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Last Updated: Tuesday, 25 March, 2003, 16:12 GMT
Bush sends $75bn bill for war

By Steve Schifferes
BBC News Online in Washington

House Speaker Dennis Hastert (left) with President George W Bush
Speaker Hastert (left) made the budget a test of patriotism

President Bush has sent Congress a request for $74.7bn (47.5bn) to pay for the first six months of the war.

Speaking at the Pentagon, Mr Bush said that America accepts the cost of supporting the military, and asked Congress for the freedom to spend much of the money as he wished due to the "fluid" nature of the war.

The president is also asking for additional cash for homeland security and humanitarian needs as well as funding for the direct costs of the war, which are estimated at $62.5bn.

Paying for the Iraq war
Military operations: $44bn
Call up of reserves: $10bn
Munitions: $6.5bn
Reconstruction: $1.7bn
Humanitarian aid: $500m
FBI: $500m
Coast Guard: $1.5bn
Afghanistan aid: $400m
Aid to Israel: $10bn
Aid to Jordan, Egypt: $1bn each
source: OMB, Congress
The request is based on the war lasting 30 days, and includes $500m in humanitarian aid, $1.7bn to rebuild Iraq, and $500m for the FBI to fight terrorism at home, as part of a $4.2bn appropriation for home security.

It will also provide up to $8bn in aid to US allies affected by the war or terrorism.

Mr Bush has asked Congress to act swiftly and approve the request before they recess on 11 April.

Democrats are expected to back the request, but have called for more money for homeland security, as Mr Bush warned legislators not to add extra spending that was "unrelated, unnecessary, and unwise."

Among additional demands, there could be calls for financial help to US airlines, who are suffering massive losses due a decline in international traffic.

Deficits fear

The war will be funded by further borrowing by the US government, which is already planning to borrow over $300bn to cover the budget deficit in the current financial year.

Democrats have argued that the cost of the war should not be a burden on future generations, and urged Mr Bush to abandon his plan for tax cuts, which he says are necessary to stimulate the economy.

British soldiers in Southern Iraq
The coalition headed for the oil fields
The non-partisan Congressional Budget Office estimates that over the next ten years the US budget gap will total $1.8 trillion.

Treasury Secretary John Snow said that although "it's important that the fiscal house of the United States stay in order," the current deficit was temporary and manageable.

Last week Congress backed the president's plan for a $726bn tax cut over 10 years to stimulate the economy, despite attempts by some moderate Republicans to curb the growing deficit - although the Senate withheld $100bn against possible war costs.

Omnibus war bill

Many states and localities have argued that they do not have the funds to implement measures to protect their citizens against terrorist threats - especially as many states have even deeper budget problems of their own.

Erecting tents in Jordan
A huge refugee crisis could be near
Democrats have produced a long list of urgent spending priorities, from more policeman and fire fighters and protective gear to increased inspection and policing at ports, nuclear facilities, and chemical plants.

And the Democrats indicated that they would seek to double, from $4bn to $8bn, the money allocated to homeland security.

The war appropriation will also include increased aid for US allies who are supporting the war effort, including $1bn in grants and $9bn in loans to Israel to prop up its sagging economy, $1bn for Egypt, and $1bn for Jordan.

And other countries fighting terrorism, including Afghanistan, the Philippines, and Colombia, will also get increased aid.

And it includes some, but not all, of the humanitarian relief and rebuilding costs in Iraq.

The US aid agency USAID has already begun asking for bids from US companies for some of this rebuilding work.

Costs of occupation

But the war bill is unlikely to spell out the future costs of reconstruction and occupation over several years.

I am really sad to see how easy it is to get money for the war effort
Patrick, Denmark

That is partly because it is not yet clear how much damage will need to be repaired in Iraq.

The US government is also hoping that some of the $25bn in annual oil revenue could be used in reconstruction.

And it would like other countries, for example Japan and South Korea, contribute to rebuilding costs, in return for their firms receiving construction contracts.

A Pentagon official said that the $62bn war cost was made up of four phases:

  • $30.3bn for the build-up, or "coercive diplomacy"
  • $13bn for the war or "major conflict phase"
  • $12bn for establishing order in the "stability phase"
  • $7.2bn for the "reconstruction phase"
These costs only cover the US fiscal year 2003, which ends 1 October 2003.

David Brown, chief European economist Bear Stearns
"The US budget deficit is sucking in an awful lot of global savings"

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