U.S. war costs could be under $170 bln - Pentagon

By Andrea Shalal-Esa

WASHINGTON, April 22 (Reuters) - The Pentagon's budget chief on Tuesday said she expects the total cost of the wars in Iraq and Afghanistan in fiscal 2009 to be less than the $170 billion estimate given earlier this year by Defense Secretary Robert Gates when pressed by U.S. lawmakers.

"I expect it to be less," Pentagon Comptroller Tina Jonas told Reuters after a speech to a conference sponsored by Jane's Information Group.

Jonas said she would meet with Gates later on Tuesday to discuss whether to give lawmakers a total estimate for war spending needs. The Bush administration has already requested $70 billion in war funds for the fiscal year starting Oct. 1, and says it will need more.

Asked about the prospect that Congress might combine fiscal 2008 and 2009 war spending, Jonas told the conference she was confident that lawmakers would "come to some accommodation."

Jonas said her concern was ensuring that the Pentagon had sufficient funds to pay soldiers and keep operations running.

The White House has warned Congress that it must approve additional war funds by the end of May or risk the start of Defense Department layoff notices.

Jonas said the Pentagon was working on contingency plans, just in case those funds were not approved. "I think we'll get there," she said.

COST PRESSURES WEIGH

Jonas said total U.S. defense spending, including base budgets and supplemental war spending, was around 4.7 percent of U.S. gross domestic product, but said that was still lower than during other major conflicts.

For instance, defense spending totaled 8.9 percent during the Vietnam War and reached 6 percent during the defense buildup under former President Ronald Reagan.

She acknowledged defense spending had soared 71 percent in recent years, but said that rise was only 34 percent in nominal terms. Rising operating costs remained a huge concern, given a tripling of fuel costs and steady increases in health care costs, she said.

In constant fiscal year 2009 dollars, the Pentagon budget was expected to decline 3.3 percent by fiscal 2013, she said.

She noted that procurement spending was expected to increase 9 percent over the same period, when measured in constant 2009 dollars, but said research and development spending would decline nearly 14 percent.

She warned that pressures on defense spending were mounting given growth in U.S. entitlement programs such as health care for the poor and elderly and the next administration could be facing a possible "train wreck."

Jonas also expressed concern about cost increases and schedule delays in major defense acquisition programs. She said 17 programs had breached congressional cost overrun thresholds and required certification if they were to continue.

The portfolio of major defense programs had grown by 900 billion to $1.7 trillion since fiscal year 2001, but cost growth accounted for 44 percent of that, Jonas said.

"That is a stunner. We have got to do better in managing costs," she said, noting that would be a big challenge for the next administration. (Editing by Eric Walsh)