%


    The top five corporate givers provided The Heritage Foundation with 
1.8 percent of its 2007 income. The Heritage Foundation's books are 
audited annually by the national accounting firm of McGladrey & Pullen. 
A list of major donors is available from The Heritage Foundation upon 
request.
    Members of The Heritage Foundation staff testify as individuals 
discussing their own independent research. The views expressed are 
their own, and do not reflect an institutional position for The 
Heritage Foundation or its board of trustees.

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