4/07/2011

Estimates of cost of Libya war excluding important costs

From the WT (Thursday, April 7, 2011):

A Democratic lawmaker said Thursday that the White House is “dramatically underestimating” the cost of the nation’s military involvement in Libya by relying on misleading accounting.

“That effort is costing us billions a week,” Rep. Brad Sherman, California Democrat and a certified public accountant, said in his opening remarks at a House Foreign Relations Committee . . . .

Last week, Secretary of Defense Robert M. Gates testified that the nation’s initial involvement in establishing a no-fly zone over the skies of Libya carried a $550 million price tag and that the cost going forward would be about $40 million a month. . . .

But Mr. Sherman on Thursday said the estimates are based on what’s known as “marginal-cost accounting,” which doesn’t include costs for things such as overhead from the development of the weapons systems and equipment being used, or the salaries of the people involved in the effort.

“We need to use full-cost accounting,” Mr. Sherman said. . . .

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