Off-Budget War WAR IN THE GULF

January 28, 1991

The United States is paying for the Persian Gulf War with a tin cup, a credit card and an open checkbook. But a war tax? Not now, not soon, perhaps not ever. President Bush is against a tax boost; so is House Speaker Tom Foley, although he does not totally rule one out if the conflict drags on.

Chariness about having the cost of war hit the home front repeats the Vietnam War experience. That struggle went on for four years before a surtax was imposed, despite accurate warnings that guns and butter, without pain, would trigger higher deficits and runaway inflation.

This time a more plausible case can be made for avoiding a tax increase, at least as fighting begins. The nation is in a recession, contrast to the boom years of the mid-1960s. Also, there is no early need to go on a Vietnam-style weapons-buying binge because U.S. arsenals are brimming.

Nonetheless, the national credit card is on the counter. Last fall, when the costs of Operation Desert Shield were just a shadow of the price-tag for Operation Desert Storm, Congress and the White House decided to put the whole operation "off budget," just as they did with the savings and loan mess. It would not be counted in computing the federal deficit. It would be borrowed.

A week before the United States went to war, the administration said Operation Desert Shield had run up incremental costs, meaning costs over regular Defense Department expenditures, of roughly $10 billion. Of this amount, it added, 80 percent would be provided by our allies.

Did that mean the buildup was costing a measly $2 billion? Hardly. Much of the foreign contributions, which had been solicited, tin cup in hand, had not yet materialized. Moreover, the figure did not reflect the checks Uncle Sam had written to keep Egypt and Turkey squarely in camp.

Since the war button was pushed Jan. 16, estimates of the daily cost of conflict have been in the range of $500 million to $700 million a day. Thus, if the war lasts 100 days, the price-tag will be in the neighborhood of $60 billion.

Which nations are going to pay this bill? Japan is pledging $9 billion. Germany is expected to come up with $6 billion. Saudi Arabia has already provided a $15 billion and may double this amount. Kuwait has come up with $13.5 billion. Other contributions may, indeed, provide enough funds to keep burden-sharing roughly within a formula of one-third each from the United States, the gulf states and other coalition members. Against that, one has to figure in the $13 billion aid request from Israel, the $7 billion debt write-off for Egypt and the multi-billion help due Turkey.

We are calculating in terms of a 100-day war. If the conflict goes on longer, all parties will have to cough up more. And if it goes on longer, a reluctant Washington establishment may have to ponder the war tax it is avoiding. President Bush vows this will not be another Vietnam. Let that apply to the economic as well as the military sphere.

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